Some Hawkins County commissioners are leaning towards a $10 million one-time payment of federal COVID stimulus funding rather than betting on the possibility of receiving an additional $1.1 million over three years.
The final rules and regulations for federal COVID stimulus funding (American Rescue Plan Act of 2021) were released earlier this month, and while county officials were still studying the 437-page document, there were a major change that will have a significant impact on Hawkins County. .
Hawkins County initially received $11.1 million. The county was able to identify $3.4 million in lost revenue due to COVID in the first year of the pandemic.
Based on previous rules and regulations, $3.4 million would not be burdened with certain spending restrictions, as would revenue lost to COVID in subsequent years.
County Chief Financial Officer Eric Buchanan told the budget committee last week that the biggest change from previous versions of the rules and regulations was how the loss of revenue affects payments.
“Before, we had to calculate that, and the first year we had a favorable result in that calculation to the tune of about $3.4 million,” Buchanan said. “But, it will be the circumstances every year, so it may not be in our favor in the following years. One of the biggest changes is that they allowed a $10 million allowance that you can choose from regardless of your situation. A standard allowance, that’s what they called it.
Buchanan noted that this would eliminate the risk of COVID loss numbers not being favorable in future years.
“I haven’t had a chance to discuss this with everyone yet, but my recommendation would be to take the standard $10 million allocation to protect us from having a year with no revenue loss,” he said. Buchanan said. “On average, with the year we have, we could potentially get the full $11.1 million in lost revenue. But I’m not a big gamer and if you told me $10 million for sure, my recommendation would be to take whatever $10 million we can guarantee.
Commissioner Jason Roach likened the $10 million rule to a standard deduction on a tax return versus an itemized deduction. Roach asked what restrictions will be placed on the $10 million payout.
“For me, it’s less invasive and less restrictive,” Buchanan said. “You still can’t put money into a pension plan. You still can’t put money in a rainy day fund reserve. You still cannot pay the P&I (principal and interest) on the debt. But that’s about all.
Buchanan noted that the government services listed as allowable expenses in the final rules and regulations are all provided by Hawkins County.
Roach: “So it’s safe to assume that if we take the $10 million, the odds of the feds coming back and saying you spent that money the wrong way – the odds of that happening and you having to reimburse are less.”
Buchanan: “I would agree with that statement.”
No action has been taken by the budget committee on federal stimulus funding which will be discussed further after a 437-page rules and regulations review is completed.