A View From My Porch: A Primer on the American Rescue Plan, What’s Happening to the Money in Old Lyme

Over the past several months, the regional media have covered American Rescue Plan (ARP) funding decisions made in several Southeast Connecticut communities. On July 26, the New London Day carried the headline, “American Rescue Plan Funding Floods Southeastern Connecticut.”

Even before that, on June 15, Old Lyme’s First Selectman Timothy Griswold reported, “The American Rescue Plan will pay the Town about $743,000, with an additional $1,419,000 share of the payment to New London County, totaling about $2,162,000.” 

I will discuss the fundamentals of ARP in this “View”; and then review the approach being taken by Old Lyme to decide how best to distribute those funds.

My objective in this essay is that readers gain some understanding of this important legislation. Note that this is not an exhaustive analysis of ARP, just what I consider the important highlights.

The American Rescue Plan Act (ARPA) of 2021 is a $1.9 trillion economic stimulus bill passed by Congress and signed into law by President Biden on March 11, 2021. The goal of the ARPA is to “accelerate the nation’s recovery from the economic and health effects of the COVID-19 pandemic.” It is actually the sixth federal COVID relief bill passed in the last year and a half; and may be the largest, in terms of funds designated for Connecticut. 

The Plan includes $65.1 billion in direct, flexible aid to every county in the United States; and then, via the counties, additional funds to some cities, towns, and villages.

Connecticut towns and cities will receive $2.55 billion, with $1.56 billion earmarked for “general government” (i.e., vital public services), and $995 million for boards of education.

Approved Uses: The Department of the Treasury has issued guidance regarding appropriate use of these funds; and will provide continuing oversight as funds are disbursed.

Eligible uses fall into five categories:-

1. Supporting the public health response, including mitigation and medical expenses
2. Addressing negative economic impacts, which may include assistance to households, small businesses, and non-profits; or aid to impacted industries, like tourism, travel, the arts, and hospitality
3. Investing in water, sewers, and broadband infrastructure 
4. Premium pay to essential workers
5. Replacing lost public sector revenue.

Old Lyme ARP Activities:

Old Lymes’s Board of Selectmen (BOS) has appointed a committee* charged with developing and recommending (to the BOS) an approach for the distribution of ARP funds to Old Lyme residents and businesses who have been impacted by the COVID pandemic. This committee is comprised of individuals with broad expertise in public health, business, municipal infrastructure, social services, emergency services, arts, and tourism. 

The first real “hands-on” introduction to this group by residents will be over the course of the next several weeks, when the committee conducts a survey of the impact of COVID on our community. Those survey results are very important, because they will provide a framework for an estimate of Old Lyme’s collective need, and help set priorities that will be included in the recommendation to the BOS. A funding process may then be developed and publicized.

CARES Act:

Many Old Lyme residents and business owners may have already benefited from the Coronavirus Aid, Relief, and Economic Security (CARES) Act, which was signed into law on March 27, 2020 by then President Donald Trump, also for emergency relief of the economic impacts of COVID. 

CARES’ $2 trillion included one-time cash payments to eligible individuals, expanded unemployment benefits, direct payments to eligible families, and the Paycheck Protection Program, which provided grants and, “forgivable” loans to small businesses (i.e., “forgivable” when used for eligible payroll costs).

Some Final Thoughts:

Old Lyme’s ARP funds are, at present, kept in an “interest-bearing account” in a local bank. Note that those funds, including interest, must be obligated or awarded by Dec. 31, 2024.

Among regional towns and cities, Norwich received the most overall funding, nearly $30 million, followed by New London with more than $26 million. 

East Lyme, Montville, Stonington and Waterford each received more than $5 million. Lyme received $685,421.56.

A complex methodology was used to determine funding levels; I won’t try to do justice to it within the confines of this essay.

That said, the federal government used a modified version of HUD’s old Community Development Block Grant formula, with total grant size for “non-metro cities” capped at 75 percent of the municipality’s most recent budget” (i.e., as of Jan. 27, 2020). The revised formula also considered total population and the rate of local unemployment.

In closing, the Committee anticipates publicizing the survey mentioned above through the local media and other channels directly reaching residents.

*Editor’s Note: Old Lyme ARP Committee members elected the author as chairman at their first meeting.

About the author: Tom Gotowka’s entire adult career has been in healthcare. He’ will sit on the Navy side at the Army/Navy football game. He always sit on the crimson side at any Harvard/Yale contest. He enjoys reading historic speeches and considers himself a scholar of the period from FDR through JFK.

A child of AM Radio, he probably knows the lyrics of every rock and roll or folk song published since 1960. He hopes these experiences give readers a sense of what he believes “qualify” him to write this column.