The town's post today is incorrect. The town has had the option to balance it's FY 2024 budget with its ARPA money for more than a year.

Photo by Randy Laybourne on Unsplash

 

FACT CHECK:   The town's post today is wrong --  the town definitely could use ARPA funds to balance this years budget: "revenue replacement" is an allowed use, and towns can claim a standard allowance for revenue replacement, without any need to show a loss, of up to $10 million.  The Treasury's standard allowance for "revenue replacement" made the town's entire ARPA award available for this purpose in early 2022.  Other towns have already used their ARPA funds this way.  If the budget was formulated around this critical misunderstanding, maybe we SHOULD take a step back and look at it again.  The latest in the Town's "Two Facts and a Fib" series is incorrect.

On Friday the town began a "Two Facts and Fib" series to support the budget it will present at Annual Town Meeting on May 3rd.

In the second installment of the "2 Facts and A Fib" series on Facebook today, the Town made a statement that is untrue. Specifically, the Town wrote a post that claimed that: "ARPA money may NOT be used for reoccurring or operational General Fund (Town & Schools) expenses UNLESS the Town can show that the need is due to decreased revenues."

The incorrect claim from the town on 4/29.

But this is not the case.  One allowed use of ARPA funds is "Revenue Replacement" and with that in mind the US Treasury's 2022 "Final Ruling" permits a standard allowance for lost revenue of $10 million without any need to show an actual loss of revenue.  This means that Lancaster could use its entire ARPA allocation towards general government expenses, if it so desired. In fact, Belchertown has already used $514,582 of ARPA funds to balance its Fiscal Year 2023 budget in this way.

The correct fact is:  Lancaster has more than enough ARPA funds left to balance it's budget this year, without an override, and could do that if that's the desire.  

This is not the first time that the Town has been wrong on a point critical to the budget, it's the second time in as many weeks. It is concerning that the Town would make such a statement without first verifying its accuracy, especially given the importance of the budget and how it affects the town's residents.   At the town's "warrant review" on April 18th Town Administrator Kate Hodges announced that the town would not vote on the FY24 budget at Annual Town Meeting; she stated that the moderator had decided that the override ballot question at the town election would decide whether the budget was approved.    Less than 12 hours later she learned that was not permitted -- the town must approve its budget at a town meeting -- and reversed her announcement.

The Treasury's "Final Ruling" on how ARPA funds can be allocated was released in early 2022. The Massachusetts Municipal Association -- of which Lancaster is a member -- published articles about it and the state relayed the change to decision makers:

"Overview of the Final Rule", US Dept. of the Treasury, 2022

 

"Final Rule Takeaways", Mass EO of Admin and Finance, 2022

 

 

 

Other towns have used their ARPA funds in this way.   Belchertown's finance committee suggested using $514,582 of ARPA funds to balance that town's  Fiscal Year 2023 budget:

From Belchertown Finance Committee FY2023 Report

You can see those funds listed as revenue in the budget that town approved:

Belchertown Fiscal Year 2023 Budget Revenue Synopsis, on page 8

It is crucial for town officials to be knowledgeable and accurate when it comes to matters such as the budget, as it can have significant consequences for the community. If false information is presented, it can lead to a misallocation of resources and a mismanagement of the town's finances.

As such, it may be wise for the town to take a closer look at the budget and the information provided by its officials. This could include conducting an independent review or seeking guidance from outside sources to ensure that the budget is accurate and reflects the needs and priorities of the community.

In conclusion, the Town's statement that ARPA funds cannot be used for General Fund expenses is unquestionably untrue, and it is concerning that she would make such a statement without first verifying its accuracy. It is essential for town officials to be knowledgeable and accurate when it comes to matters such as the budget, and the town should take steps to ensure that the budget is accurate and reflects the needs of the community.

It is now clear that the town was not properly briefed on it's options this spring on how more than $1.6 Million in available ARPA funds could be used.  Residents should rightly question whether the FY2024 budget that will be put for a vote next week was assembled with a full understanding of the town's options.