Council working on plan for CARES ACT funds

by Jack McLoone

One of the topics discussed at last Monday night’s Hastings City Council meeting was the City of Hastings budget and how it has been affected by COVID-19. In a memorandum addressed to Mayor Mary Fasbender and City Council Members, Finance Manager Melanie Lammers issued a 2020 COVID Financial Update now that the City has data to show where the revenue and expenditures for the year are at.

The first half of property tax payments were received on May 27th.

“Revenue is looking good with 35.43% collected through May of 2020,” Lammers stated in the memo. “We collected over 100% of the first half of our levy. Our investments are doing better than anticipated as we still have some CD’s with good rates from 2018.”

Lammers went on to show the areas in the general fund that currently have revenue shortfalls.

“There has been additional expense in the general fund as well due to COVID costs. Our legal fees are over budget around $20,000,” Lammer informed Mayor Fasbender and the City Council. “We have around $15,000 in COVID related purchases at this time and we anticipate this will increase as we just bought more items to facilitate safely reopening our public buildings.”

The expenses add up to total a general fund total shortfall of $116,000.

Due to the cancellation of spring activities, the Hastings Parks revenue is also significantly lower. “As of the end of May, there is a revenue shortfall for rental income and registration fees of around $29,000. Parks also spent about $1,500 on fencing for COVID reasons. To mitigate the revenue loss, no seasonal help was hired which was a saving of about $80,000,” Lammer wrote.

“The City is doing well mitigating revenue loss and additional expense that is being incurred due to COVID,” Lammers concluded.

Lammers went on to inform the Council of the CARES Act money that will be up for discussion this summer.

“We are eligible for over $1.7 million to assist with costs,” Lammers stated. “There are several areas that need to be discussed to determine if they meet three tests for eligible expense.”

Some expenses listed that may qualify include communication and enforcement of public health orders related to COVID-19, personal protective equipment expense, Public Safety measures undertaken in response to COVID-19, expenses for quarantining individuals, payroll costs for public health and safety costs for services substantially dedicated to mitigating or responding to the COVID-19 public health emergency, payroll costs for employees whose services are substantially dedicated to mitigating or responding to the COVID-19 public health emergency, expenses to improve telework capabilities for public employees, expenses of providing paid sick and paid family and medical leave to public employees and provision of grants to small businesses to reimburse the costs of business interruption caused by required closures.

Lammers went on to say that these are only some of the possible options for the CARES Act money, but it must be noted that revenue loss due to COVID-19 is not eligible for reimbursement.

At the meeting, City Administrator Dan Wietecha informed the Council that because it is federal money, it will trigger an additional audit for the City next year.

“We don’t know specifically what guidance the Federal government will give auditors 12 months down the road. We will want to make sure we stay ahead of the audit. We have had a couple of other grants and are looking at some additional funding. It goes without saying, there is no double dipping,” Wietecha informed the Council.

Wietecha also noted that if any of the money is misspent, it must be paid back.

“Make sure that wherever we make decisions on using some of this money, we are not just documenting the receipt of how the money was spent, but documenting City Council decisions on why we believe that was an eligible expense and met the criteria. I think the key piece to that is this is a lot of money, roughly 5% of our overall budget.”

Wietecha went on to outline the three eligibility criteria that all must be met. First, it must be a necessary expenditure due to the COVID response. Second, it must have been unbudgeted or substantially different from the budget. Third, it must have incurred between March 1st, 2020 to November 15, 2020.

Some broad areas that Wietecha outlined for the Council to consider were payroll specific to COVID, public safety payroll, economic support for business, emergency financial assistance and building upgrades for a healthier environment.

Councilmember Tina Folch pointed out that roughly $369,000 has already been expended, leaving roughly $1.3 million for the Council to decide where the rest of the money is needed most.

The Council will continue deliberating on the best way to spend the CARES Act money.