Jul 7, 2021 - News

Iowa requests federal coronavirus relief payments

Illustration of a hundred dollar bill as a surgical mask.

Illustration: Aïda Amer/Axios

Iowa requested local government stimulus payments Tuesday.

Why it matters: It means that distribution of about $222 million to Iowa's hundreds of small towns will begin within the next month, including multiple metro communities.

Catch up fast: Hundreds of millions of dollars were allocated to local governments as part of the federal American Rescue Plan approved by Congress in March.

  • Governments with populations under 50K are generally dependent upon the state to send invoices to the U.S. Treasury before a 30-day distribution period begins.

Driving the news: Iowa was one of only 10 other states that hadn't yet moved to collect the allocations, according to a June 28 federal report.

  • Last week, multiple groups, including Iowa Citizens for Community Improvement, criticized Gov. Kim Reynolds and the state's Management Department director, Michael Bousselot, as "missing in action while the clock is ticking."

What they're saying: The timing was strategic, Bousselot told Axios Tuesday.

  • Once the money is requested, federal timelines begin that require local governments to meet reporting responsibilities that can jeopardize their allocations if missed.
  • Iowa is helping hundreds of municipalities make pre-spending plans to reduce the red tape and maximize the aid, Bousselot said.

The big picture: Iowa's governments will receive almost $2.7 billion, including $1.379 billion to the state.

  • DSM and Polk County's portions are each around $95 million. Both are in the process of making spending plans.
  • Infrastructure, supplies and even direct aid to residents are some of the ways the money can be used.

Between the lines: The stimulus is a one-time windfall that, if leveraged correctly, can help governments reduce budget pressures in future years, Iowa State University economist Peter Orazem told Axios.

  • His advice: Use the money to fix infrastructure and reduce liabilities like underfunded employee retirement plans.

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