A team of Grand Valley State University researchers has set out to catalog and measure the economic effects of more than $300 million in federal COVID-19 relief funding being dispersed across four West Michigan counties.
Professors Bobbie Biby and Christopher John Cruz from GVSU’s Seidman College of Business presented their early findings at the Grand Rapids Area Chamber of Commerce’s Grand Rapids Policy Conference this month.
The $1.9 trillion American Rescue Plan Act includes a $350 billion fund for state and local governments that received allocations based on population. The funding can be used broadly for public health, economic recovery and infrastructure. Statutory eligible uses are: Responding to the effects of COVID-19, providing premium pay to essential workers or grants to employers, providing government services or investing in infrastructure.
GVSU researchers teamed up with the Grand Rapids Chamber to determine “how this funding is impacting our local economies,” Cruz said at the policy conference this month.
While just 19 percent of the one-time American Rescue Plan Act (ARPA) funding has been obligated so far in West Michigan, smaller municipalities generally plan to use the public money to fund local projects. Townships, cities and counties have until the end of 2024 to obligate their funding and until the end of 2026 to spend it.
The “revenue replacement” option serves as a “catch-all” category for municipalities spending their ARPA funds, Cruz said. The category can be used to fund various types of local projects or services. For example, Gaines Charter Township in Kent County is considering funding water and sewer infrastructure projects by reporting them as revenue replacement, Cruz said.
The city of Grand Rapids has obligated about $4.86 million of its roughly $92 million total ARPA allocation. A majority of Grand Rapids’ obligated funds have targeted public health initiatives, including COVID-19-related projects.
Meanwhile, some smaller cities and several townships — including Ada, Caledonia, Muskegon Heights and Walker — have obligated 100 percent of their ARPA funds for revenue replacement.
Larger entities, such as the city of Grand Rapids and Kent and Ottawa counties, tend to have prioritized broadband and water and sewer infrastructure projects, Biby and Cruz said. Each of these entities also have asked residents to weigh in on how their ARPA funding should be spent.
Ottawa County in particular stood out to Biby for its transparency, “robust web site” and its strategy of communicating funding priorities with the public. In recent months, county officials have organized a dedicated ARPA spending website with specific priorities based on feedback from businesses and residents. Last week, officials with Lakeshore Advantage Corp. issued a call for proposals from businesses on spending ARPA funds for business stabilization projects.
“I was proud of what they were doing — this is fantastic,” Biby said of Ottawa County.
The researchers have been accumulating data through direct requests to municipalities or in some cases Freedom of Information Act requests when local governments didn’t respond, Biby said.
“We’ve made a lot of phone calls, many of which were not responded to,” Biby said.
Cruz noted a “huge variation” in the way municipalities responded to requests for information.
“Some cities and counties are very responsive and very transparent in what they’re doing and thinking,” Cruz said. “A few others, not so much, so we have to be creative.”
While the research project is still relatively early in its process, experts see the ARPA funding having long-term economic implications for the region.
“The ARPA funding and impact is here for a while, and we’re very excited to be part of this project,” Biby said.
Beyond cataloging local ARPA spending, the GVSU research team aims to measure the economic effects of local governments’ decision making. That will likely prove far more complex.
“Broadly, we’ll be looking at the economic performance of each of these cities and municipalities,” Cruz said. “We have to look at every single project, every single sector and see how that impacts the local economies. It won’t be straightforward, for sure.”
For example, broadband investments are going to have different economic implications on a county by county basis, Biby said.
“Also, money invested in broadband will have a different impact than money invested in water or sewer projects,” Biby said. “There are so many variables with the impact and multipliers for each project based on location and the type of project. We’ll be looking at all of those things.”