Barre Town officials told pandemic relief dollars can be spent without strings

Residents can go to bit.ly/0525EditReport to view the entire audit report for fiscal year 2022.

After giving his presentation on the audit, Duplessis was asked by Katelyn Kran, the town’s finance director, to give an update on American Rescue Plan Act funds. The town has been awarded $2.3 million of such funds, with about half of it either already spent or spoken for.

Duplessis said the requirements for these funds are the strangest he’s ever encountered in his years as an accountant. He said the funds started with strings attached and the strings have slowly, but surely been removed.

He said any municipality that received less than $10 million, which is every municipality in Vermont except for Burlington, can claim the pandemic relief funds as lost revenue. He said municipalities can do this without having to show any proof of actual lost revenue.

“They simply let you declare that it was,” he said.

Duplessis said once that’s declared, which has already taken place with the town, some of the strings from the federal government come off. He said the municipality then has to spend the money. He said there are restrictions on how the money can be spent. It can’t be used to reduce taxes or to create a surplus fund, for example.

But Duplessis said if municipalities tell the federal government they already spent the funds on prior expenses, like salaries and benefits for town employees, even if the funds for those expenses truly came from another funding source like tax dollars, and as long as they keep a record of what was paid for, municipalities can use their pandemic relief dollars however they wish because the strings will have been removed completely. He said the town could then use the funds to reduce tax burdens or create a surplus fund.

“Once that’s done, it’s not federal money anymore,” Duplessis said. “It’s simply unrestricted money. It changes from restricted to unrestricted by a board motion. At that point then, it’s just money that you have, like clerk’s fees or taxes or any other money that you bring in. And it can be used for virtually any purpose at that point, any purpose because you’ve taken away all the federal strings.”

The pandemic relief dollars have to be obligated, meaning contracts signed for work, by the end of 2024 and fully spent by the end of 2026. But if the town tells the federal government it already spent the funds, Duplessis said those end dates go away, as well, so the town could hold the funds for as long as it saw fit.

“There’s never been any other federal money like this that is so easy to, in essence, earn and then give you the ability then to use it for whatever purpose that you want to,” he said.

Duplessis said this was a case where it sounded too good to be true, but actually is true.

Kran reported the town is set to declare all the funds spent, which will trigger an audit for fiscal year 2023 because such an audit is required when more than $750,000 of federal funds are spent by a municipality.

Board members were a bit skeptical and cautious.

Board member Michael Gilbar said he doesn’t trust the federal government. Gilbar said he felt queasy when it was announced that municipalities didn’t have to follow uniform guidance, or a framework for grant management, for the funds. He said he’s been burned by the government a few times over the course of his career.

Duplessis said he felt similarly.

“But I’ve been to enough conferences and heard enough speakers, including the feds directly, that they frankly, for anything less than $10 million, there is just so much money put out that they don’t have the resources to even start an audit,” he said.

Board member Justin Bolduc noted he and his colleagues wondered at the time how the federal government was going to track and verify all the funds when they were being awarded to every municipality in the country.

eric.blaisdell

@timesargus.com