Lexington is one of nine Kentucky cities that will receive millions in American Rescue Plan dollars directly from the federal government, but it could be a while before those funds get farmed out into the community.
The state’s largest communities expect to receive a total of $607 million through the plan, with remaining communities splitting $324 million that will flow through the Kentucky Department for Local Government.
Specifics about how the money can be spent are still being worked out, but the relief dollars will fall into six basic buckets – supporting public health, addressing negative economic impacts of the pandemic, recouping lost revenue, bolstering pay for essential workers, targeting harder-hit low-income communities, and investing in water, sewer, and broadband.
In addition to uncertainty about exactly how the money can be used, the appropriation has a long shelf life – with cities allowed to spend or obligate money all the way through December 31, 2024.
"So this can should be a very deliberative process with the local governments on how they spend their allocation," J.D. Chaney with the Kentucky League of Citi told lawmakers Wednesday. "They have time to engage their constituency. They have time to collaborate with other cities in the county, their county governments."
There are, however, a number of ways cities are expressly prohibited from spending the dollars. They include paying off unfunded pension labilities, legal settlements, and restocking rainy day funds.
Kentucky anticipates $550 million in federal American Rescue Plan dollars will go toward water, sewer, and broadband-related projects, but the wish list is already exceeding that amount in some areas.
The federal relief money dedicated to drinking water and wastewater comes out to $250 million, but Transportation Secretary Jim Gray says that state won’t have any trouble locating potential projects.
"We've received 127 grant applications and they amount to more than $300 million already," he said.
Officials are still awaiting final guidance on exactly how the funds can be utilized, but they will have until December 31, 2024 to spend or obligate the dollars. That long window of time is good news for utilities.
"That's a very realistic number for the kinds of projects that are being considered," Gray added.
Gov. Andy Beshear has estimated the state’s overall infrastructure plan will help create more than 14,000 jobs.
