Spending ARPA funds

Posted 2/1/22

By STEVE FRIAS There are few things politicians like doing more than spending our money, but they usually do not do so wisely. Through the American Rescue Plan Act (ARPA), the city of Cranston will receive $42.6 million and the Cranston School

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Spending ARPA funds


There are few things politicians like doing more than spending our money, but they usually do not do so wisely. Through the American Rescue Plan Act (ARPA), the city of Cranston will receive $42.6 million and the Cranston School Department will receive $20.8 million. ARPA provides a one-time source of federal funds designed to fiscally stabilize municipalities, to pay for certain types of infrastructure and to assist those who were substantially harmed by the pandemic. To help provide financial stability, APRA funds should be used to give Cranston taxpayers, if possible, the equivalent of a property tax freeze through fiscal year 2025 and to reduce Cranston’s unfunded Other Post-Employment Benefits (OPEB) liability. In regards to infrastructure, ARPA funds should be used to pay for drainage projects to manage increased stormwater runoff caused by climate change. To aid those impacted by the pandemic, ARPA funds should be used to reimburse Cranston’s restaurants for liquor license fees paid in 2020, to increase affordable apartment housing and to provide more in-person instruction for our school children.

Financial Stability

Unfortunately, ARPA funds cannot be returned to taxpayers through tax reductions. However, they can be used to offset city revenue losses and hold the line on property taxes. By using ARPA funds to offset revenue losses, Cranston could end up with the equivalent of a tax freeze through fiscal year 2025. For example, during fiscal year 2022, Cranston used $7.87 million in ARPA funds, and avoided a general increase in property taxes.

However, Cranston must not become dependent on ARPA funds to pay for recurring operating expenses. Otherwise, Cranston could face a major structural deficit in fiscal year 2026 when the ARPA funds run out. Overreliance on federal revenues can cause a fiscal crisis. During the 1970s, Cranston received millions in federal aid, in particular from the Comprehensive Training and Employment Act (CETA). Under Mayor James Taft Jr., Cranston used these federal funds to expand city services and hire more city employees. A Cranston Herald editorial explained that CETA was “a heaven-sent opportunity for patronage as well as a means to stall inevitable increases in local tax rates.” At one point, 40 percent of city employees were funded through CETA, but then CETA funding began to decrease. Due to a combination of reduced CETA funding, past accounting gimmicks and inflation, Cranston property taxes were hiked by 15 percent in 1978.

We should not repeat the mistakes of the 1970s. ARPA funds should not be an excuse to increase spending for recurring operating expenses. In 2020, 86 percent of Cranston voters approved a city charter amendment that, in general, limited annual property tax increases to no more than three percent annually. Cranston taxpayers do not want dramatic property tax increases. Therefore, the amount of ARPA funds to be used to pay for recurring operating expenses should be no higher than about $5.5 million annually, which would be equal to a three percent property tax increase.

Unfortunately, ARPA funds cannot be used to increase the city’s contribution to the pension fund or to reduce the city’s debt service. However, there is no prohibition against using ARPA funds to increase the city’s contribution to its OPEB fund. Cranston pays for health care retirement benefits for police and firefighters through the OPEB fund. In fiscal year 2021, Cranston did not fully fund its annual required contribution to OPEB of $4.04 million. Instead, only $2.04 million was contributed. As a result, Cranston’s OPEB funding level declined to 17.8 percent and its unfunded liability grew to $39 million. To remedy this, the city should increase OPEB funding by at least $2 million above its annual required contribution.

Long-Term Infrastructure

There is evidence that the northeastern United States will experience heavier rainfalls in the future due to climate change. Using ARPA funds to pay for stormwater drainage projects is a cost-effective way for Cranston to prepare for climate change.

Targeted Assistance

Due to public health restrictions, Cranston restaurants could not operate normally for about a year. However, about 100 Cranston restaurants still paid for city liquor licenses, which cost them $2,000 annually. These restaurants should be reimbursed for the cost of the liquor license they paid for but could not fully utilize. These restaurants are partly responsible for generating about $2 million in state restaurant taxes for Cranston. Reimbursing $200,000 to these restaurants is justifiable.

Low-income people were impacted by the pandemic. To assist them, ARPA funds can be used to increase affordable housing. Presently, Rhode Island law sets goals for the amount of affordable housing in all municipalities. The goal of having 10 percent of Cranston’s housing be affordable is simply not feasible. Cranston would need to construct 1,489 new affordable housing units to reach this goal, when it only issued about 60 new residential housing building permits in 2020. However, over a third of Cranston’s housing is apartments, and over 15 percent of these apartments are affordable. Therefore, Cranston should focus on the goal of having at least 15 percent of its apartments be affordable.

In order to get more affordable housing built, Cranston could sell to developers, though a competitive solicitation, some of its surplus property located in areas zoned for multi-family dwellings that are on or near a RIPTA route. Because, under the city charter, city property must be sold for at least 90 percent of its appraised value, it may not be economical for developers to build affordable housing on those locations. Therefore, a grant program could be established to assist developers in purchasing the land at 90 percent of its appraised value. As required by ordinance, the proceeds from the land sale would be used to reduce the city’s bonded debt. Simultaneously, Cranston could build more affordable apartments and reduce its bonded debt.

Lastly, two of the greatest tragedies of the covid pandemic were the loss of lives and our children’s learning loss. For almost a year, Cranston school children could not receive full in-person school instruction. Presumably, the best way to address learning loss is to increase the amount of in-person instruction time. This could occur through extending the school day, adding after school learning programs, funding summer school learning programs, or tutoring. The opportunity to get more in-person classroom instruction should be made available to all. There are few ways to better spend ARPA funds than on our children’s future.

Steven Frias is Rhode Island’s Republican National Committeeman, a historian, recipient of The Coolidge Prize for Journalism, and member of the Cranston Planning Commission.

spending, ARPA


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