Marshall Cautions Local Leaders on Proper Use of New Federal Funds

Attorney General Steve Marshall speaks at a news conference in Montgomery on April 13, 2021, as Lorelei Lein, general counsel for the Alabama League of Municipalities, looks on. (Source: Alabama Daily News)

MONTGOMERY — Alabama Attorney General Steve Marshall warned local governments Tuesday to use incoming funds from the federal American Rescue Plan Act in accordance with state law or be subject to criminal charges.

Marshall said during a press conference that the unprecedented amount of funds coming to counties and municipalities from the federal government automatically raised concern for his office.

“I’m not here to threaten anyone,” Marshall said. “I’m really here to plead with our government officials to please be careful. Don’t ever forget that the dollars you are spending are not yours; those belong to the taxpayers. I’m not sure that anything erodes public trust more than to see their leaders profit and line their own pockets with public money or to give that same money to members of their family.”

Marshall said government leaders need to avoid taking actions or casting votes that present a “conflict of interest” or would direct money for personal financial gain to them, family members or business partners.

Local governments should also avoid soliciting or accepting items of values, for themselves or family members, from lobbyists seeking to influence spending decisions.

Alabama Daily News reported in March that Alabama counties and municipalities would receive hundreds of millions of dollars under the ARPA. However, the law did not come with exact guidance or rules on how to spend the funds.

The act includes nearly $360 billion to help states, counties and cities. Alabama is getting $4.04 billion of that. About $951 million will go to counties and $779 million to municipalities.

Marshall advised local governments to review the state’s open meetings laws and take a refresher course of state ethics laws available on the Ethics Commission’s website.

Marshall said since funds have not reached the state yet, there have been no instances of misuse yet, but he wants officials to be prepared.

Sonny Brasfield, executive director of the Association of County Commissions of Alabama, said the commission has resources available to help counties if they have any questions.

“We work very hard to create a sense of responsibility that extends beyond the ethics law,” Brassfield said. “Ethical conduct extends to making sure that the public has confidence in the decisions that you are making.”

According to the National Conference on State Legislatures, local governments can use the new money to:

  • Address the pandemic’s economic effects, including aid to households, small businesses, nonprofits and industries such as tourism and hospitality.
  • Provide premium pay to essential employees or grants to their employers.
  • Provide government services affected by a revenue reduction resulting from COVID-19.
  • Make investments in water, sewer and broadband infrastructure.

There are things the new money can’t be used for, including funding pensions or offsetting revenue resulting from a tax cut enacted since March 3. Money must be spent by the end of 2024.

The act also says funds allocated to local governments can be distributed to households and businesses, but Marshall said state law prevents that from happening.

Marshall pointed to Section 94 of the Alabama constitution on Tuesday which says “the Legislature shall not have power to authorize any county, city, town, or other subdivision of this state to lend its credit, or to grant public money or thing of value in aid of, or to any individual, association,” and so on.

In April of last year, Marshall cited the same law in an opinion that said counties and municipalities could not give grants or loans to small businesses hurt by the pandemic unless the money would “serve a public purpose rather than merely confer a private benefit.”

Marshall said that same rule applies to these new funds, as well.

Violations of state ethics laws can result in a 2- to 20-year sentence in prison, Marshall said.

Lorelei Lein, general counsel for the Alabama League of Municipalities, said on Tuesday that they were still waiting on more guidance from the U.S. Treasury on how funds can be spent, but she said it’s clear meetings regarding the funds are subject to the Alabama Open Meetings Act.

“We are going to be deciding at the end of the day what (municipalities) are going to be spending this money on and how it would be subject to the open meetings act and would have to hold those,” Lein said.