Washington County And The State Of Tennessee Misappropriate $2M In Federal ARPA Funds (Op-Ed)

Image Credit: washingtoncountytn.org

Submitted by Concerned Tennessee Citizen –

Washington County, Tennessee voted in January 2023 to provide $2.0 Million of American Rescue Plan Act (ARPA) funds to a meat packing plant to be built in Washington County named Appalachian Producers Cooperative (APC). The ARPA funds are federal and are administered by the U.S. Treasury with dual oversight by State governments and the US Treasury department. APC has yet to break ground on construction.

In reviewing the ARPA guidelines (available here in an overview format), Washington County’s usage of $2.0 Million of ARPA funds is not allowed.

Washington County decided to utilize the ‘Revenue Loss’ section of ARPA regulations as justification for providing the funds. ARPA regulations detail ‘Revenue Loss’ funding must be used for government services. Providing meat packing services is not a normal government service.

It is clear the true intent for using the funds is general economic development, which is not allowed under ARPA regulations. To muddy the situation further, Washington County is using a local non-profit organization as the conduit to send the funds to APC. ARPA guidelines allow support of non-profits, but in this case, it is being used as a disguise to conceal the fact that ARPA funds are being allocated to a private meat packing plant. The local non-profit will not benefit monetarily at all with this arrangement.

This is damning evidence the County, in conjunction with the State, knows full well the use is not allowed, otherwise they would provide the funds directly to APC.

A concerned Washington County citizen has been actively involved in highlighting the unallowed use of the funds at the County, State and Federal levels. The County and State officials involved to date have made various excuses and irrational reasoning to explain how the use is justified by the ARPA act. The citizen has refuted each argument presented by citing facts in the ARPA act itself to counter this improper use.

During a May 2023 meeting in Nashville, which was attended by the State Comptroller, the concerned citizen presented multiple fact-based reasons this use of monies was not allowed with ARPA funds. The State Comptroller cited his office believes this use of funds is a very appropriate use and once a county receives ARPA funds into general revenue, they can be used for any purpose.

The State Comptroller went even further and shared his personal belief that “this is the best use of ARPA funds I’ve seen in the State of Tennessee and this office fully supports the use”. Personal belief as to whether the use is good is not the question, rather the right question is what is allowable under the ARPA regulations. The statement made by the Comptroller demonstrates personal bias in favor of the project. Additionally, the belief espoused ‘ARPA funds once accepted into general revenue can be used for anything desired’ is not found anywhere in the ARPA act itself and is a misrepresentation being used to justify questionable expenditures of ARPA funds at both the County and State level in Tennessee.

The truth is the ARPA act itself is over 400 pages and contains many details, examples, guidelines and regulations on how ARPA resources may be used. Unfortunately, the misnomer that funds can be used for anything desired has pervaded and been accepted by too many government officials.

Most interestingly, the founders of APC are not on record as contributing even one penny to the construction of the APC plant. The founders cite numerous economic advantages to livestock producers by having the plant, including the ability to expand their operations and profits, but are not providing any money to build the operation. 

The concerned citizen has twice contacted the State Comptroller to point out the loss of objectivity regarding this particular use of funds and has asked them to make a referral to the State of Tennessee Treasurer and/or State of Tennessee Attorney General for review and consideration of the use, given the apparent loss of objectivity.

To date, there has been no response from the State Comptroller nor any of the multiple elected State Representatives and Senators copied on these communications.

The concerned citizen has been in contact with both State of Tennessee U.S. Senators on multiple occasions to solicit their involvement and they have to date refused to take any action. The concerned citizen has also contacted U.S. Representative Harshbarger’s staff, who represents Northeast Tennessee, and has received lukewarm interest. No action has been taken by her office at this time.

The concerned citizen has been in contact with the Inspector General’s office for the U.S. Treasury department and information has been shared. At this time the office is actively considering investigating this use, but they will make no other comment. 

The APC plant itself is projected to cost $10.0 Million to build. The plant has received a $1.0 Million government grant, awaits approval of an additional $2.0 Million grant, $2.0 Million of Washington County allocated ARPA funds and a $5.0 Million loan from a consortium of banks led by Bank of Tennessee is the funding plan for the plant. A 2019 University of Tennessee study  on regional meat packing plants such as APC demonstrates that with good management a plant such as APC can be a financial success with 100% financing. Certainly, APC could build this operation without the $2.0 Million of ARPA funds by having founders contribute capital, solicit other funding, or a combination these two ideas.  

Washington County has a projected Fiscal 2023 budget shortfall of $7.8 Million, which makes the misuse of the local ARPA Revenue Loss funds even more concerning. It is very likely Washington County taxpayers will be seeing tax increases in Fiscal 2024 which will be larger than necessary due to the misuse of $2.0 Million for APC. This misuse could still be corrected, but there seems to be no interest in this at the County and State level.

Concerned citizens who live in Washington County should contact their local County Commissioner and County Mayor as well as their state wide elected officials.

The founders of APC have also approached neighboring Sullivan County for funding and these citizens should also contact their local officials, as well as their State representatives and senators to voice their opinions.

Lastly, contacting the State Comptroller’s office as well as the U.S. Treasury and other federal officials may be helpful. Encourage public officials to read the ARPA Overview for themselves rather than relying on others to read and summarize it for them.