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'Where is this money going to come from': Local match rules keep rural communities from federal grants

Three Forks, Montana.
Photo courtesy of Headwaters Economics
An overcast day in Three Forks, Montana.

News brief

As natural disasters strike the Mountain West harder than ever, rural communities face some big financial barriers to recovery. But these communities can’t always get their hands on federal funds for climate resilience, according to research from Headwaters Economics.

The federal government has been offering competitive grants through the Bipartisan Infrastructure Law. But researchers found that more than 60% of the funding requires a local match – which means localities have to pay part of the cost.

Researchers visit Three Forks, Montana to learn about the town.
Photo courtesy of Headwaters Economics
Researchers from Headwaters Economics visit Three Forks, Montana to learn about the town.

Many of these grants require communities to pay 20% to 30% of the cost. And if the grant is millions of dollars, that local match can be hard to find, making it difficult to stay in the competition against metropolitan areas.

“We know that communities really struggle when a disaster hits, and we also know that these disasters are getting more frequent and more extreme,” said Kristin Smith, the head researcher on the Headwaters Economics study. “One of my big questions is how are we ensuring that rural and disadvantaged communities have the money, the staffing, the capacity, just the resources that they need for the future?”

Headwaters looked at Three Forks, Montana, as an example. The roughly 2,000-person town received over $4 million from FEMA last year to help with flood mitigation. But it had to come up with a 25% match, which was around $1.4 million.

Even if communities do secure grants, interest, labor and resources can cost them hundreds of thousands of dollars on top of the match. That happened with Three Forks – the cost of the engineering and planning was an extra $30,600. The interest was close to $850,000 for a 20-year bond issued to help cover local costs associated with the project. These types of expenses often keep communities from even applying for the grants.

“It's not as simple as just saying, ‘Well, we have $1,000,000 in the banking account, we'll just pay for it,’ because of course, a small town of 2,000 doesn't have $1,000,000 in the bank account,” Smith said. “And because Three Forks can't have a sales tax due to state law and there's not a lot of flexibility to raise property taxes, there's a big question like, where is this money going to come from?”

Some of these federal grants also highlight inequities in the system itself. FEMA’sBuilding Resilient Infrastructure and Communities program, or BRIC, is a competitive grant program that gives money to communities to address natural disaster risks. Yet, it ranks communities higher if they pay more than the match amount, according to the research.

Smith said this results in a downward spiral for rural communities.

“These are likely places that have already been left behind, that have maybe seen decreasing populations, and it doesn’t have to be like that,” she said. “There are other ways that we can better support our rural communities to make sure that they have the resources they need.”

Some states are trying to help with this issue. Colorado allocated about $80 million to the Infrastructure Investment and Jobs Act Cash Fund to help provide local matches. New Mexico, Utah and Nevada provide money for the same purpose.

Beyond lowering the local match cost or increasing state funding for matches, Smith said it might be time to rethink this model for rural communities and provide other ways to give money to local governments.

“We know that the local match is part of the problem and it is creating inequities,” she said. “As federal agencies are rethinking these systems, they need to be thinking about how to fix the local match requirement so that resources are easier to access for all of our communities.”

This story was produced by the Mountain West News Bureau, a collaboration between Wyoming Public Media, Nevada Public Radio, Boise State Public Radio in Idaho, KUNR in Nevada, the O'Connor Center for the Rocky Mountain West in Montana, KUNC in Colorado, KUNM in New Mexico, with support from affiliate stations across the region. Funding for the Mountain West News Bureau is provided in part by the Corporation for Public Broadcasting.

I'm the General Assignment Reporter and Back-Up Host for KUNC, here to keep you up-to-date on news in Northern Colorado — whether I'm out in the field or sitting in the host chair. From city climate policies, to businesses closing, to the creativity of Indigenous people, I'll research what is happening in your backyard and share those stories with you as you go about your day.
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