News Photo by Steve Schulwitz Alpena County Commissioners Bill Peterson, left, Bob Adrian, center, and Brenda Fournier browse the proposed 2023 budget during a special meeting on Tuesday.

ALPENA — The Alpena County Board of Commissioners faces an uphill battle to reduce a growing deficit and could continue to use millions of dollars it received from the federal government to do so.

On Tuesday at a special budget meeting, the commissioners took the initial steps to craft the 2023 budget and discussed how best to utilize money it received from the federal government’s American Rescue Plan Act.

Commissioners also sorted through the proposed capital improvement projects the county can afford to do next year.

Although it wasn’t decided at the meeting, it appears likely commissioners could elect to use $800,000 from its ARPA stimulus money to trim a large projected deficit in the neighborhood of $1.5 million at the end of the year.

The board did the same last year to reduce a deficit late in 2021.

Treasurer Kim Ludlow said the county could cut into the deficit more before year’s end, but still projects the budget shortfall will be around $1 million.

Ludlow said the draft budget the commissioners were presented predicts a budget shortfall of more than $1.9 million at the end of next year, which means additional ARPA may be needed to plug holes in the county’s $12 million budget or drastic cuts may be needed.

The county is considering a different approach for spending the ARPA money because of restrictions on how the money can be used. The commissioners next year could choose not to deposit the ARPA funds into the general fund and instead use the money as needed from the account it’s currently in.

County Administrator Mary Catherine Hannah said the money can’t be used to pay off debt or unfunded financial liability. She said because the funds are placed into the general fund and blended with money that can be used for any expense, she believes properly recording how the money is used is important, should the federal government ever have questions about the use of ARPA money.

“It just makes me a little nervous about just transferring all of the money into the general fund, because, obviously, we spend general fund dollars on those things,” Hannah said. “I think it makes more sense to leave it in its own fund and move it as we need it.”

The county has until the end of 2024 to decide how to utilize the funds and until the end of 2026 to spend it all.

For the last year, the county has been putting together a capital improvement plan that will help commissioners plan and prioritize projects and purchases for the next several years. The plan can be amended each year based on affordability and need.

The plan isn’t finalized yet because the county’s Planning Commission still needs to sign off on it, as does the Board of Commissioners.

Still, the commissioners on Tuesday had a list of the projects in the plan and began filtering through them to see which ones they can afford next year.

The commissioners also discussed how best to use $250,000 it will receive from the sale of the old county jail. The county this summer accepted a bid from Alpena Marc LLC, which intends to construct small drive-thru locations.

One consideration was to add money into their equipment fund, the building and maintenance fund, and deposit some into the general fund.

The county’s annual budget runs from Jan. 1 through Dec. 31 and more budget workshops will be scheduled.