Treasury Provides Guidance on State and Local COVID-19 Aid

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On Monday, the U.S. Department of the Treasury (Treasury) launched the  Coronavirus State and Local Fiscal Recovery Funds  (CSLFRF) program. The program was first authorized under the American Rescue Plan Act (ARPA). CSLFRF provides $350 billion in emergency funding for eligible state, local, territorial, and tribal governments to help turn the tide on the pandemic, address economic fallout, and establish a foundation for recovery. Guidance has also been issued, providing clarity on a broad range of spending options eligible under the American Rescue Plan.

Funds are intended to be utilized by state and local government to:

  • Support urgent COVID-19 response efforts to continue to decrease spread of the virus and bring the pandemic under control;
  • Replace lost revenue for eligible state, local, territorial, and Tribal governments to strengthen support for vital public services and help retain jobs;
  • Support immediate economic stabilization for households and businesses; and
  • Address systemic public health and economic challenges that have contributed to the inequal impact of the pandemic.

Under ARPA, states and the District of Columbia will receive $195 billion, counties will receive $65 billion, cities will receive $46 billion, and tribal governments will receive $20 billion. Allocations were determined by unemployment rates, with most receiving funds with two equal tranches. However, states that have seen their unemployment rates increase by 2% or more since February will receive funds in a single payment. These states include Arizona, California, Colorado, Connecticut, Delaware, District of Columbia, Florida, Hawaii, Illinois, Louisiana, Maryland, Massachusetts, Nevada, New Jersey, New Mexico, New York, North Carolina, North Dakota, Oregon, Pennsylvania, Rhode Island, South Carolina, Tennessee, Virginia, Washington, and Wyoming.

Like states, local governments will also receive funding in two equal tranches, with the first payments beginning this month and the second half provided in a year.

Specific allocations are included below:

Relief funds must be spent as part of a state government wide calculation on total lost revenue and not solely based individual revenue sources, like a gas or sales tax. State and local governments may use funding to invest in water, sewer, broadband, and roadway infrastructure. Infrastructure investment eligibility is broad and can be used to make improvements to existing infrastructure, provide pay-go spending for building new infrastructure, as well as address the impacts of climate change. CSLFRF can also be used to replace lost government tax or fee revenues; support public health needs, including COVID-19 mitigation efforts; alleviate COVID-19 related economic hardship for businesses, workers, and affected industries; provide aid to hard-hit communities; and provide hazard pay for essential workers which include critical infrastructure sectors who regularly perform in person work. CSLFRF cannot be used to fill loss on debt services, rainy day funds, or pensions.

ASCE applauds Treasury’s efforts to provide much needed guidance on how ARPA state and local relief funds can be spent across our state and local governments. It is expected that further clarity will be provided in the near term, and additional resources are included below:

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