Treasury Department Provides Initial Guidance for the Distribution of $350 million in State and Local Aid

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On Monday May 10, the U.S. Department of Treasury released guidance on the State and Local Coronavirus Fiscal Recovery Fund (Recovery Fund), as part of the American Rescue Plan Act. Included in the guidance is the flexibility to use Recovery Funds to invest in broadband infrastructure, services and programs to contain and mitigate the spread of COVID-19, including capital investments in public facilities, investments in housing and neighborhoods and other guidance counties advocated for. The U.S. Treasury also opened a new web portal that state and local governments must use to receive Fiscal Recovery Funds.

HOW TO REQUEST FUNDING

Eligible state, territorial, metropolitan city, county, and Tribal governments may now request their allocation of Coronavirus State and Local Fiscal Recovery Funds through the Treasury Submission Portal. Eligible local governments that are classified as non-entitlement towns, cities and counties – generally local governments with fewer than 50,000 residents — should expect to receive this funding through their state government — rather than Treasury and should not request funding through the Treasury Submission Portal.

Metropolitan city has the meaning given that term in section 102(a)(4) of the Housing and Community Development Act of 1974 (42 U.S.C. 5302(a)(4)) and includes cities that relinquish or defer their statues as a metropolitan city for purposes of receiving allocation under section 106of such Act (42 U.S.C. 5306) for fiscal year 2021.[1]

Nonprofit unit of local government means a “city,” as that term is defined in section 102(a)(5) of the Housing and Community Development Act of 1974 (42 U.S.C. 5302(a)(4)), that is not a metropolitan city.[2]

FUNDING AMOUNTS

Congress has allocated Coronavirus State and Local Fiscal Recovery Funds to tens of thousands of eligible state, local, territorial, and Tribal governments.  These allocations include:

Recipient:

Amount (Billions):

States & District of Columbia

$195.3

Counties

$65.1

Metropolitan Cities

$45.6

Tribal Governments

$20.0

Territories

$4.5

Non-Entitlement Units of Local Government

$19.5

 

DISTRIBUTION OF FUNDING

Local governments will receive funds in two tranches, with 50% provided beginning in May 2021 and the balance delivered approximately 12 months later. States that have experienced a net increase in the unemployment rate of more than 2 percentage points from February 2020 to their date of certification will receive their full allocation of funds in a single payment; other states will receive funds in two equal tranches. U.S. territories will receive a single payment. Tribal governments will receive two payments, with the first payment available in May and the second payment, based on employment data, to be delivered in June 2021.

Additional Information on Split Payments to State Governments

USE OF FUNDING

The Coronavirus State and Local Fiscal Recovery Funds provide eligible state, local, territorial, and Tribal governments with significant funding to meet pandemic response needs and build a stronger, and more equitable economy as the country recovers. Recipients may use these funds to:

  • Support public health expenditures, by, for example, funding COVID-19 mitigation efforts, medical expenses, behavioral healthcare, and certain public health and safety staff;
  • Address negative economic impacts caused by the public health emergency, including economic harms to workers, households, small businesses, impacted industries, and the public sector;
  • Replace lost public sector revenue, using this funding to provide government services to the extent of the reduction in revenue experienced due to the pandemic;
  • Provide premium pay for essential workers, offering additional support to those who have and will bear the greatest health risks because of their service in critical infrastructure sectors; and
  • Invest in water, sewer, and broadband infrastructure, making necessary investments to improve access to clean drinking water, support vital wastewater and stormwater infrastructure, and to expand access to broadband internet.

Within these overall categories, recipients have broad flexibility to decide how best to use this funding to meet the needs of their communities.

NARC will release more information on Treasury’s new guidance in the coming days.

______________

[1] Treasury Guidance. Interim Final Rule. Page 134

[2] Treasury Guidance. Interim Final Rule. Page 134

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