In a previous blog, Stock and Leader discussed the American Rescue Plan Act (“Act”) which provides $350 billion to state and local governments to help support budgets after the effects of the COVID-19 pandemic (“Pandemic”). At that time, there was limited guidance on how municipalities could use the funds. Fortunately, new guidance on the use of such the funds was recently released by the U.S. Treasury Department.
This guidance confirmed that the funds can be used over a period of a few years, ending on December 31, 2024. According to the statute, the purpose of the funds is to support public health emergency recovery for households and businesses, pay essential workers premium pay, replace revenue lost by the Pandemic, and invest in broadband, water, or sewer infrastructure. The guidance provides further detail as it relates to each of these topics along with specific restrictions to use of the funds.
Public Health Guidance
Local governments can help communities disproportionately impacted by the Pandemic as the guidance provides for flexible spending. The funds can be used for the following:
- Assistance to unemployed workers, including job training
- Payments to state unemployment insurance trust funds
- Assistance to households, including food and rent assistance
- Expenses to improve efficacy of economic relief programs, including data analysis
- Payments to support small businesses and non-profits, including:
- “Loans or grants to mitigate financial hardship…”
- “Loans, grants, or in-kind assistance to implement COVID-19 prevention or mitigation tactic…”
- “Technical assistance, counseling, or other services…”
- Rehiring state, local, and tribal government staff
- Aid, including Pandemic mitigation assistance, to impacted industries, such as tourism, travel, and hospitality
- “Building stronger communities through investments in housing and neighborhoods,” including:
- “Services to address homelessness…”
- “Affordable housing development…”
- “Housing vouchers, residential counseling, or housing navigation assistance…”
Hazard Pay Guidance
Hazard pay for essential workers is available for the following workers, who performed work in-person. These workers are included as eligible workers for premium pay:
- “Staff at nursing homes, hospitals, and home care settings”
- “Workers at farms, food production facilities, grocery stores, and restaurants”
- “Janitors and sanitation workers”
- “Truck drivers, transit staff, and warehouse workers”
- “Public health and safety staff”
- “Childcare workers, educators, and other school staff”
- “Social service and human services staff”
These eligible workers can be awarded up to $13 per hour, up to $25,000 in aggregate. Such payments can be made retroactively and prospectively. The preference is for lower-income workers to receive these funds as there are enhanced reporting requirements if funds are used to pay workers who make 150% of the state’s average wage.
The guidance identifies specific infrastructure projects for which the funds can be used. There are “[n]ecessary investments … designed to provide an adequate minimum level of service and are unlikely to be made using private sources of funds.” Such infrastructure includes:
- Water and sewer infrastructure “that would be eligible to receive financial assistance through the Environmental Protection Agency’s (EPA) Clean Water State Revolving Fund (CWSRF) or Drinking Water State Revolving Fund (DWSRF).”
- Broadband infrastructure projects that are “designed to provide services meeting adequate speeds and are provided to unserved and underserved households and businesses.”
Guidance on reporting requirements will come at a later date.
Use Restriction Guidance
The new guidance makes it clear that certain uses of funds are prohibited. These uses include:
- Deposits into pension funds
- Offsets to reductions in net tax revenue
- Matching funds for “Federal programs whose statute or regulations bar the use of Federal funds to meet matching requirements”
- “[C]ontributions to rainy day funds, financial reserves, or similar funds”
- Satisfaction of judgments, settlements or other legal decrees
This guidance allows for a flexible spending, but local governments need to make sure they are using the funds correctly. When reporting the allocation of funds, be mindful that, “[f]alse statements or claims made to the Secretary may result in criminal, civil, or administrative sanctions, including fines, imprisonment, civil damages and penalties, debarment from participating in Federal awards or contracts, and/or any other remedy available by law.” Further guidance is expected, and Stock and Leader’s Municipal Group will provide additional guidance on this issue when there is another update.