the american rescue plan act local funding discussion
TRANSCRIPT
The American Rescue Plan Act
Local Funding DiscussionMichael GleesonNational League of Cities
• For the first time all 19,000 municipal governments will be entitled to a
difference-making level of federal funds by formula, not competitive funding,
which will be allocated by the Treasury Department.
• The CARES Act went to cities with a population of greater than 500,000
• The rental assistant program passed in December went to cities with 200,000
or more people.
• This is Historic.
The Money For Cities, Towns and Villages
• Cities, Towns and Villages will split $65.1 billion.
• Entitlement Cities – generally those with populations greater than 50,000 - will
have funds distributed using the current Community Development Block Grant
funding formula. Entitlement Cities get $45.53 billion.
• Non-Entitlement Cities – distributed by the state on the basis of population.
Non-Entitlement Cities receive $19.57 billion
The Money For Cities, Towns and Villages
• When do Cities, Towns and Villages Receive the Money?
• The funds will be distributed in two tranches.
• The first tranche will go out 60 days from the signing of the law.
• The second tranche will go out one year later after the first tranche.
The Money For Cities, Towns and Villages
• How Cities Get Their Money?
• Entitlement Cities will receive a direct allocation from the Treasury
Department within 60 days of signing.
• Non-Entitlement cities will receive a pass through from their state within 30
days**.
The Money For Cities, Towns and Villages
• The CARES Act provided money to the top 34 cities directly. More than 6,000
Cities, Towns and Villages never received any CARES Act funding either from
their state or county.
• There is iron clad language in the statute that uses the word “shall” to ensure
that states pass the money though.
• However, the Secretary of Treasury can allow up to 120 days for the state to
pass through the money if they can show undue burden. Penalties on the
states if they do not share.
Non-Entitlements And Why This Is Not Like The CARES Act
• ‘‘(A) to respond to the public health emergency with respect to the Coronavirus Disease
2019 (COVID–19) or its negative economic impacts, including assistance to households,
small businesses, and nonprofits, or aid to impacted industries such as tourism, travel,
and hospitality;
• (B) to respond to workers performing essential work during the COVID–19 public health
emergency by providing premium pay to eligible workers of the metropolitan city,
nonentitlement unit of local government, or county that are performing such essential
work, or by providing grants to eligible employers that have eligible workers who perform
essential work;
• This allows a municipality to provide up to $13 per hour above regular wages.
Allowable Uses
• ‘‘(C) for the provision of government services to the extent of the reduction in revenue of
such metropolitan city, nonentitlement unit of local government, or county due to the
COVID–19 public health emergency relative to revenues collected in the most recent full
fiscal year of the metropolitan city, nonentitlement unit of local government, or county
prior to the emergency; or
• Key here: prior to the emergency. The base year against which you will measure lost
revenue happens not the most recent full fiscal year but the most recent full fiscal year
prior to the emergency.
Lost Revenue
• ‘‘(D) to make necessary investments in water, sewer, or broadband
infrastructure.
• A couple points:
• The term “or”. If this were “and” then all three might be allowed, but as I read this you
only get to make an investment in one of the categories.
• The investment does not need to be tied to the pandemic
• If you have infrastructure in one of these three buckets that needs upgrades, go for it.
Allowable Uses
• Recipient Governments can transfer funds to a:
• Private nonprofit organization
• a public benefit corporation involved in the transportation of passengers or cargo,
• or a special-purpose unit of State or local government.
Flexibility of Funds
• Non-entitlement cities may not receive more than 75 percent of the city’s most
recent budget
• Money may not be used for pension funds
• ‘‘(2) PENSION FUNDS.—No metropolitan city, nonentitlement unit of local government, or county
may use funds made available under this section for deposit into any pension fund.
• Money Remains Available until December 31, 2024
Restrictions
• In the House version, there was no reporting requirement.
• In the final version, ALL recipients of money will have to provide periodic
reports to Treasury.
• Recipients of “payment made under this section shall provide to the Secretary periodic reports
providing a detailed accounting of the uses of such funds by such metropolitan city,
nonentitlement unit of local government, or county and including such other information as the
Secretary may require for the administration of this section.”
Reporting
• NLC will begin working with the Treasury Department on the implementation
of this section of the American Rescue Plan Act, as well as work to make
suggestions on guidance.
• If you have any input or thoughts, you can email:
• Mike Gleeson | [email protected]
• Michael Wallace | [email protected]
Next Steps
QUESTIONS? GET IN TOUCH.
Michael Gleeson
Manager, Finance, Administration, and Intergovernmental Relations
NLC’s Federal Advocacy team
@LEAGUEOFCITIES