In March of last year, the $1.9 trillion American Rescue Plan was passed in an attempt to mitigate the effects of the COVID-19 pandemic. As part of the Plan, $130.2 billion was allocated for local governments under the Coronavirus Local Fiscal Recovery Fund.
The Fund listed four overarching guidelines that govern how local governments are to use the funding.
They are as follows:
- To respond to the negative impacts of COVID-19, including assistance to households, small businesses, and nonprofits, or aid to impacted industries such as tourism, travel, and hospitality
- To respond to workers performing essential work during the COVID–19 public health emergency by providing premium pay to eligible workers that are performing such essential work, or by providing grants to eligible employers that have eligible workers who perform essential work.
- For the provision of government services to the extent of the reduction in revenue due to the COVID-19 public health emergency relative to revenues collected in the most recent full fiscal year prior to the emergency
- To make necessary investments in water, sewer, or broadband infrastructure.
The description of the use of funds was very broad, however, leaving many municipalities unsure as to how they were allowed to allocate spend. To provide more clarity, a final rule was released this month specifying the parameters that municipalities had under the four overarching guidelines.
In regard to the third guideline, the final rule states that funding may be used to improve the efficacy of public health and economic programs through tools like program evaluation, data, and outreach, as well as to address administrative needs caused or exacerbated by the pandemic.
The final rule specifies that this includes technology infrastructure to improve access to and the user experience of government IT systems, as well as technology improvements to increase public access and delivery of government programs and services.
50 percent of allocated funding was distributed to local governments beginning in May 2021, with the other 50 percent to be distributed beginning in May of this year.
Read more about the final rule from the US Treasury here.
