American Rescue Plan Act
The American Rescue Plan Act’s (ARPA) $350 billion State and Local Fiscal Recovery Fund distributes federal relief to every US state, local, territorial, and Tribal government. This once-in-a-lifetime infusion of flexible funding can help catalyze broader community recovery and rebuilding by addressing the immediate and long-term negative health and economic impacts of the COVID-19 pandemic, particularly on low-income communities and people of color.
The American Rescue Plan Act’s (ARPA) $350 billion State and Local Fiscal Recovery Fund is being administered by the Department of the Treasury. On May 17, 2021, Treasury issued an Interim Final Rule containing detailed regulations interpreting statutory language contained in ARPA. In it, Treasury reiterates that Congress’ goal in allocating these ARPA funds to state and local governments was to give “States, local and Tribal governments […] broad latitude to choose whether and how to use the Fiscal Recovery Funds to respond to and address the negative economic impact” of the COVID-19 health and economic crisis. In order for a proposed use to be eligible, grantees must identify an economic harm that resulted from or was made worse by the COVID-19 public health emergency, and then demonstrate how the proposed use of ARPA funds reasonably and proportionally responds to that harm.
Funds must be obligated by December 31, 2024 and expended by the end of 2026. Local governments will receive funds in two equal payments, with the first half coming as soon as May 2021 and the balance delivered approximately 12 months later. For state allocations, those states that have experienced a 2% or more net increase in the unemployment rate from the start of the pandemic should have received their full allocation of funds in a single payment; states that did not meet this criterion should receive funds in two equal tranches 12 months apart. Territorial governments will receive a single payment. Tribal governments should have received their full allocations by June 2021.
Not only is this the first time the federal government has provided direct aid to all 19,000 local governments, but this will also likely be the largest single infusion of flexible federal funding many communities have ever received and are likely to receive for the foreseeable future. It represents a unprecedented opportunity for cities, counties, and states to make truly transformative investments; if ever there was a time for bold, strategic action, this is it.