As the American Rescue Plan moves forward, local governments should act now to support communities

Since the start of the pandemic, state and local governments across America have needed federal support to help combat COVID-19 in their communities. In terms of impactful federal funding, if the Coronavirus Aid, Relief, and Economic Security (CARES) Act was Round 1, then the proposed $1.9 trillion American Rescue Plan (ARP) is Round 2.

For local governments, territories and tribes, the ARP will require a significant amount of strategy, planning and risk awareness. Let’s start by making sure we are all on the same page regarding what the ARP is and what you need to know now.

The basics and the benefits

The ARP is a $1.9 trillion relief package proposed by President Joe Biden with the purpose of aiding individuals and communities throughout the country. All state and local governments will have access to non-competitive funding from the U.S. Department of Treasury (Treasury). Allocations will be determined formulaically by population. Larger cities and counties are expected to receive payments directly from Treasury within 60 days of certification of need. Non-entitlement communities (generally, those with less than 50,000 in population) can expect a formulaic distribution by population, distributed by their state within 30 days of receipt from Treasury, if unextended. The legislation is anticipated to be signed into law as close as possible to March 14, 2021, as unemployment benefits begin to phase out. Additionally, funding will be available across most federal agencies through competitive grant applications.

As we compare the ARP to the CARES Act, we see several important differences this time around, all of which are positive and appear to allow for more flexibility. The primary anticipated differences are:

• There is more funding potentially available
• The spending deadline is Dec. 31, 2024
• The funds can now be applied to lost revenue
• There is more focus on addressing economic impacts of the pandemic

What we learned from the CARES Act

It’s important for local governments to mobilize early to develop a plan for spending the funds to help ensure allocations are spent timely and on necessary objectives.

Assessing the risk involved with the eligibility of each potential expenditure is a critical part of this process that may require professional assistance, depending on your team’s depth of expertise in this area.