In early January, the US Treasury issued the anticipated Final Rule outlining guidelines for the American Rescue Plan Fiscal Recovery Funds Program. The guidelines go into effect on April 1, 2022, and provide expanded use of the funds. Some of the biggest takeaways:
- Recipients can choose between two options for how to determine their amount of revenue loss, which may be especially helpful to smaller governments. They may elect a “standard allowance” of $10 million or they may calculate their actual revenue loss according to the formula in the final rule. The revenue loss replacement category is the most flexible spending category under the SLFRF and can be used for government services or anything traditionally provided by local governments. This category is a significant benefit to small governments as their allocation is likely under the $10 million amount and offers streamlined reporting and maximizes the allowable use of their funds.
- The final rule clarifies that local governments can use funds for capital expenditures that support an eligible COVID-19 public health or economic response.
- The final rule is consistent with the interim rule regarding spending restrictions. Governments may not use funds on pension fund liabilities, replenish reserves, debt service obligations or payments for settlements or judgments.
While the guidelines officially go into effect on April 1, 2022, governments have flexibility and protections in the interim as they do not need to wait until April to take advantage of the changes and expanded eligibility and can start spending according to the rule immediately. Governments will not be penalized with enforcement action before April 1, so long as the expenditures align with the final rule guidelines and eligibility.
For more information go to: https://www.gfoa.org/treasury-issues-final-rule-for-arpa-state-and-local