On Monday, the U.S. Department of Treasury opened the first round of the American Rescue Plan’s Fiscal Recovery Fund for states, counties, and metropolitan cities, and it released guidelines on how state and local governments may use funds.
The State of Oregon’s share of the Coronavirus State Fiscal Recovery Fund was revised upward from initial estimates. The State’s fiscal recovery fund, to which SDAO continues advocating for special districts’ access, will be $2.68 billion. A list of county allocations is available here, and a list of metropolitan city allocation is available here.
Oregon’s non-entitlement units of local government (generally cities with fewer than 50,000 residents) will receive a total of $248 million but must apply to the State to receive their allocations. SDAO continues to advocate that a share of the State’s $2.68 billion be transferred to special districts, but at this point we do not have any assurances that this will happen. If you have not responded to our prior calls to action by contacting the Governor and legislative leadership please do so, it’s not too late!
Treasury’s rules for the program also specifically references special districts as eligible for funding transfers. The guidance states:
“By permitting these transfers, Congress recognized the importance of providing flexibility to governments seeking to achieve the greatest impact with their funds, including by working with other levels or units of government or private entities to assist recipient governments in carrying out their programs. This includes special-purpose districts that perform specific functions in the community, such as fire, water, sewer, or mosquito abatement districts.”
Treasury guidance further states that fire, water, wastewater, and mosquito abatement districts are not an exclusive set of eligible services transfer-eligible units of local government may provide.
The American Rescue Plan Act allows state and local fiscal recovery funds to be used for COVID-19 expenditures and responses to the economic downturn, revenue losses, providing premium pay for essential workers, and “necessary investments” in water, wastewater, and broadband infrastructure.
Under the May 10 guidance, Treasury states that “recipients have broad flexibility to decide how best to use this funding to meet the needs of their communities”. Treasury outlines the parameters for the use of funds as follows:
- Support public health expenditures, by, for example, funding COVID-19 mitigation efforts, medical expenses, behavioral healthcare, and certain public health and safety staff. Treasury guidance builds upon the Coronavirus Relief Fund’s (CARES Act) eligible use of funds. This includes, but is not limited to:
- COVID-19 vaccination, testing and contract tracing programs.
- Enforcement of public health orders.
- Public communication efforts.
- Purchase of personal protective equipment and sanitization.
- Payroll and benefits of workers directly responding to COVID-19, e.g. medical staff, fire fighters.
- Address negative economic impacts caused by the public health emergency, including economic harms to workers, households, small businesses, impacted industries, and the public sector.
- Treasury guidelines allow utility assistance and emergency burial coverage as part of “household assistance”.
- Treasury will also allow funds to be spent on rehiring state, local and tribal government staff.
- Replace lost public sector revenue, using this funding to provide government services to the extent of the reduction in general revenue experienced due to the pandemic.
- The most recent full fiscal year prior to the public health emergency may be used.
- “General revenue” includes revenue collected by a recipient and generated from its underlying economy and would capture a range of different types of tax revenues, as well as other types of revenue that are available to support government services.
- Under the guidance, “intergovernmental transfers between state and local governments” may be included when calculating for revenue loss; however, federal transfers are excluded.
- Provide premium pay for essential workers, offering additional support to those who have and will bear the greatest health risks because of their service in critical infrastructure sectors.
- Workers in the sectors of healthcare, public health and safety, childcare, education, sanitation, transportation are included in guidelines; however, recipients of funds have discretion to add additional sectors to the list so long as they are deemed “critical to protect the health and well-being of residents.”
- Low-income workers should be prioritized.
- A recipient may provide up to $13 per hour, maximum $25,000, for eligible employees.
- Recipients would be required to publish an explanation of why any employee whose wage, with premium pay, totals 150 percent of the state’s average annual wage for all occupations, and how providing the worker with premium pay meets the goals of this provision.
- Recipients may grant funds to a contracted entity to provide contracted employees with premium pay.
- When calculating loss, governments may include what they expected to receive in revenues without COVID-19’s interference/impacts. In doing so, Treasury states:
- Recipients may use a growth adjustment of either 4.1 percent per year or the recipients’ average annual revenue growth over the three full fiscal years prior to the COVID-19 public health emergency, whichever is higher.
- Invest in water, sewer, and broadband infrastructure, making necessary investments to improve access to clean drinking water, support vital wastewater and stormwater infrastructure, and to expand access to broadband internet. Treasury states:
- A “necessary investment” would provide adequate, minimum levels of services that are unlikely to be made using private funds. Projects must maintain a level of services that:
- Meets applicable health-based standards
- Takes into account climate resiliency
- Establishes or improves broadband service to unserved or underserved populations.
- Eligible use of water and wastewater infrastructure investment is aligned with projects eligible to receive financial assistance through the Environmental Protection Agency’s Clean Water State Revolving Fund or Drinking Water State Revolving Fund.
- In addition to a focus on climate resiliency, Treasury encourages recipients to consider “green infrastructure investments.”
- Reporting requirements on how state and local governments utilize infrastructure projects will be offered in future guidance.