The American Rescue Plan Act of 2021 included significant funds for state, local and other municipal governments, including both direct funding from the U.S. Department of Treasury and other funds that are to be distributed through other federal agencies. These funds are purportedly guaranteed to go to every local government, with programmatic funds going to states and local entities that meet certain eligibility requirements.
Who’s Eligible
State governments and the District of Columbia will receive a total of $219.8 billion, with cities and counties receiving $130.2 billion, and $65.1 billion going to counties. An additional $45.57 billion will go to cities with more than 50,000 in population. For cities under 50,000, funds will be allocated according to population. Finally, $20 billion is slated for U.S. territories and tribal governments. Importantly, for smaller cities the payments cannot exceed 75 percent of a city’s annual budget as of January 27, 2020.
How Can the Funds Be Used?
The funds can be used for the following purposes:
- To respond to the coronavirus health impacts or its economic impacts, including assistance to households, small businesses, nonprofits and industries impacted by the pandemic and its disruptions, such as hospitality, travel and tourism.
- To assist businesses in providing “premium pay” for essential workers—up to $13 per hour and with an annual cap of $25,000.
- To cover for lost revenue in providing services to businesses and citizens throughout the pandemic and ongoing.
- To make capital investments in water, sewer or broadband infrastructure.
- The bill also establishes a $2 billion fund to cover shortfalls for governments that revenue share with the federal government.
Funds cannot be used to cover lost revenues if the losses were the result of lost revenues due to a community-initiated tax cut, and funds cannot be used to cover pension shortfalls.
How to Apply
Grants are being distributed according to a formula outlined in a document provided by the Treasury department. Under the Housing and Community Development Act of 1974, the Community Development Block Grant (CDBG) makes allocations for metropolitan cities and urban counties according to a formula that uses several objective measures of community needs, including the extent of poverty, population, housing overcrowding and age of housing. The American Rescue Plan provides that money be allocated to governments in an amount determined and “consistent with the CDBG formula.”
Cities eligible to receive American Rescue Plan Act funding directly from the U.S. Department of the Treasury may submit required information through the Treasury Submission Portal.
To complete a submission on behalf of your jurisdiction, you will be asked to provide the following information:
- Jurisdiction name, taxpayer ID number, DUNS Number, and address
- Authorized representative name, title and email
- Contact person name, title, phone and email
- Funds transfer information, including recipient’s financial institution, address, phone, and routing number and account number
- Completed award terms and conditions (to be signed by an authorized representative of the entity)
Jurisdictions must submit a request to receive funding even if they have previously applied for other programs through the Treasury Submission Portal. Eligible jurisdictions will receive further communications regarding the status of their submission via the email address provided in the Treasury Submission Portal.
For a detailed explanation of the Act’s applicability to state and local governments, the U.S. Department of Treasury has published this fact sheet, which is a useful overview of the plan’s objectives and processes.
