The Treasury Department released its final rule for how governments can spend their American Rescue Plan fiscal relief funding and it creates even more flexibility than the interim rule did back in May 2021. The final rule is a whopping 437 pages and I won’t claim to have read all of it, but I did read most of it and skimmed the rest. This week’s newsletter covers the biggest changes and dives into some of the new uses for the funds.
But first, a plug for a fun webinar I’m doing at the end of this month with thought leader Nick Kittle on what we can learn from how governments spent their CARES Act funds. Join us!
More spending eligibility, less administrative burden for governments
The new rules make it easier for governments to direct spending where it’s needed without filing additional justifications and analysis. It does this in two ways.
First, it expands the set of households and communities that qualify as “impacted” or “disproportionately impacted” by the pandemic. Initially, Treasury said only households in qualified census tracts would be automatically considered “disproportionately impacted” and it was a little ambiguous on who was considered “impacted” by the pandemic. But now it’s more clear:
All low income households (earning up to 185% of the area federal poverty level) are automatically considered “disproportionately impacted.”
Moderate income households (earning up to 300% of FPL) or those that have experienced employment loss, or food or housing insecurity are automatically assumed to be “impacted.”
Second, the final rule also expands the eligible uses of ARP funds in these two categories. For example, it makes affordable housing, childcare, and early learning services eligible in all impacted communities and it allows spending on certain community development and neighborhood revitalization activities in disproportionately impacted communities.
Bottom line, this change is critical for small cities and towns, which often lie within a single census tract but have a wide array of incomes within their borders. Expanding these automatic designations means their small staff potentially won’t be burdened with additional justifications for ARP money spent on, say, the local Head Start program.
Other spending shortcuts are also in the final rule. Governments can:
Take a revenue loss allowance of up to $10 million without having to use Treasury’s complicated revenue loss calculation formula.
Use the ARP money that is replacing lost revenue for any government service, such as transit or transportation.
Spend up to $1 million on an eligible capital expenditure project without filing a spending analysis.
State and local governments also urged Treasury to expand the types of infrastructure they can spend ARP money on and they generally got their wish. The following are examples of some of those new opportunities and clarifications for spending within eligible communities.
Many of the categories below also represent new or expanded opportunities for private sector companies and nonprofits (particularly tech and infrastructure-related ones) to partner with government.
Dams, schools and sidewalks: Money for infrastructure
Keep reading with a 7-day free trial
Subscribe to Long Story Short to keep reading this post and get 7 days of free access to the full post archives.