Soon, state and local governments will have more freedom to use the billions of dollars allocated by the federal government for coronavirus relief for purposes unrelated to the pandemic, such as building new roads and bridges and providing assistance to those affected by wildfires, floods, and other natural disasters.
One of the many stipulations included in the recently passed $1.7 trillion spending package for the federal government’s fiscal year 2023 was the expanded spending authorization for the pandemic help that had already been approved.
It comes after more than a year of lobbying by city, county, and state officials for more freedom in utilizing a $350 billion aid fund established by President Joe Biden and the Democratic-led Congress in March 2021.
To help cover the costs of responding to COVID-19, stabilize government finances, and engage in longer-term programs to strengthen communities, the American Rescue Plan act provided federal aid for all levels of government, from states and territories down to small towns and villages.
Though the U.S. initially launched the program, it had a lot of freedom.
Treasury Department, the money could only be used for certain things.
After the Treasury issues updated guidelines, the newly enlarged spending options are anticipated to take effect by the end of February.
According to Brittney Kohler, legislative director for transportation and infrastructure at the National League of Cities, “I think it supercharges the ARPA monies to be as effective as possible.”
She continued that this is a tremendously helpful tool to maximize every federal budget.
States and local governments could use their federal pandemic relief funds, by the revised spending rules, to provide the local matching sum required to obtain additional federal grants for road and transportation projects, including some funded by the Infrastructure Investment and Jobs Act signed by Biden in November 2021.
For such transportation infrastructure, governments may use up to $10 million or 30% of their American Rescue Plan amount, whichever is higher.
There is no limit on how much of their allotment may be used to provide temporary accommodation, food, and financial aid during a natural disaster.
The Federal Emergency Management Agency already offers catastrophe relief to governments.
According to Susan Frederick, senior federal relations counsel at the National Conference of State Legislatures, “the procedure at FEMA can be time-consuming and a little cumbersome.”
“The states would be able to access these funds without having to jump through all the hoops in a more timely manner.”
According to Mark Ritacco, the National Association of Counties’ top government affairs officer, there are currently federally declared disasters in around one-fourth of the nation’s counties.
If the county redirected local monies that could have been used to alleviate disasters, a natural disaster “may have been worse due to the country’s focus on the COVID-19 epidemic,” Ritacco said.
Larger governments that earned more than $10 million under the American Rescue Plan will primarily benefit from the increased flexibility.
The reason for this is a Treasury Department rule that was published a year ago allowed all governments to assume up to $10 million in revenue losses caused by the pandemic in exchange for spending an equal amount on general government services, which could be interpreted to include building roads or providing disaster relief.