The American Rescue Plan, signed into law on March 11, 2021, included historic investments in county and municipal governments. But local government officials are still awaiting guidance from the Treasury Department on how exactly they can spend the $130.2 billion in aid.
The first tranche of aid is due to be released by May 10, 60 days after the bill’s signing. The second tranche will be dispersed no earlier than 12 months later. Local governments have over three years to spend the money, with a deadline of December 31, 2024.
“The eligible uses are broad,” said National Association of Counties (NACo) President Gary Moore in an April 22 membership call. According to the bill’s text, funds can be used for the following purposes:
- To respond to the coronavirus pandemic and its economic consequences;
- Providing premium pay to eligible essential workers, or grants to businesses that employ essential workers;
- To make up for reductions in revenue caused by the Covid-19 pandemic, relative to revenues collected in the most recent full fiscal year prior to the emergency; and
- to make necessary investments in water, sewer, or broadband infrastructure.
According to NACo’s website, allowable uses of the grants are not limited to the above four categories. The Treasury Department plans to release more detailed guidance and reporting requirements alongside the first tranche of funding.
Though many local governments are already making spending plans based on the above guidelines, others are taking a more conservative approach.
Minnesota county governments are risk averse in general, said Matthew Hilgart, government relations coordinator at the Association of Minnesota Counties. According to him, all local governments received in the way of CARES Act guidance was an FAQ sheet. “We were like ‘Really? This is it?” he said.
The message from the federal government was “If you screw up, you’re going to have to pay us back,” said Hilgart. Though counties are still moving slowly this go-around, “With these funds, it’s kind of a green light for some infrastructure and other investments that previously we were more cautious on.”
This time, counties and municipalities are receiving more counsel. On April 14, the Treasury Department established the Office of Recovery Programs, which is tasked with administering coronavirus relief aid, including the allocations to local governments. In a membership call the next day, NACo’s executive director Matthew Chase said the disbursement of state, local, and tribal aid is a focus of the new office.
For many small local governments, this aid represents a massive investment.
For example, Jefferson County, Illinois, is slated to receive $7.31 million, according to preliminary estimates from the House Oversight Committee. “It’s a pretty good chunk,” said the county’s Treasurer Bob Watt, “7.3 [million], it’s about 62% of our budget.”
According to the National League of Cities, there are many “informal” steps local governments can take to prepare for their grants. Municipalities should “get to know the community’s needs at all levels.” This includes considering the needs of residents, families, businesses, and all levels of government.
In some states, planning is already well underway. “It’d be fair to say there’s a lot of excitement,” said Hilgart. “And we’re telling our members, right now, just be ready to start your planning and brainstorming.”
There are also more technical steps that counties and municipalities should take before the funding is released.
Cities with populations under 50,000 need to ensure they have an active DUNS number—a nine-digit identification number issued by Dun & Bradstreet—according to the National League of Cities.
In addition to an active DUNS number, county governments should make certain they have an active SAM registration (System for Award Management). Counties can begin registration for the government-wide database at SAM.gov.
According to NACo, there are 116 counties without an active SAM registration. This could cause a delay in funding allocation, as SAM registration can take up to three weeks to process.
Throughout the disbursements, said Hilgart, communication between government entities is key. His message to local officials: “Start communicating and working with other local governments. We are going to need to work together and collaborate between counties, cities, and schools to supplement and complement our efforts.”