on Mar 12, 2021
What is in the American Rescue Plan for State and Local Governments?
Written by Erman Eruz
Yesterday President Biden signed the $1.9 trillion American Rescue Plan (ARP). As the third COVID-relief bill since March 2020, the ARP will deliver aid to millions in need, including $1,400 direct stimulus checks, expansion of unemployment insurance through September 6 with $300 per week in federal benefits, and an expanded child tax credit program, projected to cut child poverty in half.
In addition, the ARP will deliver over $500 billion in direct aid and other support to state and local governments, which were largely left out of the COVID-relief bill in December This includes:
- $350 billion in direct aid to State, local, and Tribal governments, and territories, more than doubling the $150 billion provided by the Coronavirus Relief Fund (CRF) in the Coronavirus Aid, Relief and Economic Security (CARES) Act. The new funds can be used with even greater flexibility, including for replacing revenues lost since January 2020, which was not allowed for CRF funds. Other potential uses include: aid to households, small businesses, nonprofits, and industries; investments in water, sewer, and broadband infrastructure; unemployment support and workforce development; and support to health facilities with the costs of protective equipment, testing and vaccination rollout; among others.
- $10 billion for a new Coronavirus Capital Projects Fund to carry out critical capital projects directly enabling work, education, and health monitoring, including remote options. Each state, Puerto Rico, and the District of Columbia will get $100 million, and the rest will be distributed based on total population, rural population, and proportion of low-income households. Broadband infrastructure investments are especially suited for the use of the funds. For example, Senator Chuck Schumer already announced that New York State’s share of the Fund will go towards the State’s Broadband Investment Program. The Secretary of the Treasury will establish a grant application process within two months. It is not yet clear who will administer the Fund.
- $3 billion in Economic Development Administration (EDA) Grants, double the $1.5 billion included in the CARES Act, to provide flexible funding that can help local governments, downtown organizations, nonprofit institutions, and others plan for recovery and make investments in small business, infrastructure, and economic development projects. 25% of the funding will assist communities that have suffered economic injury as a result of job losses in the travel, tourism, or outdoor recreation sectors. Although the funds will remain available until September 2022, most funding will likely be earmarked much sooner; as with the EDA funds in the CARES Act, Regional EDA Departments will seek to channel the funds to existing projects in the backlog or set up accelerated competitive grant procedures.
- $30.5 billion in Federal Transit Administration (FTA) Grants to help with operating costs, including payroll and personal protective equipment. The funds will be distributed using existing FTA programs, with $26.1 billion for the Urbanized Area Formula Grants and $1.7 billion for Capital Investment Grants. The funds will remain available until September 2024.
- $21.55 billion for Emergency Rental Assistance to augment funds provided to states, localities, and territories through the Coronavirus Relief Fund, to help families pay rent and utility fees. The new funds will add on to the $25 billion made available in the December 2020 COVID-relief bill. Assuming well-designed programs, the new funds could assist an additional over 4 million households for up to 6 to 9 months.
- $5 billion in emergency assistance to secure housing for the homeless, providing flexibility for both congregate and non-congregate housing options, helping jurisdictions purchase and convert hotels and motels into permanent housing, and helping communities provide supportive services.
- $5 billion in Emergency Housing Vouchers to transition homeless and at-risk population to stable housing. Funds will remain available until September 2030.
- $50 billion for the Federal Emergency Management Agency (FEMA) Disaster Relief Fund for 100% reimbursement to State, local, Tribal, and territorial governments dealing with ongoing response and recovery activities from the pandemic, including vaccination efforts, deployment of the National Guard, providing personal protective equipment for critical public sector employees, and disinfecting activities in public facilities such as schools and courthouses.
- $10 billion for the State Small Business Credit Initiative (SSBCI) Program, an Obama-era federal financing program that allows State governments to set up programs that can leverage private capital for low-interest loans, financing non-profits, and directly targeting collateral shortfalls, among other uses.
- $7.17 billion for the Emergency Connectivity Fund to reimburse schools and libraries for internet access and connected devices, administered by Federal Communications Commission (FCC).
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