Government organizations applaud bipartisan ARPA flexibility legislation

City and county organizations are lauding the Senate’s approval of a bipartisan initiative that codifies into law the U.S. Treasury’s final rule allowing communities the flexibility to allocate up to $10 million in American Rescue Plan funding toward general government services. The measure, called the Bipartisan COVID Supplemental Appropriations Act, would also allow local governments to allocate up to 30 percent of recovery funds for eligible transportation projects, certain grant projects and disaster relief. 

“The National League of Cities commends Senate Majority Leader Charles Schumer (D-NY) and Sen. Mitt Romney (R-UT) for their bipartisan leadership to advance a COVID spending bill that ensures we remain vigilant in our pandemic response without reducing essential aid for fiscal recovery in cities and towns,” said National League of Cities (NLC) Executive Director Clarence Anthony in a statement. 

The added flexibility, which advocacy organizations have been promoting for months, represent “a significant win for counties as intergovernmental partners,” according to a statement from the National Association of Counties (NACo).  

There is, however, a drawback in the Senate’s approved package: “The text, as introduced, reduces the Local Assistance and Tribal Consistency Fund authorized under the American Rescue Plan.” 

When it was first introduced under the American Rescue Plan, the fund was intended to stabilized counties and Tribes with large tracts of untaxable federal public lands. An error in the rollout has so far prevented those eligible governments from receiving funds, NACo’s statement says. And while the Senate’s legislation does clarify the drafting error—the funds will be directed to over 1,900 counties currently receiving Payments In Lieu of Taxes from the federal government—it also reduces the funding level from $1.5 billion to $826 million. 

An overview issued by Congress notes it’s intended “to help smaller governments comply with program requirements. This bill will also allow Tribal governments additional time to use CARES Act Coronavirus Relief Fund allocations.” 

The flexibility is important, Anthony said, because it gives local governments “expanded authority to use a portion of their ARPA recovery funds for transportation, CDBG-eligible activities, and disaster response. This no-cost provision helps communities meet their recovery priorities more holistically, removes hurdles for small and disadvantaged communities to leverage federal infrastructure programs, and simplifies compliance during emergencies like natural disasters.”