NACo provides overview of U.S. Treasury final rule for Coronavirus recovery funds

The U.S. Treasury released the final rule for the State and Local Coronavirus Fiscal Recovery Fund (SLFRF) authorized under the American Rescue Plan Act (ARPA), which will go into effect on April 1, 2022.

During a recent membership call, the National Association of Counties (NACo) offered an overview of the final rule and discussed key highlights for counties. First, the rule has allocated $65.1 billion is direct, flexible aid to every U.S. County, and counties can choose to take advantage of the final rule’s flexibilities and simplifications ahead of the effective April 1 date.

The call was led by Matt Chase, NACo executive director, and Eryn Hurley, NACo deputy director of government affairs. Chase introduced the meeting by thanking NACo county officials across the country, who looked through the interim rule and helped NACo work with the Treasury toward the final rule. “We’ve got some major gains in this final rule, including the $10 million allowance for lost revenue that helps about 70 percent of all counties declare their allocation as ‘lost revenue’ and allows them to use it for more general uses,” he said.

In reviewing the key highlights of the final rule, Hurley said that counties who choose to use up to $10 million in ARPA Recovery Funds as “loss revenue” can use it for the provision of general government services without needing to use the Treasury revenue loss formula. Counties can allocate up to $10 million toward that category and use it for any government service.

According to NACo, recovery funds used to replace loss revenue are more flexible and may be used for a broad range of government services, programs and projects. Examples of these government services include (but are not limited to):
• Construction of schools and hospitals
• Road building and maintenance, and other infrastructure
• Health services
• General government administration, staff and administrative facilities
• Environmental remediation
• Police, first responders and other public safety services (including the purchase of fire trucks and police vehicles)

Chase and Hurley both stressed that revenue recoupment cannot be used for debt service payments, including Tax Anticipation Notes (TANs); rainy day funds; legal settlements; pension funds or for any action that would be against COVID mitigation.

In addition to replacing revenue loss, other highlights in the final rule include:
• Improves revenue loss calculation formula to include utility revenue and liquor store sales as an option for counties
• Clarifies eligible use of funds for capital expenditures and written justification for certain projects
• Streamlines options to provide premium pay, by broadening the share of eligible workers who can receive premium pay
• Authorizes re-hiring of local government staff, either at or above pre-pandemic levels
• Allows Recover Funds to be used for modernization of cyber security, including hardware and software

As far as broadband, which is an infrastructure issue that came to light during the COVID pandemic, the interim final rule required counties to invest in households and businesses without reliable wire line at 25 Mbps download/3 Mbps upload. The final rule broadens eligible broadband infrastructure investments to ensure better connectivity to broader populations by allowing counties to invest in locations without reliable wireline at 100 Mbps download/20 Mbps upload.

Counties can use funds to make a broad range of water and sewer infrastructure investments. The final rule broadens eligible use of funds for water and sewer projects, including a broader set of lead remediation projects (i.e., facets, fixtures and internal plumbing in schools and childcare facilities), culvert repair, residential wells, and rehabilitation of certain dams and reservoirs.

The NACo will have a more detailed analysis of the final rule in the next week, according to Hurley.

The U.S. Treasury is hosting a live webinar to brief and answer questions about the final rule on Jan. 12 at 1 p.m. EST.