Even though formal guidelines haven’t been provided yet regarding the appropriate ways to utilize American Rescue Plan Act (ARPA) funds, local governments are starting to strategize and discuss how they will allocate the dollars they’re expecting to receive. We’ve been getting a lot of questions from community leaders –so, to help as many community leaders as we can, here are 5 key facts to address some of the frequently asked questions:
Unlike CARES Act funds, which had to be used as a direct response to the negative impacts of Covid-19, ARPA funds are intended to be used as a supplemental revenue source for local governments. The ARPA funds aren’t earmarked for any specific cause or appropriation (with the exception mentioned at bullet point #3 below).
We know the ARPA funds will be given in two tranches (12 months apart), but what you might not know is that you don’t need to worry about using all of the first allocations before receiving the second allocation. The most important thing is that the funds are all used by the end of December 2024.
While there aren’t any exact guidelines on what ARPA funds can be used for, we know what they cannot be used for funding new tax breaks, delaying new tax increases, and funding penchants. Other than that, the world is (reasonably) your oyster!
Forward-thinking cities are looking to use ARPA funds to not only mitigate the negative impacts of Covid-19 but also to adapt their communities to the post-pandemic norms. This means investing in long-term strategic solutions that promote remote work and education, secure their digital services, and use technology to engage their communities.
Leading cities are already coming up with allocation plans for their ARPA funds. The sooner you’ll be able to make the case internally as to where you’d like the funds to go, the sooner you’ll be able to receive the funds and see their impact.
What you need to know about the American Rescue Plan and Small Business Support?
The new and historic $1.9 trillion American Rescue Plan Act (ARP) signed into law on March 11th provides $360 billion in state and local government support, with $65.1 billion going directly to cities. The spending deadline is set for December 31st, 2024, enabling mayors to create strategic, innovative, and long-term plans to utilize the funds in order to maximize the local economic impact and create a sense of civic pride.
Here’s what mayors must know about the ARP:
Double the support: The amount of money local governments will receive is much greater from the ARP. The CARES Act provided $150 billion in state and local government support, whereas the ARP provides $360 billion, of which $65.1 billion is dedicated solely for non-county municipalities.
Direct funding to cities: Out of the $360 billion state governments receive $130.2 billion are from the “Coronavirus Local Fiscal Recovery Fund”, from which $45.57 billion will go to non-county municipalities with a population equal to or above 50,000. Those with a population under 50,000 will receive $19.53 billion. Aid to each municipality is calculated based on a formula including population, growth, poverty, and housing overcrowding. Here’s a city-by-city comparison.
Local governments at the forefront of the decision-making process:Unlike the CARES Act,in which most cities were subjected to further review from their respective county and state governments, the ARP allows cities to receive direct funding from the federal government. This bypass of state governments ensures that cities, regardless of population size, are making the best decisions at a local level.
The distribution of these funds will be made in two waves of equal amounts – the first no later than 60 days after enactment, the second wave no earlier than 12 months after the first.
Mayor Marty Walsh of Boston and Mayor Daniel Horrigan of Akron already have proven that federal funds can be utilized for economic recovery projects that not only maximize the economic impact of ‘shop local’ initiatives over the short-term, but also generate a long-lasting social and economic impact.
Ultimately, the American Rescue Plan is more than just a rescue plan. The ARP is a chance to reevaluate local spending approaches and strategies to meet new post-pandemic norms and boost local communities as well as create a newfound sense of civic pride.
Colu welcomes opportunities to talk with public leaders about how the ARP can facilitate small business recovery. You can reach out HERE to schedule a private consultation.
Preparing for Coronavirus
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