U.S. Treasury Updates Guidance on Allowed ARP Expenditures

On May 10, 2021, sixty days after President Biden signed the American Rescue Plan Act into law, the United States Department of Treasury issued its “Interim Final Rule,” which details eligible and ineligible uses for the Coronavirus State and Local Fiscal Recovery Funds. The Interim Final Rule is currently open for a 60-day comment period, which will close on July 9, after which Treasury will issue its Final Rule based on questions and comments from state and local governments. Trenton will receive $72,913,998 across two payments, the first of which was received on May 19.

The categories of eligible uses include supporting public health expenditures, addressing negative economic impacts related to COVID-19, replacing lost public sector revenue, providing premium pay for essential workers, and investing in water, sewer, and broadband infrastructure. Generally, municipalities must assess whether and how the use would respond to the COVID-19 public health emergency and identify the connection between the negative impact and how the assistance responds to that impact.

The guidance offers wide latitude to support public health initiatives and resources, including COVID-19 mitigation and containment, medical expenses, and behavioral and mental health services. This also includes capital investments in public facilities to meet operational requirements related to the pandemic. Municipalities are also empowered to address negative economic impacts for individuals, households, small businesses, and non-profits, especially in low-income and socially vulnerable communities. A formula to calculate revenue loss and replacement was also provided, with the base revenue considered the last full fiscal year prior to the public health emergency – for Trenton, this is FY2019. Premium pay for essential workers includes those involved in emergency response, public health work, educational work, government services, sanitation, maintenance, and others. Premium pay allotments should prioritize low- and moderate-income workers and is capped at $13 per hour for work performed during the declared public health emergency. The only programs not directly related to COVID-19 are improvements to water, sewer, and broadband infrastructure. Specific ineligible uses include making deposits into pension funds, offsetting reductions in net tax revenue, replenishing financial reserves, repaying debts, and paying settlement agreements.