The American Rescue Plan Act provides state and local aid.
The funding provides $350 billion to help states, counties, cities and tribal governments cover increased expenditures, replenish lost revenue and mitigate economic harm from the COVID-19 pandemic.
Funds will be distributed in two tranches, with 50% delivered no later than 60 days after the date on which the certification required, and the remainder delivered no earlier than one year later. States would have to distribute funds to smaller towns within 30 days of receiving a payment from the department. States that miss the deadline would have to pay back any undistributed funds. A town cannot receive more than 75% of its budget as of Jan. 27, 2020. The Treasury Department could also withhold up to half of a state or territory’s allocation for as long as 12 months based on its unemployment rate and require an updated certification of its funding needs.
The funding provides $25.5 billion equally divided to each state (a minimum of $500 million). $169 billion would be allocated based on the states’ share of unemployed workers over a three-month period, from October–December 2020.
The funding provides $65.1 billion for counties; $45.6 billion for metropolitan cities; $19.5 billion for towns with fewer than 50,000 people.
U.S territories receive $4.5 billion.
Tribal governments receive $20 billion.
Provides $10 billion for a Coronavirus Capital Projects Fund to carry out projects to support work, education and health monitoring during COVID-19.
How we can use the funds
We cannot use the funds towards pensions or to offset revenue resulting from a tax cut enacted since March 3, 2021. Funds can be transferred to private nonprofit groups, public benefit corporations involved in passenger or cargo transportation, and special-purpose units of state or local governments. Funds should be used to:
- Respond to the COVID-19 emergency and address its economic effects, including through aid to households, small businesses, nonprofits, and industries such as tourism and hospitality
- Provide premium pay to essential employees or grants to their employers. Premium pay couldn’t exceed $13 per hour or $25,000 per worker.
- Provide government services affected by a revenue reduction resulting from COVID-19
- Make investments in water, sewer and broadband infrastructure
- Funds can be used to cover costs incurred by December 31, 2024