Senate passes American Rescue Plan with $65B in aid for municipalities

This past Saturday, the U.S. Senate passed the American Rescue Plan of 2021, the latest round of stimulus funding to address the impacts of the COVID-19 pandemic.

The $1.9 trillion plan, which had been proposed by President Joe Biden, includes $350 billion in emergency relief for states, local governments, tribes and territories. The legislation would also provide funding for housing, education, nutrition programs, unemployment assistance, vaccines and assistance from the Federal Emergency Management Agency.

The legislation would create new state and local coronavirus relief funds, with $220 billion going to states, tribal governments and territories, and $130 billion going directly to municipal and county governments.

Funds could be used to replace revenue lost or reduced as a result of the pandemic, fund COVID-related costs, provide support to aid households and businesses impacted by the crisis, invest in economic recovery and renewal, and fund investments in water, sewer and broadband infrastructure. Under the most recent draft, the funds would be provided in two blocks in 2021 and 2022 and would be available for use through 2024.

Once the bill becomes law, the Treasury Department will provide specific guidance on allowable uses of the funds.

The bill now goes back to the House, where a final vote is expected as early as Tuesday, and then to President Biden, who is expected to sign it into law before March 14 to avoid any lapse in extended federal unemployment benefits.

The MMA has made passage of the American Rescue Plan a top priority, working closely with the National League of Cities, which coordinated a national campaign to advocate for direct aid to all cities and towns. The NLC mobilized thousands of local officials and state municipal organizations to make sure that direct aid to local governments remained in the aid package.

“The American Rescue Plan Act is a true game-changer,” said MMA Executive Director Geoff Beckwith. “This bill will provide critical aid to every city and town in Massachusetts to stabilize essential services, inject real dollars into our communities to protect individuals, families and businesses hit hardest by COVID-19, and invest in a powerful economic recovery all across the state.”
On behalf of the MMA, Beckwith praised all members of the Massachusetts congressional delegation.

“We are so fortunate to have remarkable senators and representatives who are strong and enduring advocates for federal aid to cities and towns,” he said. “Their leadership has paved the way for passage of the American Rescue Plan.”

Ultimately, the Senate approved $65 billion in direct aid for municipalities across the country. Early estimates for Massachusetts indicate that cities and towns could receive as much as $2 billion in direct aid, through two distributions. Thirty-seven “Metropolitan Cities” (generally communities with populations above 50,000) would receive about $1.7 billion distributed through a modified Community Development Block Grant formula, and all other communities would receive approximately $368 million distributed on a per-capita basis. Counties would receive about $1.3 billion, also distributed on a per-capita basis.

In regions that have abolished their county governments (Berkshire, Essex, Franklin, Hampden, Hampshire, Middlesex and Worcester), the bill would keep the aid in the state by distributing the money to the cities and towns in the county based on the municipalities’ percentage of the county population, and communities could use the funds to supplement their direct aid.

Municipal leaders from communities with functioning county governments (Barnstable, Bristol, Dukes, Nantucket, Norfolk, Plymouth and Suffolk) will need to work with their county officials to make sure the funds are available for local government priorities.

The House Oversight Committee provided estimates for states and localities as of Feb. 25 (Excel file). Final allocations will be determined by the Treasury Department based on the most recent census data and the final language in the law.

The MMA will be providing updates at www.mma.org over the coming days, and the National League of Cities is also sharing information at www.nlc.org.