The U.S. Department of the Treasury this afternoon announced the launch of the Coronavirus State and Local Fiscal Recovery Funds, established by the American Rescue Plan Act of 2021 to provide $350 billion in emergency funding for state, local, territorial and Tribal governments.

The Treasury Department published a two-page Quick Reference Guide, an eight-page Fact Sheet on the Coronavirus State and Local Fiscal Recovery Funds program and a 151-page Interim Final Rule. The fact sheet provides details on the ways funds can be used to respond to acute pandemic-response needs, fill revenue shortfalls among state and local governments, and support the communities and populations hardest-hit by the COVID-19 crisis.

The Treasury also published allocations from the Coronavirus State and Local Fiscal Recovery Funds program to Metropolitan Cities (38 in Massachusetts), non-entitlement amounts to each state (amounts for each community are expected to be released soon), and county allocations.

Communities classified as Metropolitan Cities and functioning counties may now submit their funding requests to the Treasury through an online portal.

According to the Executive Office for Administration & Finance’s Federal Funds Office, only Metropolitan Cities and functioning counties need to apply directly to the Treasury Department for CLFRF funding. The remaining non-entitlement units of local government will receive CLFRF funding from the Commonwealth, which has already applied to the Treasury for the funding on behalf of the NEUs as well as the state’s non-functional counties.

The American Rescue Plan Act recognizes that the need for services provided by state, local, territorial and Tribal governments has increased — including setting up emergency medical facilities, standing up vaccination sites, and supporting struggling small businesses — at a time when these governments have faced significant revenue shortfalls as a result of the economic fallout from the crisis. Since the beginning of the COVID crisis, state and local governments have had to cut 1.3 million jobs, according to the Treasury.

“With this funding, communities hit hard by COVID-19 will be able to return to a semblance of normalcy; they’ll be able to rehire teachers, firefighters and other essential workers – and to help small businesses reopen safely,” said Treasury Secretary Janet Yellen in a prepared statement. “During the Great Recession [of 2007-2009], when cities and states were facing similar revenue shortfalls, the federal government didn’t provide enough aid to close the gap. … With today’s announcement, we are charting a very different — and much faster — course back to prosperity.”

The Coronavirus State and Local Fiscal Recovery Funds provide substantial flexibility for each jurisdiction to meet local needs — including support for households, small businesses, impacted industries, essential workers, and the communities hardest-hit by the crisis. Within the categories of eligible uses listed, recipients have broad flexibility to decide how best to use this funding to meet the needs of their communities, according to the Treasury.

In addition to allowing for flexible spending up to the level of their revenue loss, the Treasury states, recipients can use funds to:
Support public health expenditures, by funding COVID-19 mitigation efforts, medical expenses, behavioral health care, mental health and substance misuse treatment, and certain public health and safety personnel responding to the crisis, among other uses
Address negative economic impacts caused by the public health emergency, including by rehiring public sector workers, providing aid to households facing food, housing or other financial insecurity, offering small business assistance, and extending support for industries hardest hit by the crisis
Aid the communities and populations hardest hit by the crisis, supporting an equitable recovery by addressing not only the immediate harms of the pandemic, but its exacerbation of longstanding public health, economic and educational disparities
Provide premium pay for essential workers, offering additional support to those who have borne and will bear the greatest health risks because of their service during the pandemic
Invest in water, sewer and broadband infrastructure, improving access to clean drinking water, supporting vital wastewater and stormwater infrastructure, and expanding access to broadband internet

In Massachusetts, 38 “Metropolitan Cities” (generally communities with populations above 50,000) will receive about $1.66 billion distributed through a modified Community Development Block Grant formula, and non-entitlement communities will receive approximately $385 million distributed on a per-capita basis. Counties will receive about $1.3 billion, also distributed on a per-capita basis, and a majority of this aid will flow to cities and towns.

Where county governments have been abolished (Berkshire, Essex, Franklin, Hampden, Hampshire, Middlesex, Suffolk and Worcester), the law will 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 may use the funds to supplement their direct aid.

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

For more information, visit the Coronavirus State and Local Fiscal Recovery Funds portal on Local officials may sign up for email updates from Treasury Department Relief and Recovery Programs.

Written by