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More Federal Funds Come to Your Municipality; How Can You Use Them?

Updated: Jul 1, 2021

The American Rescue Plan Act of 2021 appropriates federal funds directly to “metropolitan cities” and funds through the state to municipalities with populations under 50,000. You may obtain the estimated amount to be allocated to your municipality here. The legislation requires that the money be used for six main categories related to COVID-19 relief. The U.S. Treasury has released an Interim Final Rule to provide guidance on the proper use of the funds per Section 9901 of the Act, as follows:

  • Funding for public health needs, such as for vaccination programs, testing, support for isolation or quarantine, enforcement of local public health orders, purchase of personal protective equipment, and more;

  • Direct payments to households, nonprofits, and businesses, particularly businesses in the tourism, travel, and hospitality fields;

  • Unique support to populations disproportionately affected by the pandemic;

  • Premium pay to essential employees, prioritized to lower income eligible workers who perform essential work;

  • Supplements to municipal budgets to offset lost revenues;

  • Investment in water, sewer, or broadband infrastructure.

Funds cannot be used for deposits into any pension fund. The funds can be used only to cover costs incurred between March 3, 2021 and December 31, 2024. Projects funded with payments from the Act must be completed by December 31, 2026. Use of the funds for unapproved purposes may result in their having to be returned.

The Executive Office of Administration and Finance has applied to the U.S. Treasury for the funds to be distributed by it to the municipalities with under 50,000 residents. The guidance for obtaining those funds is not available as of this writing but guidance on the accounting and reporting requirements is just now being released. See BUL-2021-4 and the May 24, 2021, memorandum from the Executive Office for Administration and Finance Federal Funds Office. If your municipality is one of the 38 “metropolitan cities,” then you may find instructions on how to obtain the funds directly from the Treasury here.


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