COVID-19 has created a significant economic fallout for state, local, territorial, and tribal governments that have been at the forefront of responding to the public health needs created by the pandemic. Many government entities put projects, such as improving critical infrastructure, on hold while dealing with unprecedented economic strain.
On May 10, 2021, the U.S. Department of the Treasury announced the launch of the Coronavirus State and Local Fiscal Recovery Funds, established by the American Rescue Plan (ARP) Act of 2021. The ARP provides $350 billion in funding for eligible governments, which will be able to access this funding in the coming days. The money must be spent by the end of 2024, so it’s vital for public entities to determine now how to allocate the funding.
The Government Finance Officers Association (GFOA) has prepared some guiding principles for public entities to consider. Among them is an explanation of how applying funds to critical infrastructure is a particularly good use of ARP funds. It stands to reason: Critical infrastructure generally involves non-recurring expenditures that strategically target important, long-term assets for improvements that will last for years to come.
However, entities should consider any ongoing operating costs that might be associated with such a project while also taking into account any potential alterations to policies and compliance requirements. Determining some best practices for leveraging these funds is discussed in the GFOA “Guiding Principles.”
For example, local governments should be aware of state-level efforts, especially regarding infrastructure, potential enhancements of state funding resources, and existing or new state law requirements. Communicating with other governments in the region and community will also be important during this process. With many entities receiving ARP funds, it is vital to understand how others plan to use the funds and how their plans could lead to collaboration and enhanced projects.
The ARP provides significant flexibility for governments to meet local needs, including delivering resources that recipients can invest in building, maintaining or upgrading their water, sewer, and broadband infrastructure.
If you’re interested in learning more about how ARP funds could be leveraged in your area, contact Tim Murphy, CESSWI, our national Public Sector Market Group lead, at 419.214.4406 or via email at tmurphy@cecinc.com.
More resources and information about the ARP, how funds will be distributed, and how the public sector can best utilize them can be found below:
- American Rescue Plan Spending: Recommended Guiding Principles – Government Finance Officers Association
- Coronavirus State and Local Fiscal Recovery Funds – U.S. Department of the Treasury
- The American Rescue Plan clears a path to recovery for state and local governments and the communities they serve – Economic Policy Institute
- The American Rescue Plan Act: State and Local Funding Breakdown – The Rockefeller Institute of Government
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