Treasury Finalizes Rules for the Use of State and Local Fiscal Recovery Funds (SLFRF), part of the American Rescue Plan Act (ARPA)

This week, associations representing state, local, territorial, and Tribal (SLTT) officials welcome the Treasury’s release of the Final Rule for the use of State and Local Fiscal Recovery Funds (SLFRF) program funds. At 437 pages, the Final Rule provides welcome certainty for SLTT governments. They had been operating under the Interim Final Rule since its issuance in May 2021. The Final Rule will go into effect on April 1, 2022.

The National Association of Counties (NACo) and National League of Cities (NLC) highlighted new flexibility created by the Final Rule. A new provision allows SLTT governments to skip the complicated “revenue loss” to justify up to $10 million in government services. This provision is especially welcome to smaller jurisdictions that might not have the capacity to calculate their lost revenue. Other changes include more options to use funds for cybersecurity, broadband, and utility projects. It also expands eligibility for premium pay and clarifies the use of funds for capital expenditures related to economic impact and public health. In a press release, NACO’s Executive Director Matt Chase noted that:

“The American Rescue Plan Act recognizes counties’ vast responsibilities to care for our most vulnerable residents and bolster our nation’s recovery… Treasury’s final rule clarifies how this historic legislation will help us strengthen our communities by investing in distressed small businesses, public health and safety, human services, especially for those suffering from domestic violence, mental illnesses and substance use disorders, and much-needed infrastructure, including broadband.”

Associations are mobilizing quickly to help their members navigate the new requirements. The National Conference of State Legislatures (NCSL), Government Finance Officers Association (GFOA), U.S. Conference of Mayors (USCM), and International City/County Management Association provided information and links to additional resources. NLC has already posted “Final Rule on ARPA SLFRF Grants: 10 Things for City Leaders to Know.” NACo held an hour-plus webinar for members on January 10, explaining the key provisions. A recording of the session is freely available.  

Even with their excitement at the release, the “Big Seven” associations would like to see even more flexibility. In November, the executive directors signed a joint letter to House Speaker Nancy Pelosi and House Republican Leader Kevin McCarthy, urging them to approve the State, Local Tribal, and Territorial Fiscal Recovery, Infrastructure, and Disaster Relief Flexibility Act. The Senate approved it in October 2021 as S. 3011.  

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