More than $2.8 billion began rolling into the bank accounts of Texas counties in May — the first of two deposits headed their way over the next 12 months under the $1.9 trillion American Rescue Plan Act of 2021.
The expansive pandemic relief package that President Joe Biden signed into law in March contains far more than the $1,400 payments most taxpayers received. Among its many programs, funds and grants, the American Rescue Plan also established the $350 billion Coronavirus State and Local Fiscal Recovery Funds, which include $65.1 billion in direct aid from the U.S. Treasury Department to all counties nationwide.
Of that amount, Texas counties will receive a total of about $5.7 billion. The first of two equal portions began arriving in May; the second half will arrive roughly the same time next year.
Allocations are based generally on each county's share of the U.S. population. Individual total allotments in Texas range from $32,826 for sparsely populated Loving County in West Texas to more than $915.5 million for Harris County. For some counties, the total amount they receive will represent a quarter or more of their annual budgets. McLennan County’s total $49.8 million allotment, for example, adds up to about 43% of its almost $115 million in budgeted expenditures for the 2021 fiscal year, the Waco Tribune-Herald reported.
It's no wonder then that county officials, public policy experts and the media have described the local funding under the American Rescue Plan as an extraordinary chance for states and local governments to look well beyond the pandemic. As Duval County Judge Gilbert Saenz told the Alice Echo-News Journal, "It's a generational type opportunity and a morale boost for the community as we move past COVID-19."
For Tarrant County Judge B. Glen Whitley,
the funds also mean local control for Texas' 254 counties. "What this act allows counties to do is to look at their individual circumstances and determine how best to use the funds within their locales and for their constituents," Whitley told County magazine. "Had the money gone to the state, it would have tried to dictate its perceived needs for local government."
So much money, of course, generates intense interest in how it should be spent. Many counties have put together work groups to explore their options and establish procedures for spending the funds. The question foremost in their minds is, how do we best use all this money?
Relatively few restrictions
Coming up with worthy projects that can win community buy-in is going to be a challenge, Bastrop County Commissioner Clara Beckett said. But unlike last year's $2.2 trillion Coronavirus Aid, Relief and Economic Security (CARES) Act, counties have more flexibility in how they can spend the American Rescue Plan funds they receive.
The U.S. Treasury Department released 151 pages of proposed rules on May 10. These guidelines, known as the Interim Final Rule, give counties considerable latitude in choosing how to spend the funds. Allowable uses include:
Supporting the public health response to COVID-19.
Assisting households, small businesses, nonprofits and industries, such as tourism and travel, that were hit particularly hard by the pandemic.
Covering government costs and revenue shortfalls related to the pandemic.
Providing premium pay for essential workers.
Investing in water, sewer and broadband infrastructure.
For more information about the American Rescue Plan:
- Visit TAC's American Rescue Plan Information & Resources webpage at www.county.org.
- Read the latest COVID-19 relief updates from the
- U.S. Treasury Department at www.treasury.gov.
- Find your county's allocation and other critical
- American Rescue Plan resources at the National Association of Counties at www.naco.org.
While its acceptable uses are deliberately broad, the Treasury Department's guidance places limits on the funds. State and local governments can't use the money to replace revenue lost through tax cuts, nor can they deposit the funds into any pension program. Funding debt service, paying for legal settlements or judgments, or filling rainy day funds also are disallowed.
The proposed rules include a request for comment from county officials by July 16. Comments can be submitted through www.regulations.gov; search for "Coronavirus State and Local Fiscal Recovery Funds." Additional information can be found on the Treasury's Department's website, www.treasury.gov.
"Counties are going to have specific questions about specific projects and whether they meet the rules," Tom Green County Auditor Nathan Cradduck said, adding that he was encouraged by the Treasury Department's efforts to consider and answer counties' comments and questions. He anticipates additional guidance to develop as the department refines its rules.
Cradduck said it's "best for counties to do their due diligence, to take a hard look at their needs and use the funds to best serve their communities."
Failure to comply with the act's rules can end up with counties having to repay the federal government an amount equal to the funds used in violation of the rules. "I've never seen a federal dollar come in that we didn't have to work for and document carefully," Beckett said.
Carefully crafting procedures to avoid haphazardly spending the money is crucial, Whitley said. He also cautioned counties against creating operational costs that they will have to continue to budget for after the federal funds run out.
An opportunity to think big
The American Rescue Plan can be seen as both a pandemic economic stabilization package and an infrastructure improvement package. It's the infrastructure component, notably the broadband part of it, that comes up repeatedly as county leaders ponder the best use of the federal funds. Done smartly, officials say, the social and economic benefits from the act could outlive the pandemic by decades.
And because the American Rescue Plan also sends $3.4 billion to Texas cities, infrastructure is just one area where the state, cities and counties could work together toward the same goal. Broadband was a priority for Gov. Greg Abbott and lawmakers during this year's legislative session, which ended May 31.
"Obviously broadband is something that you can really tie to the pandemic and could last well beyond the pandemic, especially when done in connection with what the state's doing," Beckett said. "It's something that five or 10 years from now we could look back on as a significant use of the money."
Her words echo the advice that Brad Whitehead and Joseph Parilla with the Brookings Institution in Washington, D.C., offered in March. They recommended local governments take "a three-prong approach" to spending their money: stabilize their operating budgets, map out investments in infrastructure programs to support workers and small businesses, and organize local coalitions to coordinate strategic investments and track results.
"In 10 years," they wrote, "we may look back at this time and ask: Which places merely spent their money, and which places invested it?"
American Rescue Plan:
- Establishes the $350 billion Coronavirus State and Local Fiscal Recovery Funds for state, local, territorial and tribal governments.
- The states and the District of Columbia will receive $195.3 billion. Texas’ share: $15.8 billion.
- $65.1 billion will go to U.S. counties, including $5.7 billion for Texas counties.
- $45.6 billion will go to metropolitan cities, including $3.4 billion for Texas cities.
- 50% of the funds began arriving in May; the second 50% will arrive no earlier than 12 months later.
- Funds must be obligated for specific projects and programs by Dec. 31, 2024. They must be spent by Dec. 31, 2026.
Source: U.S. Treasury Department