U.S. Treasury Issues Final ARPA Rules

On Jan. 6, the U.S. Department of the Treasury released the final rules for the Coronavirus State and Local Fiscal Recovery Funds, which also cover the $65.1 billion in federal funds sent to counties nationwide under the American Rescue Plan Act (ARPA).

January 27, 2022

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On Jan. 6, the U.S. Department of the Treasury released the final rules for the Coronavirus State and Local Fiscal Recovery Funds, which also cover the $65.1 billion in federal funds sent to counties nationwide under the American Rescue Plan Act (ARPA). Multiple substantial changes were made to the interim final rules issued in May 2021. The final rules take effect April 1, 2022, but may be used now if a county determines it is more advantageous to do so.

Options for calculating revenue loss

One of the most significant changes in the final rules is they allow a county to claim up to $10 million in lost revenue without the need to use the Revenue Loss Calculator. This will allow nearly two-thirds of all Texas counties to claim the balance of their ARPA funds as lost revenue, creating an opportunity to use those funds on a greater range of local government services. TAC and the National Association of Counties (NACo) worked diligently to support this provision with members of the Texas congressional delegation in a stand-alone bill authored by Texas Sen. John Cornyn. Lost revenue funds can be used for any traditional government service that does not interfere with the pandemic response.

Additionally, for those counties with funds above the $10 million threshold, or for those that prefer to use the Revenue Replacement Calculator, they may now use a standard growth rate of 5.2% (up from 4.1%), include utilities and liquor sales in general revenue, and calculate lost revenue based on a fiscal or calendar year. When choosing between fiscal and calendar years, a county must use that choice for the remainder of the reporting period. Counties must also adjust actual revenue totals for the effect of tax cuts or increases adopted after Jan. 6​.

Ineligible and eligible uses

The final rules, as in the interim rules, prohibit counties from depositing any of these funds into a rainy-day account or extraordinary pension fund contributions, servicing debt, paying legal settlements or replacing lost revenue from a state or local tax cut.

Premium pay

While many Texas counties have already elected to use ARPA funds for premium pay, it is important to note that changes to the premium pay section of the rules in the final document will not result in any claw back of funds as long as a county adhered to the interim rules in place at the time it adopted a premium pay policy.

The interim final rules defined “essential work” as work that is in-person and either requires interactions with patients, the public, or coworkers of the individual that is performing the work, or regular physical handling of items that were handled by, or are to be handled by, patients, the public or coworkers of the individual that is performing the work. Treasury maintained this definition of essential work in its final rules to ensure that premium pay is targeted to workers who faced or face heightened risks due to the character of their work during a pandemic. Up to $13 per hour, not to exceed $25,000 in aggregate, nor increasing the employee’s pay above 150% of the state’s or county’s average annual income, may be disbursed in lump sums, hourly increases or as a monthly addition to regular pay.

Premium pay was originally targeted to low- and moderate-income full-time employees who the Treasury felt were least financially able to handle the negative economic impacts of the ongoing pandemic. Accordingly, the interim final rules required written justification for how premium pay to certain higher-income workers responds to eligible workers performing essential work. The final rules also allow a county to determine certain essential non-public employees as eligible for premium pay.

Broadband expansion

The final rules expand the permissible locations and uses of ARPA funds for broadband projects from households and businesses below a reliable connection speed of 25 megabits per second (Mbps) download and 3 Mbps upload speeds to below reliable connection speeds of 100 Mbps download and 20 Mbps upload. Counties can use the increased speed thresholds to invest in more projects to increase connection speeds, reliability or affordability of broadband in underserved areas. Such projects would still require a plan outlining how increased download and upload speeds will be achieved. Additionally, counties can use ARPA funds to subsidize enrollment of low-income households in the Federal Communications Commission’s Affordable Connectivity Program.

These are just a few of the important changes included in the Treasury’s final rules. For additional information and updates, please follow TAC’s American Rescue Plan Information & Resource page, the National Association of Counties and NACo’s Overview of U.S. Treasury’s Final Rule for ARPA Fiscal Recovery Fund.

For more information about this article, please contact Austin McCarty.