AMERICAN RESCUE PLAN BECOMES LAW
Last week President Biden signed into law the American Rescue Plan Act of 2021 (H.R. 1319). The $1.9 trillion package was created to assist Americans and businesses during the COVID-19 pandemic and brings the total since last spring to about $4 trillion dollars in pandemic aid.
The bill provides over $350 billion dollars to state and local governments and $130 billion for schools to help with re-opening safely. Also in the bill is an additional $21.6 billion for the Emergency Rental Assistance Program and a provision to make public sector employers eligible to receive the FFCRA tax credit for wages or compensation paid to an employee who is unable to work due to the pandemic.
While many programs of importance to states will receive additional funds in the rescue plan, the State Recovery Fund is of particular interest as it provides direct aid. Details of the new fund are noted below.
State Fiscal Recovery Fund TOTAL: $219,850,000,000
Amount of Aid for States and District of Columbia
Allowable Use
A state, territory, or tribal government shall only use the funds provided under payment to cover costs incurred by the state, territory, or tribal government, by December 31, 2024:
Limitations on Use
A state or territory shall not use the funds provided or transferred to either directly or indirectly offset a reduction in the net tax revenue of a state or territory resulting from a change in law, regulation, or administrative interpretation during the covered period that reduces any tax (by providing for a reduction in a rate, a rebate, a deduction, a credit, or otherwise) or delays the imposition of any tax or tax increase.
No state or territory may use funds made available for deposit into any pension fund.
Transfers
A state, territory, or tribal government may transfer funds to a private nonprofit organization, a tribal organization, a native corporation, a public benefit corporation involved in the transportation of passengers or cargo, or a special-purpose unit of state or local government.
Administration of Funds
Any state, territory, or tribal government receiving a payment under this section shall provide to the secretary periodic reports providing a detailed accounting of the uses of funds by such state, territory, or tribal government, including, in the case of a state or a territory, all modifications to the state’s or territory’s tax revenue sources during the covered period; and such other information as the secretary may require.
Recoupment
Contains a specific provision on recoupment by Treasury for misuse of funds.
Oversight/Accountability
The law provides an additional $77 million for the Government Accountability Office and $40 million for the Pandemic Response and Accountability Committee.
Coronavirus Capital Improvements Fund
In addition to amounts provided, $10 billion, for making payments to states, territories, and tribal governments to carry out critical capital projects directly enabling work, education, and health monitoring, including remote options, in response to the public health emergency with respect to the Coronavirus Disease (COVID–19).
The bill provides over $350 billion dollars to state and local governments and $130 billion for schools to help with re-opening safely. Also in the bill is an additional $21.6 billion for the Emergency Rental Assistance Program and a provision to make public sector employers eligible to receive the FFCRA tax credit for wages or compensation paid to an employee who is unable to work due to the pandemic.
While many programs of importance to states will receive additional funds in the rescue plan, the State Recovery Fund is of particular interest as it provides direct aid. Details of the new fund are noted below.
State Fiscal Recovery Fund TOTAL: $219,850,000,000
- $4,500,000,000 – Territories
- $20,000,000,000 – Tribal Gov
- $195,300,000,000 – States and DC
- ($50,000,000 – Treasury Admin)
Amount of Aid for States and District of Columbia
- $195.3 for states and DC.
- $25.5 billion of such amount shall be allocated by the Secretary equally among each of the 50 states and the District of Columbia.
- A portion to each state based on the state’s share of total national unemployment ($169.8 billion).
Allowable Use
A state, territory, or tribal government shall only use the funds provided under payment to cover costs incurred by the state, territory, or tribal government, by December 31, 2024:
- To respond to the public health emergency with respect to the Coronavirus Disease 2019 (COVID–19) or its negative economic impacts, including assistance to households, small businesses, and nonprofits, or aid to impacted industries such as tourism, travel, and hospitality.
- To respond to workers performing essential work during the COVID–19 public health emergency by providing premium pay to eligible workers of the state, territory, or tribal government that are performing such essential work, or by providing grants to eligible employers that have eligible workers who perform essential work.
- For the provision of government services to the extent of the reduction in revenue of such state, territory, or tribal government due to such emergency; or to make necessary investments in water, sewer, or broadband infrastructure.
Limitations on Use
A state or territory shall not use the funds provided or transferred to either directly or indirectly offset a reduction in the net tax revenue of a state or territory resulting from a change in law, regulation, or administrative interpretation during the covered period that reduces any tax (by providing for a reduction in a rate, a rebate, a deduction, a credit, or otherwise) or delays the imposition of any tax or tax increase.
No state or territory may use funds made available for deposit into any pension fund.
Transfers
A state, territory, or tribal government may transfer funds to a private nonprofit organization, a tribal organization, a native corporation, a public benefit corporation involved in the transportation of passengers or cargo, or a special-purpose unit of state or local government.
Administration of Funds
- Treasury serves as administrator of the funds.
- Funds much be expended by December 31, 2024.
- Payment:
- The Secretary shall have the authority to withhold payment of up to 50 percent of the amount allocated to each state and territory (other than payment allocated to the District of Columbia) for a period of up to 12 months from the date on which the state or territory provides the certification. The Secretary shall exercise such authority with respect to a state or territory based on the unemployment rate in the state or territory as of such date.
- Before paying to a state or territory the remainder of an amount allocated to the state or territory that has been withheld by the Secretary, the Secretary shall require the state or territory to submit a second certification, in addition to such other information as the Secretary may require.
Any state, territory, or tribal government receiving a payment under this section shall provide to the secretary periodic reports providing a detailed accounting of the uses of funds by such state, territory, or tribal government, including, in the case of a state or a territory, all modifications to the state’s or territory’s tax revenue sources during the covered period; and such other information as the secretary may require.
Recoupment
Contains a specific provision on recoupment by Treasury for misuse of funds.
Oversight/Accountability
The law provides an additional $77 million for the Government Accountability Office and $40 million for the Pandemic Response and Accountability Committee.
Coronavirus Capital Improvements Fund
In addition to amounts provided, $10 billion, for making payments to states, territories, and tribal governments to carry out critical capital projects directly enabling work, education, and health monitoring, including remote options, in response to the public health emergency with respect to the Coronavirus Disease (COVID–19).