Thursday, July 15, 2021

Know the Allowable Uses of American Rescue Plan Funding

The Coronavirus Local Fiscal Recovery Fund of the American Rescue Plan provides a large amount of relief money for cities and towns — $65.1 billion nationwide. The funding brings with it plenty of considerations for how local leaders should make plans for using the funds, and they need to be certain their expenditures are allowable under the law. 

Allowable uses 
Guidance from the U.S. Department of the Treasury has explained how the funding may be used, including replacing governmental revenue loss and using funds to help maintain vital public services. Other allowable uses include projects to offset negative economic impacts, such as programs for small business support and public employee rehiring. Governments can also use funds to provide premium pay for essential workers, a category that includes sanitation and transit workers. Some of the allowable expenditures are specific to infrastructure. This could be improvements to water and sewer systems, and projects that improve the availability of broadband internet. 

Full details of allowable funding are available in the Department of the Treasury’s Interim Final Rule

When is funding available? 
The Department of Treasury plans to provide ARP funding allocations through two payments, or tranches. The timing of each payment is determined by how the ARP classifies the municipality. 

The other 254 municipalities are classified as non-entitlement municipalities. Non-entitlement units of local government will receive their allocations from the State of South Carolina. 

Before payments can be distributed from the state to cities and towns, the state must first submit a request to the U.S. Department of Treasury for its allocation from the State Fiscal Recovery Fund. Doing so will prompt Treasury to simultaneously initiate payment to the Local Fiscal Recovery Fund. 

South Carolina has not yet submitted its request for payment to the U.S. Department of Treasury. 

After cities and towns receive their first tranche, the second tranche is expected to be available 12 months later. 

Planning issues to consider 
Each city and town must have its ARP funds obligated by the end of 2024 and spent by the end of 2026. Because of the extended time frame and the need to ensure that certain expenses are allowable, local leaders should consider placing funds into a segregated bank account and take their time researching allowable uses. Beyond the available guidance documents, they can email the Department of Treasury at with specific questions. 

Because municipalities can use their allocations to replace pre-pandemic revenue they have lost, they should also consider calculating whether revenue losses have occurred. The Government Finance Officers Association has created an Excel-based calculator that can help with this. 

To learn more, check out this episode of the City Quick Connect podcast. In it, Legislative and Public Policy Advocate Erica Wright and Field Services Managers Charlie Barrineau and Jeff Shacker discuss ARP funding and items to think about when making plans for a city’s allocation. 

Rules for the funding will also appear as a topic of discussion during the Municipal Association’s 2021 Annual Meeting, taking place July 22 – 24.

Thursday, July 1, 2021

Time Is Running Out for Business License Standardization

The SC Business License Tax Standardization Act, Act 176, sets January 1, 2022, as the date by which every local government across the state that has a business license tax must begin administering that tax the same way. Although that compliance deadline is six months in the future, there are standardization steps that cities and towns need to have taken by now to meet the January 2022 deadline. For those that have not yet taken action, there is not much time left to work toward compliance and avoid problems in 2022. 

Getting in the rebalancing assistance queue 
The Municipal Association of SC has developed a seven-step process to simplify the standardization process. The third step involves rebalancing tax rates to ensure that the process of making changes to business license practices does not result in a revenue windfall for the city or town. Act 176 requires revenue neutrality during the compliance process. Municipal Association staff have been working with business licensing officials in each city or town to adjust tax rates appropriately. Given the significant amount of work involved to rebalance business license tax rates, the cities and towns now requesting rebalancing assistance are going into a queue. Those that are not yet in the rebalancing assistance queue should immediately contact their assigned Municipal Association business license liaison to avoid getting caught in an end-of-year bottleneck. 

Further steps 
To comply with Act 176, cities and towns will also need to adopt the new version of the model business license ordinance that addresses the law’s numerous requirements. Cities and towns should not attempt to update their existing ordinances. They will also need to familiarize themselves with critical information on the changes to the law so they can provide this information to their local business owners.

Municipalities need to work now with the Municipal Association to begin the process of using the online Local Business License Renewal Center. As with rebalancing, setting up each municipality to use the business license renewal portal will be a time-intensive one. With the 2022 compliance deadline approaching quickly, local officials need to contact their business license liaisons as soon as possible. 

Learn more 
Beyond the Association’s landing page for business license standardization, the City Quick Connect podcast has episodes that delve into many of the critical issues of business license standardization: