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 17 largest SC municipalities are classified as metropolitan cities and can access their allocations now through the U.S. Department of Treasury submission portal.
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 SLFRP@treasury.gov 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.