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Eligible Uses and Restrictions on the Funding
At the beginning of the pandemic, many public sector agencies were forced to place a hold on non-essential funding in both operating and capital budgets until they could determine the true financial impact of the pandemic and its after- effects on their revenue forecasts. As the pandemic impacts grew, most organizations were forced to lower revenue forecasts and tighten their financial belts with service reductions, staffing furloughs and other drastic cost-cutting activities. Decision making became heavily focused on delivering essential services to the constituents hardest hit by the pandemic and supporting a remote workforce and remote service delivery capabilities.
AS A RESULT, COMMON ARPA FUNDING USES INCLUDE:
Revenue replacement for the provision of government services to the extent of the reduction in revenue due to the COVID-19 public health emergency, relative to revenues collected in the most recent fiscal year prior to the emergency.
COVID-19 expenditures or negative economic impacts of COVID-19, including assistance to small businesses, households, and hard-hit industries, and economic recovery.
Premium pay for essential workers.
Investments in water, sewer, broadband and other infrastructure.
Funds cannot be used directly or indirectly to offset tax reductions or delay a tax or tax increase. Funds cannot be deposited into any pension fund. As with previous COVID-19 relief packages, the distribution of funds to state and local governments is dependent on the completion of the registration process that can be found on the U.S Department of the Treasury website.
As per the Interim Final Rule released by the Treasury Department in May 2021: “Local governments should expect to receive funds in two tranches, with 50% provided beginning in May 2021 and the balance delivered 12 months later. States that have experienced a net increase in the unemployment rate of more than 2 percentage points from Febru- ary 2020 to the latest available data as of the date of certification will receive their full allocation of funds in a single payment; other states will receive funds in two equal tranches.”
All funds must be spent in full by the end of calendar year 2024.
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