Pending Bill Could Ease Local Government Ability to Use ARPA Funds

Local governments struggling to find eligible uses of American Rescue Plan Act (ARPA) fiscal recovery funds might have good news ahead thanks to a recent U.S. Senate vote.

The news is a result of the State, Local, Tribal, and Territorial Fiscal Recovery, Infrastructure, and Disaster Relief Flexibility Act. Passed last month, the bipartisan bill expands the use of ARPA recovery funds to include transportation, infrastructure, disaster relief, housing and other government services.

It also presents an easier method to calculate revenue losses eligible for replacement. The act redefines money to be used under revenue replacement criteria as the greater of  the traditional calculation, as currently defined in the Interim Finale Rule, or $10,000,000.”

Currently, governments must perform a calculation to determine their revenue loss eligible for replacement. While this is a large number for some entities, many don’t have any revenue loss based on federal criteria. The $10 million threshold means the original ARPA criteria will no longer be the sole determining factor. This in turn would allow a significant number of governments the flexibility to use fiscal recovery funds in ways they deem will best benefit their communities.

Finally, the bill would extend select spending deadlines of ARPA funds to Sept. 30, 2026 (Under current law, the deadline is Dec. 31, 2024.)

The bill, which was supported by four Republican and five Democratic senators, was passed unanimously in the Senate. It now goes to the House of Representatives. With its fate still in flux, specifics of the bill could still change.

Your government CPAs are tracking this development; please reach out if you have questions on ARPA fiscal recovery funds. You can also watch our recent webinar for more discussion on this pending bill and a detailed explanation of the revenue loss criteria.

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