President Biden Signs American Rescue Plan With $350 Billion for State and Local Governments

March 15, 2021

The package includes $65 billion in recovery funds for cities of all sizes.

President Biden signed the $1.9 trillion American Rescue Plan on March 11. It includes $350 billion in federal aid for states, municipalities, counties, tribes, and territories.

Coronavirus Local Fiscal Recovery Fund

In addition to the $350 billion for states and local governments, the act provides federal aid for all 19,000 municipal governments across the country via the Coronavirus Local Fiscal Recovery Fund, including:

  • $130 billion for local governments split evenly between municipalities and counties.
  • $65 billion allocated to cities through a modified Community Development Block Grant formula as follows:
    • $45.9 billion for entitlement communities (over 50,000 in population).
    • $19.5 billion for non-entitlement communities (under 50,000 in population).

The law also spells out a few other details about the aid to local governments, including that:

  • Funds will be released in two payments to local governments, with half following enactment and half paid 12 months following receipt of first payment.
  • There will be no minimum population threshold for payments, but non-entitlement distributions will be capped at 75% of the pre-pandemic city budget.
  • Funds can be used to replace lost revenue.
  • Funds can be transferred between jurisdictions or to nonprofit partners.
  • There is an expenditure deadline of Dec. 31, 2024.

See preliminary allocation estimations to states and local units of government (xls)

Please note that funding estimates are approximations, and there are certain Minnesota cities that are not included in the linked estimations. This should not be read as an indication that those cities will not receive funding; final estimations are forthcoming.

Additional details

Other provisions in the law of importance to cities include:

  • A federally financed COBRA subsidy that is available for up to six months for eligible individuals. (Learn more about this from consultants at Gallagher.)
  • Other employee benefits, including temporary increases for dependent care benefits and extension of credits for paid leave when offered on a voluntary basis. (Learn more about this from consultants at Gallagher.)
  • $25 billion in emergency rental assistance.
  • $15 billion for Small Business Emergency Injury Disaster Loans.
  • $25 billion for grants to restaurants and bars to meet payroll and other expenses.
  • $7.6 billion Emergency Connectivity Fund to assist with internet access for distance learning.
  • $7 billion in additional funding for the Paycheck Protection Program.
  • $4.5 billion in assistance for low-income individuals to assist with energy and water bills.
  • Funding for coronavirus testing, contact tracing, and vaccine distribution.
  • Extension of weekly federal pandemic unemployment benefits of $300 through Sept. 6.
  • $1,400 stimulus checks for individuals earning up to $75,000 per year, and $2,800 for couples filing jointly and earning up to $150,000 per year.

Free webinar

The League presented a free webinar about this new COVID relief package on March 16.

Access a recording of the webinar

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