The bill includes $350 billion in flexible federal assistance for state and local units of government.
The U.S. House of Representatives voted on Feb. 27 to pass H.R. 1319, the $1.9 trillion American Rescue Plan Act of 2021 on a 219-212 vote.
The pandemic rescue plan, which includes the authorization of $350 billion in State and Local Coronavirus Relief Funds, now goes to the Senate for a vote expected to occur sometime before the March 14 federal unemployment aid deadline. Title V, Section 603 of the House-passed bill includes a $130.2 billion Coronavirus Local Fiscal Recovery Fund for metropolitan cities, non-entitlement units of local government, and counties.
Coronavirus Local Fiscal Recovery Fund
Of the $130.2 billion, $45.57 billion is set aside for direct appropriations to entitlement cities of at least 50,000 in population based on a modified Community Development Block Grant formula. Funds must be provided directly from Treasury within 60 days of a city submitting a Certification of Need.
$19.53 billion is set aside for cities with less than 50,000 in population. The amount of funds distributed to non-entitlement cities will be based on population and capped at 75% of the city’s most recent budget as of Jan. 27, 2020. Funds will be sent to the state with a requirement that funds be distributed within 30 days, and states are prohibited from changing allocation amounts or imposing additional requirements.
A funding estimation for both cities over 50,000 in population and cities under 50,000 in population can be found on the House Oversight Committee website. However, it is important to note that the initial 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, and the League has asked for estimates for the omitted cities.
How funds can be used
Unlike the Coronavirus Relief Funds authorized by the Coronavirus Aid, Relief, and Economic Security (CARES) Act, the Coronavirus Local Fiscal Recovery Funds can be used for the following purposes:
- Respond to or mitigate the public health emergency with respect to COVID-19 or its negative economic impacts.
- Cover costs incurred as a result of such emergency.
- Replace revenue that was lost, delayed, or decreased (as determined based on revenue projections for the metropolitan city, non-entitlement unit of local government, or county as of Jan. 27, 2020) as a result of such emergency.
- Address the negative economic impacts of such emergency.
The League of Minnesota Cities applauds the passage of the American Rescue Plan as one step closer to providing direct aid to cities of all sizes.