By Hillary Thompson, Jeffrey Meyers
The Coronavirus State and Local Fiscal Recovery Funds (SLFRF), passed through the American Rescue Plan Act (ARPA), included $350 billion of funds for states, tribes, and territories and local governments to respond to and recover from the COVID-19 pandemic. Originally, the allowed uses of this funding included:
More than a year ago, additional flexibility was proposed in a Senate Bill (S.3011), called the State, Local, Tribal, and Territorial Fiscal Recovery, Infrastructure, and Disaster Relief Flexibility Act. This bill was passed twice by the US Senate but was never taken up by the US House of Representatives. On December 22, 2022, the provisions of S. 3011 were added to the Consolidated Appropriations Act, 2023 (CAA) as an amendment, by a bipartisan voice vote. It became law on December 29th, when President Biden signed the new omnibus spending bill.
The important details of how this flexibility will be implemented remain to be determined and published by the US Treasury, and SLFRF recipients should await anticipated guidance from Treasury before deciding to use SLFRF funds for any of the new eligible uses. The flexibility enacted includes:
Sets the amount of Lost Revenue funding that can be spent generally on the provision of government services to the greater of either the actual lost revenue calculation or $10 million. This change had already been made administratively by Treasury.
Allows for SLFRF funds to be used toward emergency relief from natural disasters or the negative economic impacts of natural disasters, including temporary emergency housing, food assistance, financial assistance for lost wages, or other immediate needs.
Provides state and local governments authority to use funds for certain infrastructure categories beyond those currently specified in ARPA (sewer, water, and broadband projects). Funds now can be expended for projects that meet existing eligibility criteria for a large number of existing transportation and infrastructure programs (see below for the list of programs). For these new eligibility categories, some specific requirements apply:
Funds under this eligibility category must be obligated by December 31, 2024, and all expenditures completed by September 30, 2026 (as opposed to the December 31, 2026, expenditure deadline provided for other uses of SLFRF).
The new flexibility will take effect when Treasury issues guidance implementing the new law. Treasury is required under the CAA to either issue new guidance or promulgate a federal regulation (in consultation with the Department of Transportation) no later than 60 days after the CAA’s enactment implementing this new flexibility, and we recommend that SLFRF recipients wait for Treasury’s action before changing current approaches. SLFRF recipients, however, may wish to wait until after March 2023 to obligate remaining SLFRF funds, as additional projects related to transportation, transit, sustainability, and community development will be eligible for SLFRF use at that time.
Nationally significant freight and highway projects (can also be used for non-federal cost share)
Fixed guideway or small start capital projects (can also be used for non-federal cost share)
Mega Program, a.k.a. National Infrastructure Project Assistance (can also be used for non-federal cost share)
Transportation Infrastructure Finance and Innovation Act (TIFIA) program (can also be used for non-federal cost share and loan repayments)
Appalachian Development Highway System
Community Development Block Grant programs
National Highway Performance Program
Bridge Investment Program
Surface Transportation Block Grant Program
Metropolitan Transportation Plan
Highway Safety Improvement Program
Congestion Mitigation and Air Quality Improvement Program
National electric vehicle charging and hydrogen, propane, and natural gas fueling corridors
Territorial and Puerto Rico Highway Program
National Highway Freight Program
Rural Surface Transportation Grant Program
Carbon Reduction Program
Promoting Resilient Operations for Transformative, Efficient, and Cost-Saving Transportation (PROTECT) Program
Tribal Transportation Program
Federal Lands Transportation Program
Federal Lands Access Program
Urbanized Area Formula Grants
Bridge Replacement, Rehabilitation, Preservation, Protection, and Construction Program
Rural Area Formula Grants
State of Good Repair Grants
Grants for Buses and Bus Facilities Program
Rebuilding American Infrastructure with Sustainability and Equity (RAISE) Program
National Culvert Removal, Replacement, and Restoration Grant Program
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