Over the last year, The League has worked in partnership with the National League of Cities (NLC) and our members to advocate for flexible and direct federal funding for local governments. The League, along with NLC, worked diligently to advocate to Congress on our members’ behalf through letters, press releases and meetings, in addition to engaging members in our advocacy efforts through press conferences and take action alerts.
President Joe Biden signed The American Rescue Plan into law on March 11, ensuring direct funding for local governments. Thanks to our collective efforts, Pennsylvania will receive roughly $13 billion dollars, close to $8 billion of which will go directly to our local governments to help recover from the pandemic.
Under the American Rescue Plan, local governments are directly allocated $65.1 billion out of the total $350 designated for states, local and tribal governments. Of this direct funding, about $45.5 billion will go to CDBG entitlement communities and about $19.5 billion will go to non-entitlement communities. For non-entitlement municipalities with a population less than 50,000, allocation will be capped at 75 percent of the municipality’s most recent pre-pandemic budget. Additionally, the grants will be allocated in two separate tranches, and you would not need to spend the entire amount of the first tranche in order to receive the second tranche. The grant funds must be used by December 31, 2024, as all money not spent will be returned to the U.S. Department of Treasury.
The U.S. Department of Treasury has 60 days to develop the regulations regarding the grants, including eligible uses of the funds, providing definitions and generally clarifying language in the American Rescue Plan. Additionally, Treasury will come out with the final list of grant allocations, so it is possible the current grant estimate for your municipality may change as Treasury is the ultimate arbiter for the amount each local government will receive. While we wait for more guidance and information from Treasury, there are a few things we do know: municipalities may use grant funds for revenue replacement; grant funds may be transferred to private non-profits, public benefit corporations involved in transportation of passengers and cargo, and special purpose units of state and local governments; grant funds cannot be used for pensions; and grant funds will be no more restrictive than the CARES Act Coronavirus Relief Fund.
We ask that you please be patient while we wait for Treasury to release their regulations, and we encourage you to visit the resources provided on this webpage.
We will continue to work with NLC and our Congressional delegation to provide information to all of you as it becomes available.