American Rescue Plan Act Includes Billions for Local Government

On March 11, 2021, President Biden signed into law H.B. 1319, the American Rescue Plan Act.  The Act provides $1.9 trillion in additional coronavirus relief, including $7.17 billion for E-rate, $10 billion for state-level broadband and other infrastructure projects as well as $130.2 billion for local governments. Below is a brief summary of these provisions of the Act.

E-Rate Funds:

The Act provides $7.17 billion to create an Emergency Connectivity Fund to reimburse e-rate eligible schools and libraries to enable them to provide eligible equipment or advanced telecommunications and information services during the pandemic, including in locations other than a school or library. The FCC is required to issue regulations for distribution of the Fund within 60 days of enactment.

“Eligible equipment” includes:

• Wi-Fi hotspots
• Modems
• Routers
• Devices that combine a modem and router
• Connected devices (defined to include “a laptop computer, tablet computer, or similar end-user device that is capable of connecting to advanced telecommunications and information services”)

The term “advanced telecommunications and information services” means advanced telecommunications and information services, as that term is used in section 254(h) of the Communications Act of 1934 (47 U.S.C. 254(h)).

State, Territory and Tribal Infrastructure Funds:

The Act includes $10 billion for states, territories and tribal governments to carry out “critical capital projects directly enabling work, education, and health monitoring, including remote options, in response to the public health emergency…” which clearly encompasses broadband projects.  The Treasury Secretary is required to establish a process of applying for grants to access this funding not later than 60 days after enactment.

Local Fiscal Recovery Fund:

The bill provides a total of $130.2 billion, to remain available through December 31, 2024, for local governments. The funds are allocated as follows:

• $45.57 billion in direct payments to non-county municipalities with populations of at least 50,000, using a modified Community Development Block Grant formula;  
• $19.53 billion for non-county municipalities with populations of less than 50,000, to be paid to the states, which in turn must distribute the funds to municipalities (based on population) within 30 days, with possible extensions of time where there is an “excessive administrative burden” for the state; these payments may not exceed the amount equal to 75 percent of the most recent budget for the local government as of January 27, 2020;
• $65.1 billion for payments directly to counties to be distributed based on population.

These funds may be used to cover costs incurred by December 31, 2024:

• to respond to the public health emergency with respect to COVID–19 or its negative economic impacts, including assistance to households, small businesses, and nonprofits, or aid to impacted industries such as tourism, travel, and hospitality;
• to respond to workers performing essential work during the COVID–19 public health emergency by providing premium pay to eligible workers of the local government that are performing such essential work, or by providing grants to eligible employers that have eligible workers who perform essential work;
• for the provision of government services to the extent of the reduction in revenue due to the COVID–19 public health emergency relative to revenues collected in the most recent full fiscal year of the local government prior to the emergency; or
• to make necessary investments in water, sewer, or broadband infrastructure.

Other provisions:

• Funds may not be deposited into any pension fund.
• Local governments are allowed to transfer funds to a private nonprofit organization (as that term is defined in 42 U.S.C. 11360(17)), a public benefit corporation involved in the transportation of passengers or cargo, or a special-purpose unit of state or local government.
• Local governments are required to provide "periodic reports" to the Treasury Secretary providing a detailed accounting of the use of funds.
• Treasury Secretary is to make payments in two equal tranches, the first not later than 60 days after the date of enactment and the second not earlier than 12 months after the date on which the first tranche amount is paid.

Economic Development Funds:

The Act provides $3 billion through September 30, 2022, to be allocated by the Department of Commerce for economic adjustment assistance as authorized by sections 209 and 703 of the Public Works and Economic Development Act of 1965 (42 U.S.C. 3149 and 3233) to prevent, prepare for, and respond to the coronavirus and for necessary expenses for responding to economic injury as a result of the coronavirus.