NATOA Urges Treasury Not to Restrict Rescue Plan Act Funding for Broadband

In a letter to Treasury Secretary Yellen, NATOA urged the Treasury Department to ensure its forthcoming guidance on use of funds allocated to local governments in the American Rescue Plan Act does not restrict the uses related to broadband.  The letter echoes the comments of the National League of Cities and National Association of Counties encouraging the Department’s guidance to allow maximum flexibility in the use of these funds for broadband purposes.  As noted in the letter, the Act does not restrict these funds in a manner other federal broadband funds have been restricted (e.g., precluding use of funds where other state/federal funding has been provided; mandating use of funds only for unserved areas) and we encourage Treasury not to add such restrictions in its guidance

The Act provides $130.2 billion for local governments, to remain available through December 31, 2024. 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.