Legislative Analysis for Counties_ State, Local, Tribal and Territorial Fiscal Recovery, Infrastructure And Disaster Relief Flexibility Act1/23/23, 5:50 PM Legislative Analysis for Counties: State, Local, Tribal and Territorial Fiscal Recovery, Infrastructure And Disaster Relief Flexibility Act
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On December 23, the U.S. Congress enacted the bipartisan State, Local, Tribal, and Territorial Fisca
l Recovery, Infrastructure, and Disaster Relief Flexibility Act <https://naco.sharefile.com/d-sa63d2
2383766472b92d496c80782d78c> as an amendment to the Fiscal Year (F Y) 2023 omnibus
appropriations bill. The amendment , which was championed by Senators John Cornyn (R-Texas)
and Alex Padilla (D-Calif.) provides additional flexibility for the $350 billion Coronavirus State and
Local Fiscal Recovery Fund (Recovery Fund) authorized under the American Rescue Plant Act
(ARPA), including infrastructure, community development , and disaster response. It will also
provide the U.S. Treasury with much-needed resources to assist counties in deploying recovery
funds.
Counties have supported this bill and advocated for its passage since it was first introduced and passed the U.S. Senate by unanimous consent in October 2021. NACo s
ent a letter to congressional leadership <https://www.naco.org/resources/state-territory-and-local-leaders-urge-congress-include-bipartisan-american-rescue-plan>
urging swift passage of the bill as part of a year-end spending package.
Counties nationwide will now be able to use a total of over $27 billion for new transportation and infrastructure projects, over $17 billion for government services and
ARPA funds to respond to the impacts of natural disasters and invest in Community Development Block Grant (CDBG)-eligible projects. The amendment additionally
expands eligibility of consolidated city-county governments to receive payments from the ARPA Local Assistance and Tribal Consistency Fund (LATCF).
This analysis provides an overview of key provisions included in the Cornyn/Padilla amendment and how they will impact county governments.
LEGISL ATIVE ANALYSIS FOR COUNTIES: STATE ,LOCAL , TRIBAL AND TERRITORIAL FISCALRECOVERY, INFR ASTRUCT URE AND DISASTERRELIEF FLE XIBILIT Y ACT
BY ERYN HURLEY NOVEMBER 2, 2021
VIEW YOUR COUNTY’S ARPA FLEXIBLE FUNDALLOCATION UNDER S. 3011
ACCE SS ALLOCATION ESTIMATE S <HT T P ://WWW.NAC O.ORG/RES OU R CE S/FEAT URED/FISCAL -REC OVER Y-F UND -F LEXIBILITY>
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KE Y HIGHLIGHTS
Permits counties to invest the greater of $10 million or 30 percent of their total ARPA Fiscal Recovery Fund allocation on new infrastructure-related and natural
disaster response activities and Community Development Block Grant projects
Codifies the standard allowance included in the US Department of Treasury ’s Final Rule that allows counties to invest up to $10 million for the provision of
government services without having to go through a complicated “revenue loss” calculation
Expands eligibility to receive payments from the Local Assistance and Tribal Consistency Fund (L ATCF) to include consolidated city-county governments
Unlocks administrative funds for the US Department of the Treasury to continue working with counties to implement this historic investment
The bill does not increase spending and does not place mandates on how counties can spend their Recovery Funds
Requires the US Department of Treasury and US Department of Transportation secretaries to report to Congress on the use of relief funds to ensure
accountability
Clarifies existing allocations set aside at the US Department of Treasury for tribal governments and ensures they receive funding delayed by legal barriers over
the last year
Allows a county that received less than $10 million in ARPA Recovery Funds to consider the entire allocation as flexible for use toward a broad range of
infrastructure projects outlined in the legislation
ARPA Recovery Funds will still need to be obligated by December 31, 2024, and expended by September 24, 2026
OVER VIE W OF PROVISIONS
The Recovery Fund, which NACo helped develop and strongly advocated for its passage, is a historic investment in our nation’s counties. These funds provide direct,
flexible aid for every county, parish and borough in America.
The legislation strengthens the Recovery Fund in the following ways, which ensures our nation’s recovery COVID-19 continues:
1. Allows Counties to Use ARPA Recovery Funds for Transportation and
Infrastructure Projects
The bill would allow counties to use the greater of $10 million or 30 percent of their ARPA Recovery Fund allocation for a wide variety of transportation infrastructure
projects, including:
ELIGIBLE TRANSPORTATION & INFRASTRUCTURE PROJECTS
National Highway Performance Program
Bridge Investment Program
Surface Transportation Block Grant Program
Metropolitan Transportation Planning
Highway Safety Improvement Program
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Counties would also be able to use Recovery Funds under this section to meet local match requirements for the following:
Nationally Significant Freight and Highway Projects Program
Transportation Infrastructure Finance Improvement Act (TIFIA) Loan Program – in addition to satisf ying the TIFIA local match requirement , these funds could
also be used to repay a TIFIA loan
Fixed Guideway Capital Investment Grant Program
National Infrastructure Project Assistance (new competitive program for which counties would be directly eligible if the program is established through the
enactment of the Infrastructure Investment and Jobs Act <https://www.naco.org/resources/legislative-analysis-counties-infrastructure-investment-jobs-act> (H.R.
3684)
Congestion Mitigation and Air Quality Improvement Program
Territorial and Puerto Rico Highway Program
National Highway Freight Program
Rural Surface Transportation Grant Program
Carbon Reduction Program
PROTECT Program
Alternative Fueling Infrastructure
Federal Lands Transportation Program
Federal Lands Access Program
RAISE Grant Program
ADHS Program
Urbanized Area Formula Grants
Formula Grants for Rural Areas
State of Good Repair Grants
Grants for Buses and Bus Facilities
National Culvert Removal, Replacement, and Restoration Program
Community Development Block Grant
Bridge Replacement , Rehabilitation, Preservation, Protection, and Construction Program
Tribal Transportation Program
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Notably, counties would be prohibited under this section from using ARPA Recovery Funds for operating expenses.
In response to the U.S. Department of Treasury ’s Interim Final Rule for the Recovery Fund, NACo strongly urged <https://www.naco.org/sites/default/files/documents/N
ACo_Comments_on_Treasury_Recovery_Fund%20IFR.pdf> that eligible use of funds should be expanded to include a broad range of capital investment projects,
including transportation and infrastructure projects.
2. Allows Counties to Use ARPA Recovery Funds for Government Services
The bill would allow counties to consider up to $10 million of their ARPA Recovery Fund allocation as if it were “lost revenue” that could be used toward the provision of
government services, as defined by the U.S. Department of Treasury ’s Interim Final Rule, including but not limited to:
Maintenance of infrastructure
Pay-go funded construction of infrastructure, such as roads (pay-go refers to “paying-as-you-go” or utilizing current revenue rather than borrowing against it , ex .
by issuing a bond)
Modernization of cybersecurity, including hardware, software and protection of critical infrastructure
Healthcare services
Environmental remediation
School or educational services
Provision of police, fire and other public safety services
Counties would not be allowed to use these funds towards the following:
Rainy day/reserve funds
Legal settlements
Pension obligations
Debt payments
The provision would assist smaller counties in complying with program requirements.
3. Flexibility to Use ARPA Funds for Programs Authorized Under the Community
Development Block Grant Program
In addition to using Recovery Funds for new transportation and infrastructure projects, S. 3011 would allow counties to use funds to invest in projects authorized under
the Community Development Block Grant (CDBG) program. As with transportation and infrastructure projects, counties may use up to $10 million or 30 percent,
whichever is greater, of their total Recovery fund allocation for these activities.
If a county decides to use Recovery Funds for projects authorized under CDBG, the activities must meet the requirements put forth under title I of the Housing and
Community Development Act of 1974, which established the CDBG program.
In response to the US Department of Treasury ’s Interim Final Rule for the Recovery Fund, NACo strongly urged <https://www.naco.org/sites/default/files/documents/N
ACo_Comments_on_Treasury_Recovery_Fund%20IFR.pdf> that CDBG expenditures be included as eligible uses of Recovery Funds.
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The CDBG program provides critical funding to counties to improve local communities and serve our most vulnerable residents. Counties utilize the flexibility of CDBG
funds to support projects that meet their local priorities in addressing community and economic development, housing, water and infrastructure and human service
needs while creating jobs through the expansion and retention of businesses.
4. Clarifies Implementation of the Local Assistance and Tribal Consistency Fund
As part of the State and Local Fiscal Recovery Fund, the ARPA authorized the $2 billion Local Assistance and Tribal Consistency Fund (the Fund), which provided $1.5
billion in direct funds to revenue share (I.e., public lands) counties.
S. 3011 would make important clarifications to the implementation of the Fund by:
Reducing the full amount of direct funding to counties eligible to receive an allocation under the Fund by 1 percent, to $742.5 million per year for Fiscal Years
(FYs) 2022 and 2023 and directs the remaining $7.5 million per year to US territorial governments.
Defining an “eligible revenue share county ” qualifying for direct county aid under the Fund as the same counties as those qualifying for annual Payment in Lieu
of Taxes (PILT ) payments, thus ensuring these funds will go exclusively to public lands counties
Lays out special criteria for payment distribution to towns rather than counties in those states where counties have limited governmental functions
Disbursing funds for Alaska boroughs to the state, which will then be distributed to local governments based on the formula that NACo is assisting the US
Treasury to develop
5. Flexibility to Use Funds for Natural Disaster Response
The bill would allow counties to use ARPA Recovery Funds toward emergency relief services to address 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.
Contact
Eryn Hurley
Director of Government Affairs & Federal Fellowship Initiative
(202) 942-4204
ehurley@naco.org