The American Rescue Plan Act of 2021 (ARPA) is the sixth federal COVID-19 relief bill passed in the last year, and is by far the largest infusion of resources to the State of Connecticut. Specifically, the State expects approximately $6Billion of ARPA funds to enter through various grants to the State and Local governments.
Coronavirus State and Local Fiscal Recovery Funds The Coronavirus State and Local Fiscal Recovery Funds Will Deliver $350 Billion for State, Local, Territorial, and Tribal Governments to Respond to the COVID-19 Emergency and Bring Back Jobs.
The Coronavirus State and Local Fiscal Recovery Funds provide eligible state, local, territorial, and Tribal governments with a substantial infusion of resources to meet pandemic response needs and rebuild a stronger, and more equitable economy as the country recovers.
Recipients may use these funds to:
Support Public Health Expenditures
For example, funding COVID-19 mitigation efforts, medical expenses, behavioral healthcare, and certain public health and safety staff.
Address Negative Economic Impacts Caused by the Public Health Emergency
Including economic harms to workers, households, small businesses, impacted industries, and the public sector.
Replace Lost Public Sector Revenue
For example, using this funding to provide government services to the extent of the reduction in revenue experienced due to the pandemic.
Provide Premium Pay for Essential Workers
For example, offering additional support to those who have and will bear the greatest health risks because of their service in critical infrastructure sectors.
Invest in Water, Sewer, and Broadband Infrastructure
For example, making necessary investments to improve access to clean drinking water, support vital wastewater and stormwater infrastructure, and to expand access to broadband internet.
Within these overall categories, recipients have broad flexibility to decide how best to use this funding to meet the needs of their communities.
Recipients may NOT use these funds to:
Offset a Reduction in Net Tax Revenue
Recipients may not use this funding to directly or indirectly offset a reduction in net tax revenue due to a change in law from March 3, 2021 through the last day of the fiscal year in which the funds provided have been spent. The American Rescue Plan ensures that funds needed to provide vital services and support public employees, small businesses, and families struggling to make it through the pandemic are not used to fund reductions in net tax revenue.
Treasury’s Interim Final Rule implements this requirement. If a state, locality, or territory cuts taxes, they must demonstrate how they paid for the tax cuts from sources other than Coronavirus State Fiscal Recovery Funds—by enacting policies to raise other sources of revenue, by cutting spending, or through higher revenue due to economic growth. If the funds provided have been used to offset tax cuts, the amount used for this purpose must be paid back to the Treasury.
Deposit into Pension Funds
No recipient may use this funding to make a deposit to a pension fund. Treasury’s Interim Final Rule defines a “deposit” as an extraordinary contribution to a pension fund for the purpose of reducing an accrued, unfunded liability. While pension deposits are prohibited, recipients may use funds for routine payroll contributions for employees whose wages and salaries are an eligible use of funds.
Additional information will be made available soon.
Governor Lamont developed five key areas for these investments:
(1) Defeating COVID-19
(2) Investing in our Future
(3) Creating a More Affordable Connecticut
(4) Economic Growth that Works for All
(5) Modernizing State Government
Treasury Department Guidance
FEMA Guidance and Resources
Economic Development Administration (EDA) Programs
Under the American Rescue Plan, EDA was allocated $3 billion in supplemental funding to assist communities nationwide in their efforts to build back better by accelerating the economic recovery from the coronavirus pandemic and building local economies that will be resilient to future economic shocks.