Treasury rule provides flexibility for state and local government pandemic aid

State and local governments will have increased flexibility to pursue a wider range of uses under the State and Local Fiscal Recovery Funds (SLFRF) program as a result of a new final rule issued Thursday by Treasury that takes effect April 1.

SLFRF funds were awarded as part of the American Rescue Plan Act, P.L. 117-2, to deliver $350 billion to state, local, and Tribal governments as aid for the COVID-19 pandemic. More than $245 billion has been distributed to governments.

Uses for the funds include expanding access to testing and vaccines and other steps to protect community members, including those that are high-risk and underserved. Prior to the release of the final rule, governments were encouraged to begin using funds under the guidance contained in an interim final rule.

The final rule is designed to provide additional clarity for recipient governments. The rule’s provisions:

• Expand the permissible uses for the funds. The rule clarifies that recipients can use funds for certain capital expenditures to respond to public health and economic impacts and making services like child care, early education, addressing learning loss, and affordable housing development available to all communities affected by the pandemic.

• Expand support for public-sector hiring and capacity that is critical for economic recovery and maintaining public services for communities.

• Streamline options to provide premium pay for essential workers.

• Broaden eligible water, sewer, and broadband infrastructure projects.

• Are designed to simplify the program for small localities.

— To comment on this article or to suggest an idea for another article, contact Ken Tysiac at Kenneth.Tysiac@aicpa-cima.com.