“Standard Allowance” Finding Greatly Expands Eligible Uses for American Rescue Plan Funding

Key policy change by US Treasury will greatly impact community strategies, particularly in smaller municipalities.

A section of the US Treasury’s American Rescue Plan Act (ARPA) Final Rule issued last week provides flexibility for communities receiving allocations under $10 million. A “standard allowance” of $10 million was added to the Replace Lost Public Sector Revenue rules last week, which allows recipients to use ARPA funding for a nearly universal provision of government services up to the allowance, include transportation infrastructure such as roads and bridges,. 

This finding allows ALL local recipients of ARPA funds to elect a designation of up to $10 million claimed as lost revenue versus calculating lost revenue for each year from 2020 through 2023. For thousands of communities across the country, this means their entire allocation may be used for any services or projects generally provided by a municipal government.

For infrastructure funded through these means, funding may only be used for “pay-go” infrastructure, which means utilizing the funding at hand. ARPA funding may not be used to pay down borrowed sums for infrastructure, whether debts are existing or incurred as part of a future project. 

Communities receiving over $10 million in ARPA allocations may also choose to claim the standard allowance, or calculate their revenue loss if it is anticipated to be higher than $10 million.

 If you have specific questions in relation to the ARPA Final Rule, please feel free to contact me.