Treasury Issues Final Local Fiscal Recovery Funds Rule for COVID Response

On January 6, the U.S. Department of the Treasury issued the Final Rule for the State and Local Fiscal Recovery Funds (SLFRF) program, as a part of the American Rescue Plan. This program delivers $350 billion to state, local, and tribal governments to support their response to and recovery from the COVID-19 pandemic. In addition to providing health and vaccine services, supporting impacted families and businesses, and economic recovery, the SLFRF provides funding for maintaining vital public services that include eligible water and wastewater, and broadband infrastructure projects.

This Final SLFRF Rule will take effect on April 1, 2022 and provides additional clarity and flexibility from what was included in the May 2021 interim final rule for recipient governments, including:

• A non-exhaustive list of uses for recipients to respond to COVID-19 and its economic impacts and clarifying that recipients can use funds for certain capital expenditures to respond to public health and economic impacts.
• Expanded support for public sector hiring and capacity, which is critical for the economic recovery and in maintaining vital public services for communities.
• Streamlined options to provide premium pay for essential workers, who bear the greatest health risks because of their service in critical sectors.
• Broadened eligible water and sewer projects that can go beyond eligible uses under the DWSRF and CWSRF, to include a wide range of projects such as lead remediation, stormwater infrastructure, and aid for private wells and septic systems.
• A simplified program for small localities that includes an option to elect a standard allowance for revenue loss rather than calculating revenue loss through the full formula.

For more information, read the press release, view the final rule, and read an overview of the major rule provisions.