The American Rescue Plan Provides Stimulus to Local Governments

A recent infusion of stimulus funds from the federal government has municipalities all over the U.S. wondering how they’re going to use their newfound resources.

The City of Frederick was one of many local governments in Maryland to receive a check earlier this spring. Thanks to the American Rescue Plan (ARP) Act that was signed into law in March 2021, $350 billion in emergency funding will go to fight the negative public health and economic impacts of the Covid-19 pandemic. The Plan specifically allocates a large portion to state, local, territorial, and tribal governments. This specialized funding, known as the Coronavirus State and Local Fiscal Recovery Funds (SLFRF), seeks to support local Covid-19 response efforts, replace lost revenue for eligible governments, support economic stabilization, and more.

Local and state governments of Maryland are on track to receive $6.355 billion in SLFRF. With this stimulus relief, governments will be able to address critical issues facing their communities. Half of these funds were delivered in May of 2021, and the rest will be distributed in June of 2022.

The ARP strikes a delicate balance between providing general guidelines to follow and granting flexibility for spending. The Final Interim Rule of the ARP dictates that funding may be used to support public health expenses, address negative economic impacts caused by the public health emergency, replace lost public sector revenue, provide premium pay for essential workers, and invest in water, sewer, and broadband infrastructure.

It’s no doubt the American Rescue Plan provides much-needed relief to address public health and economic challenges. However, some governments have been cautious when it comes to outlining a spending plan. Chestertown, MD has formed a committee to track and oversee how their funds are spent to ensure compliance. Before allocating their SLFRF dollars, Anne Arundel County launched a public community survey to gain feedback from residents.

The City of Frederick lost no time putting together their spending plan. With $10.6 million in aid to spend, the City has put forth a proposal that allocates funds to Sewer and Water Infrastructure ($5.8 million), Public Health ($3.75 million), Negative Economic Impact ($600,000), and Disproportionally Impacted Communities ($425,000). Before the City moves forward with the plan, the proposal will be sent before an Aldermen committee for approval.

Before Frederick County announced their spending plan for their allocated $50.4 million, the County sought community feedback via roundtable discussions and public surveys.  Using the data they collected, the County has put together a proposal for stakeholders to review and approve. They intend to spend their funding in the areas of Public Health ($12.4 million), Disproportionately Impacted Communities ($5 million), Negative Economic Impact ($3 million), and Revenue Replacement and Continuity of Government Services ($30 million). The County is currently evaluating projects that fall under the Continuity category.

The American Rescue Plan delivers unprecedented relief to many local municipalities and small governments. The program provides incentive to tackle costly infrastructure improvements for the betterment of communities everywhere.

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