American Rescue Plan Act: Considerations for Wisconsin Local Governments
The Wisconsin Department of Revenue (DOR) posted Form SL-330: Coronavirus Local Recovery Funds Request, which is the form municipalities with a population under 50,000 (non-entitlement units of government (NEUs)) must electronically file (e-file) with DOR to request American Rescue Plan Act – Local Fiscal Recovery Funds (LFRF).
Note: If you are a county or metropolitan city, visit the U.S. Department of Treasury (Treasury) website for funding details.
The deadline to request LFRF funds from the Wisconsin DOR is Friday, June 18, 2021 – make sure to request funds today! For more information, visit https://www.revenue.wi.gov/Pages/SLF/COTVC-News/2021-06-08.aspx
UW-Madison, Division of Extension can provide support to local governments considering how to use their ARPA funds. The following document highlights Extension support and resources available along with key contact information for potential areas in which local governments may be considering investing their ARPA funds.
On March 11, 2021, the American Rescue Plan Act (ARPA) of 2021 was signed into law. It provides $1.9 trillion in economic stimulus to aid the recovery from the COVID-19 pandemic. ARPA created the Coronavirus State and Local Fiscal Recovery Fund which provides $350 billion for states, counties, municipalities, tribes, and territories, including $130 billion for local governments split evenly between municipalities and counties.
ARPA will provide Wisconsin counties, cities, and local jurisdictions approximately $3 billion. Localities will receive the funds in two tranches – the first, after the U.S. Treasury certifies the proceeds to each jurisdiction and the second, one year later. Funding must be spent by the end of calendar year 2024. Estimates of the allocations to Wisconsin local government entities are available here. This list will be updated after the US Treasury certifies each jurisdictions proceeds.
The U.S. Department of the Treasury is responsible for distributing the funding, and they are currently developing methods and guidance for the allocation and oversight process. Initial guidance has been released and is available on this page. Specific guidance for “non-entitlement units” (generally, those local government units with a population less than 50,000) is available here.
A summary of provisions of the Act are available on the GFOA website and the GFOA’s analysis that provides highlights by section and additional resources for each provision is available here.
Analysts note that the law includes these eligible ARPA uses:
- Revenue replacement for the provision of government services to the extent of the reduction in revenue due to the COVID-19 public health emergency, relative to revenues collected in the most recent fiscal year prior to the emergency
- COVID-19 expenditures or negative economic impacts of COVID-19, including assistance to small businesses, households, hard-hit industries, and economic recovery
- Premium pay for essential workers
- Investments in water, sewer, and broadband infrastructure
Restrictions on the uses of these funds include:
- Funds allocated to states cannot be used to directly or indirectly offset tax reductions or delay a tax or tax increase
- Funds cannot be deposited into any pension fund
Many associations and organizations are encouraging their town, city, village and county members to focus the spending on one time investments, not reoccurring expenditures.
Temporary Nature of ARPA Funds
ARPA funds are non-recurring so their use should be applied to one-time investments.
- Avoid creating new programs or add-ons which will require an ongoing financial commitment.
- Replenishing reserves used to offset revenue declines during the pandemic should be given high priority to rebuild financial flexibility/stability and restore fiscal resiliency.
- Use of ARPA funds to cover operating deficits caused by COVID-19 should be considered temporary and additional budget restraint may be necessary to achieve/maintain structural balance in future budgets.
- Investment in critical infrastructure is a particularly well-suited use of ARPA funds because it is a non-recurring expenditure that can be targeted to strategically important long- term assets that provide benefits over many years. However, care should be taken to assess any on-going operating costs that may be associated with the project.
ARPA Scanning and Partnering Efforts
State and local jurisdictions should be aware of plans for ARPA funding throughout their communities.
- Local jurisdictions should be cognizant of state-level ARPA efforts, especially regarding infrastructure, potential enhancements of state funding resources, and existing or new state law requirements.
- Consider regional initiatives, including partnering with other ARPA recipients. It is possible there are many beneficiaries of ARPA funding within your community, such as schools, transportation agencies and local economic development authorities. Be sure to understand what they are planning and augment their efforts; alternatively, creating cooperative spending plans to enhance the structural financial condition of your community.
Take Time and Careful Consideration
ARPA funds will be issued in two tranches to local governments. Throughout the years of outlays, and until the end of calendar year 2024, consider how the funds may be used to address rescue efforts and lead to recovery.
- Use other dedicated grants and programs first whenever possible and save ARPA funds for priorities not eligible for other federal and state assistance programs.
- Whenever possible, expenditures related to the ARPA funding should be spread over the qualifying period (through December 31, 2024) to enhance budgetary and financial stability.
- Adequate time should be taken to carefully consider all alternatives for the prudent use of ARPA funding prior to committing the resources to ensure the best use of the temporary funding.
Additional opportunities and recommendations
- ARPA funding provides a great opportunity to engage your community to identify priority investments. Consider a public participation process to help allocate the funds.
- Plan for the future. Investments in infrastructure, climate resiliency, and quality of life projects will all have long-term benefits. These projects are often difficult to fund on tax revenues so ARPA funds provide the opportunity to invest in the future.
- Get creative. Look for innovative partnerships and collaborations to implement strategic projects. Non-profit organizations, neighboring local governments, and regional organizations might all make good partners in investing ARPA funds to have the largest impact.
What should my local government do while we wait for more guidance?
The US Department of the Treasury has released information about preliminary steps that municipalities should take to facilitate quick receipt of funds. Metropolitan cities (population over 50,000) need a valid DUNS number, an active SAM registration, and payment information whereas Non-Entitlement Units of Local Government need a valid DUNS number to meet reporting requirements. A DUNS number is a unique nine-character number used to identify an organization. Registering for a DUNS number is free of charge. If an entity does not have a valid DUNS number, please call 1-866-705-5711 to begin the registration process.
Municipalities should also take informal steps to prepare for these funds. Assess government operations AND community needs to develop a plan for recovery. Gather your team and include internal and external stakeholders. Include resident voices. Get to know the community’s needs at all levels: individuals, families, organizations and businesses, and each level of government. Think about building connections across systems and levels. Solicit input from valuable staff and stakeholders to help create a comprehensive needs assessment. Make racial equity a part of your plan and ensure that you have set targets to support those who are often excluded.
More information on ARPA can be found at:
- National League of Cities – Frequently Asked Questions: https://www.nlc.org/covid-19-pandemic-response/arp-local-relief-frequently-asked-questions/
- National Association of Towns – ARPA Report
- National Association of Counties – Funding Information: https://www.naco.org/resources/featured/american-rescue-plan-act-funding-breakdown
- Cherry Beakert Company – Temporary Nature of ARPA Funds (https://www.cbh.com/guide/articles/american-rescue-plan-act-state-and-local-governments/)
Other Wisconsin ARPA Resources can be found at:
- League of Wisconsin Municipalities: https://www.lwm-info.org/1638/American-Rescue-Plan-Act
- Wisconsin Counties Association: https://www.wicounties.org/wca-american-rescue-plan-act-arpa-resources/
- Wisconsin Towns Association: https://www.wisctowns.com/information-library/
Link to the upcoming ARPA Summit: