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COVID-19 Federal Assistance e311

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Lost Revenue & Revenue Replacement

After the Revenue Loss Amount has been calculated, is it permissible to use funds for expenses incurred prior to March 3, 2021?

Municipalities may not use CSLFRF funds to cover costs incurred prior to March 3, 2021.[1] 

As specified in the U.S. Department of the Treasury’s (“Treasury”) Coronavirus State and Local Fiscal Recovery Funds (“CSLFRF”) Interim Final Rule (the “Rule”), municipalities must employ a “forward looking” approach for the use of CSLFRF funds.[2] The Rule:

[P]ermits funds to be used to cover costs incurred beginning on March 3, 2021. This aligns the period for use of Fiscal Recovery Funds with the period during which these funds may not be used to offset reductions in net tax revenue. Permitting Fiscal Recovery Funds to be used to cover costs incurred beginning on this date will also mean that recipients that began incurring costs in the anticipation of enactment of the [American Rescue Plan Act of 2021 (“ARP”)] and in advance of the issuance of this rule and receipt of payment from the Fiscal Recovery Funds would be able to cover them using these payments.[3]

Further, the Rule's associated Frequently Asked Questions ("FAQs") regarding CSLFRF are under Revenue Loss state:

The Interim Final Rule gives recipients broad latitude to use funds for the provision of government services to the extent of reduction in revenue ... However, use of funds for government services must be forward looking for costs incurred by the recipient after March 3, 2021.[4]

However, while a municipality may only use CSLFRF funds to cover expenses incurred prior to March 3, 2021, costs for eligible infrastructure projects that were started prior to March 3, 2021 may be eligible so long as the costs to which CSLFRF is being applied were incurred subsequent to March 3, 2021.[5]

Municipalities may wish to examine Federal Emergency Management Agency (“FEMA”) Public Assistance (“PA”) funds as an alternative for certain COVID-related expenses incurred prior to March 3, 2021. As of August 17, 2021, the White House has extended FEMA’s 100% reimbursement for COVID emergency protective measures and extended COVID Title 32 authorization – at 100% cost share – through December 31, 2021. This allows for retroactive 100% reimbursement of costs for eligible safe-opening and operations work prior to January 2021 (back to January 20, 2020), thus providing additional opportunity for expense reimbursement through PA funds.[6]

Last Revised: August 26, 2021

[1] The ARP does permit some retroactive payments that predate March 3, 2021 for authorized uses of ARP funds other than revenue loss provision, such as the use of ARP funds for retroactive premium pay or for household economic assistance payments for harms and costs that predate March 3, 2021. In both cases, though the work or cost can have occurred prior to the effective date of March 3, 2021, the payments for premium pay or economic assistance cannot have been obligated by the municipality prior to that effective date. See Coronavirus State and Local Fiscal Recovery Funds, Frequently Asked Questions (as of July 19, 2021) – FAQ #4.7, available at: https://home.treasury.gov/system/files/136/SLFRPFAQ.pdf.

[3] Id., at 99.

[4] Coronavirus State and Local Fiscal Recovery Funds, Frequently Asked Questions (as of July 19, 2021) – FAQ #4.7, at 21, available at: https://home.treasury.gov/system/files/136/SLFRPFAQ.pdf.

[5] Id.

[6] The White House, “Memorandum on Maximizing Assistance to Respond to COVID-⁠19,” available at https://www.whitehouse.gov/briefing-room/presidential-actions/2021/08/17/memorandum-on-maximizing-assistance-to-respond-to-covid-19/.