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Are the costs of a universal basic income program an eligible use of ARP funding?

Assuming that “universal basic income” (UBI) is defined as a government program in which every adult citizen receives a set amount of money on a regular basis, a municipality’s implementation of such a program will most likely not be considered an eligible use of funds obtained from the American Rescue Plan Act of 2021 (“ARP”). Neither the statute nor the U.S. Department of the Treasury’s (“Treasury”) Coronavirus State and Local Fiscal Recovery Plan (“CSLFRF”) Interim Final Rule (the “Rule”) includes UBI as an eligible use.

There are four authorized use categories of CSLFRF funds:

  • To respond to the COVID-19 public health emergency or its negative economic impacts;  
  • To ease fiscal pressure on State, local, and Tribal governments that might otherwise lead to harmful cutbacks in employment or government services; 
  • To provide premium pay to essential workers; and
  • To make necessary investments in water, sewer, or broadband infrastructure.[1]

The Rule generally promotes and streamlines the provision of assistance to individuals and communities in greatest need, particularly communities that have been historically disadvantaged and experienced disproportionate impacts of the COVID-19 crisis. Providing relief to disadvantaged populations aligns with E.O. 13985 Executive Order On Advancing Racial Equity and Support for Underserved Communities Through the Federal Government, which laid out an Administration-wide priority to support “equity for all, including people of color and others who have been historically underserved, marginalized, and adversely affected by persistent poverty and inequality.” There are a variety of different programs and services a municipality may utilize to assist workers and households who have been negatively impacted economically by the COVID-19 pandemic, such as assistance to households[2] and premium pay to eligible workers. [3]

The Rule highlights specific eligible services to support low-income areas that have been unduly impacted by the pandemic by:

  • establishing definitions of essential workers eligible for premium pay;
  • encouraging Fiscal Recovery Funds recipients to serve workers based on financial need;
  • providing that recipients may use Fiscal Recovery Funds to restore (to pre-pandemic levels) state and local workforces where women and people of color are disproportionately represented; and
  • targeting investments in broadband infrastructure to unserved and underserved areas.[4] 

Ultimately, neither the statute nor the associated regulatory guidance discuss the provision of a universal basic income program, and such a program is unlikely to meet eligibility criteria published to date.

Last updated: July 1, 2021

[1] American Rescue Plan Act of 2021 § 9901, Pub. L. No. 117-2, amending 42 U.S.C. § 801 et seq., available at [117]: https://home.treasury.gov/system/files/136/FRF-Interim-Final-Rule.pdf.  

[2] U.S. Department of the Treasury, Coronavirus State and Local Fiscal Recovery Funds: Frequently Asked

Questions (updated June 24, 2021), Q2.4. at [4-5], available at: https://home.treasury.gov/system/files/136/SLFRPFAQ.pdf

[3] Id., at [19] 4.7.