How can cities balance spending federal funds on transformative internal projects against the desire to give funds directly to the community?

Under the U.S. Department of the Treasury’s (“Treasury”) Final Rule for Coronavirus State and Local Fiscal Recovery Funds (“CSLFRF”), “the [CSLFRF] program provides vital resources for state, local, and Tribal governments to respond to the pandemic and its economic effects and to replace revenue lost due to the public health emergency, preventing cuts to government services.”[1] Additionally, a foundational goal of the CSLFRF program is to “[b]uild a strong, resilient, and equitable recovery by making investments that support long-term growth and opportunity.”[2] Should a municipality determine that an internal project is an investment into their municipality’s recovery, they can use funds to address this matter.

Municipalities seeking to utilize CSLFRF funding for internal projects should: (i) consider the long-term impact that the deployment of funds may have on the community; and (ii) align each project with the objectives of the larger municipal recovery plan and the goals and requirements of CSLFRF.

Under the Final Rule’s revenue loss provision, CSLFRF may be spent on any traditional government service. This includes, “[g]eneral government administration, staff, and administrative facilities.”[3] Likewise, the revenue loss provision allows for other traditional government services that benefit communities, including:

• Construction of schools and hospitals;
• Road building and maintenance, and other infrastructure;
• Health services;
• Environmental remediation; and
• Provision of police, fire, and other public safety services (including purchase of fire trucks and police vehicles).[4]

Depending on the nature of the program, this provision could be used to both address a transformative internal project or provide valuable services to the community.

Last Revised: March 7, 2022