When calculating revenue, how should one-time expenses be treated? Should one-time non-operational expenses be excluded when calculating revenue?

The United States Department of the Treasury’s (“Treasury”) Coronavirus State and Local Fiscal Recovery Funds (“CSLFRF”) Final Rule defines general revenue to include “revenue collected by a recipient and generated from its underlying economy, and it would capture a range of different types of tax revenues, as well as other types of revenue that are available to support government services.”[1] Treasury’s definition of general revenue was expanded in the Final Rule to “allow recipients that operate utilities that are part of their own government to choose whether to include revenue from these utilities in their revenue loss calculation” and to add “liquor store revenue to the definition of general revenue.”[2], [3]

While the Final Rule does not address one-time expenses, Treasury states:

In response to requests that the definition of general revenue exclude revenue from special assessments, settlements that make the recipient whole for past expenditures, and one-time revenues such as revenue from the sale of property, Treasury is maintaining its position in the final rule that such revenue is included in general revenue. While such revenues may be less predictable than other sources of revenue (e.g., property taxes), these are not uncommon sources of revenue for recipients, and their inclusion provides a more complete view of the financial health of a recipient government and is consistent with the Census Bureau methodology.[4]

Treasury is expected to issue Frequently Asked Questions (“FAQs”) for the Final Rule at a later date, and it is possible the updated response will provide more guidance on one-time expenses.[5]

Treasury’s definition of general revenue is based on the Census Bureau’s “General Revenue from Own Sources” in the Annual Survey of State and Local Government Finances.[6] Following Treasury’s guidance, recipients that seek further clarification on the definition of general revenue may refer to the classification and instructions used to complete the Census Bureau’s Annual Survey.[7]

Last Revised: March 16, 2022