American Rescue Plan Coronavirus State and Local Recovery Fund: Interim Final Rule Questions

5/17/2021

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The interim final rule issued by the Department of Treasury on the Coronavirus State and Local Recovery Fund solicited feedback on 38 questions. Over the next 45 days, NCSL will develop its response to the Treasury regarding the questions and welcomes input from state legislatures. Comments and questions can be submitted directly to arp@ncsl.org.

NCSL also encourages states to separately submit their own responses. Thank you in advance for your assistance.

Eligible Uses

  • Question 1: Are there other types of services or costs that the Treasury should consider as eligible uses to respond to the public health impacts of COVID-19? Describe how these respond to the COVID-19 public health emergency.
  • Question 2: The interim final rule permits coverage of payroll and benefits costs of public health and safety staff primarily dedicated to COVID-19 response, as well as rehiring of public sector staff up to pre-pandemic levels. How long should these measures remain in place? What other measures or presumptions might the Treasury consider to assess the extent to which public sector staff are engaged in COVID-19 response, and therefore reimbursable, in an easily administrable manner?
  • Question 3: The interim final rule permits the rehiring of public sector staff up to the government’s pre-pandemic staffing level, which is measured based on employment as of Jan. 27, 2021. Does this approach adequately measure the pre-pandemic staffing level in a manner that is both accurate and easily administrable? Why or why not?
  • Question 4: The interim final rule permits deposits to unemployment insurance trust funds, or using funds to pay back advances, up to the pre-pandemic balance. What, if any, conditions should be considered to ensure that funds repair the economic impacts of the pandemic and strengthen unemployment insurance systems?
  • Question 5: Are there other types of services or costs that the Treasury should consider as eligible uses to respond to the negative economic impacts of COVID-19? Describe how these respond to the COVID-19 public health emergency.
  • Question 6: What other measures, presumptions or considerations could be used to assess “impacted industries” affected by the COVID-19 public health emergency?
  • Question 7: What are the advantages and disadvantages of using Qualified Census Tracts and services provided by tribal governments to delineate where a broader range of eligible uses are presumed to be responsive to the public health and economic impacts of COVID-19? What other measures might the Treasury consider? Are there other populations or geographic areas that were disproportionately impacted by the pandemic that should be explicitly included?
  • Question 8: Are there other services or costs that the Treasury should consider as eligible uses to respond to the disproportionate impacts of COVID-19 on low-income populations and communities? Describe how these respond to the COVID-19 public health emergency or its negative economic impacts, including its exacerbation of pre-existing challenges in these areas.
  • Question 9: The interim final rule includes eligible uses to support affordable housing and stronger neighborhoods in disproportionately impacted communities. Discuss the advantages and disadvantages of explicitly including other uses to support affordable housing and stronger neighborhoods, including rehabilitation of blighted properties or demolition of abandoned or vacant properties. In what ways does, or does not, this potential use address public health or economic impacts of the pandemic? What considerations, if any, could support the use of Fiscal Recovery Funds in ways that do not result in resident displacement or loss of affordable housing units?

(Page 43 of the interim final rule)

Premium Pay

  • Question 10: Are there additional sectors beyond those listed in the interim final rule that should be considered essential critical infrastructure sectors?
  • Question 11: What, if any, additional criteria should the Treasury consider to ensure that premium pay responds to essential workers?
  • Question 12: What consideration, if any, should be given to the criteria on salary threshold, including measure and level, for requiring written justification?

(Page 51 of the interim final rule)

Revenue Loss

  • Question 13: Are there sources of revenue that either should or should not be included in the interim final rule’s measure of “general revenue” for recipients? If so, discuss why these sources either should or should not be included.
  • Question 14: In the interim final rule, recipients are expected to calculate the reduction in revenue on an aggregate basis. Discuss the advantages and disadvantages of, and any potential concerns with, this approach, including circumstances in which it could be necessary or appropriate to calculate the reduction in revenue by source.
  • Question 15: The Treasury is considering whether to take into account other factors, including actions taken by the recipient as well as the expiration of the COVID-19 public health emergency, in determining whether to presume that revenue losses are “due to” the COVID-19 public health emergency. Discuss the advantages and disadvantages of this presumption, including when, if ever, during the covered period it would be appropriate to reevaluate the presumption that all losses are attributable to the COVID-19 public health emergency.
  • Question 16: Do recipients anticipate lagged revenue effects of the public health emergency? If so, when would these lagged effects be expected to occur, and what can the Treasury do to support these recipients through its implementation of the program?
  • Question 17: In the interim final rule, paying interest or principal on government debt is not considered a provision of government service. Discuss the advantages and disadvantages of this approach, including circumstances in which paying interest or principal on government debt could be considered a provision of government service.

(Page 61 of the interim final rule)

Water and Sewer Infrastructure

  • Question 18: What are the advantages and disadvantages of aligning eligible uses with the eligible project type requirements of the DWSRF and CWSRF? What other water or sewer project categories, if any, should the Treasury consider in addition to DWSRF and CWSRF eligible projects? Should the Treasury consider a broader general category of water and sewer projects?
  • Question 19: What additional water and sewer infrastructure categories, if any, should the Treasury consider to address and respond to the needs of unserved, underserved or rural communities? How do these projects differ from DWSFR and CWSRF eligible projects?
  • Question 20: What new categories of water and sewer infrastructure, if any, should the Treasury consider to support state, local and tribal governments in mitigating the negative impacts of climate change? Discuss emerging technologies and processes that support the resiliency of water and sewer infrastructure. Discuss any challenges faced by states and local governments when pursuing or implementing climate-resilient infrastructure projects.
  • Question 21: Infrastructure projects related to dams and reservoirs are generally not eligible under the CWSRF and DWSRF categories. Should the Treasury consider expanding eligible infrastructure under the interim final rule to include dam and reservoir projects? Discuss public health, environmental, climate or equity benefits and costs in expanding the eligibility to include these types of projects.

(Page 68 of the interim final rule)

Broadband Infrastructure

  • Question 22: What are the advantages and disadvantages of setting minimum symmetrical download and upload speeds of 100 Mbps? What other minimum standards would be appropriate, and why?
  • Question 23: Would setting such a minimum be impractical for particular types of projects? If so, where and on what basis should those projects be identified? How could such a  standard be set while also considering the practicality of using this standard in particular types of projects? In addition to topography, geography and financial factors, what other constraints, if any, are relevant to considering whether an investment is impracticable?
  • Question 24: What are the advantages and disadvantages of setting a minimum level of service at 100 Mbps download and 20 Mbps upload in projects where it is impracticable to set minimum symmetrical download and upload speeds of 100 Mbps? What are the advantages and disadvantages of setting a scalability requirement in these cases? What other minimum standards would be appropriate and why?
  • Question 25: What are the advantages and disadvantages of focusing these investments on those without access to a wireline connection that reliably delivers 25 Mbps download by 3 Mbps upload? Would another threshold be appropriate and why?
  • Question 26: What are the advantages and disadvantages of setting any particular threshold for identifying unserved or underserved areas, minimum speed standards or scalability minimum? Are there other standards that should be set (e.g., latency)? If so, why and how? How can such threshold, standards, or minimum be set in a way that balances the public’s interest in making sure that reliable broadband services meeting the daily needs of all Americans are available throughout the country with the providing recipients' flexibility to meet the varied needs of their communities?

(Page 77 of the interim final rule)

Pension Funds

  • Question 27: Beyond a “deposit” and “payroll contribution,” are there other types of payments into a pension fund that the Treasury should consider?

(Page 80 of the interim final rule)

Offset a Reduction in Net Tax Revenue

  • Question 28: Does the interim final rule’s definition of tax revenue accord with existing state and territorial practice and, if not, are there other definitions or elements the Treasury should consider? Discuss why or why not.
  • Question 29: The interim final rule permits certain spending cuts to cover the costs of reductions in tax revenue, including cuts in a department, agency or authority in which the recipient government is not using Fiscal Recovery Funds. How should the Treasury and recipient governments consider the scope of a department, agency or authority for the use of funds to ensure spending cuts are not being substituted with Fiscal Recovery Funds while also avoiding an overbroad definition of that captures spending that is, in fact, distinct?
  • Question 30: Discuss the budget scoring methodologies currently used by states and territories. How should the interim final rule take into consideration differences in approaches? Please discuss the use of practices including but not limited to macrodynamic scoring, microdynamic scoring and length of budget windows.
  • Question 31: If a recipient government has a balanced budget requirement, how will that requirement impact its use of Fiscal Recovery Funds and ability to implement this framework?
  • Question 32: To implement the framework described above, the interim final rule establishes certain reporting requirements. To what extent do recipient governments already produce this information and on what timeline? Discuss ways that the Treasury and recipient governments may better rely on information already produced, while ensuring a consistent application of the framework.
  • Question 33: Discuss states’ and territories’ ability to produce the figures and numbers required for reporting under the interim final rule. What additional reporting tools, such as a standardized template, would facilitate states’ and territories’ ability to complete the reporting required under the interim final rule?

(Page 95 of the interim final rule)

Recoupment Process

  • Question 34: Discuss the timeline for requesting reconsideration under the interim final rule. What, if any, challenges does this timeline present?

(Page 101 of the interim final rule)

Transfers

  • Question 35: What are the advantages and disadvantages of treating the list of transferees in sections 602(c)(3) and 603(c)(3) as nonexclusive, allowing states and localities to transfer funds to entities outside of the list?
  • Question 36: Are there alternative ways of defining “special-purpose unit of state or local government” and “public benefit corporation” that would better further the aims of the funds?

(Page 107 of the interim final rule)

Non-Entitlement Units (NEU) of Government

(States and territories distributing Fiscal Recovery Funds payments to NEUs are responsible for complying with the statutory requirement that distributions to NEUs not exceed 75% of the NEU’s most recent budget.)

  • Question 37: What are alternative ways for states and territories to enforce the 75% cap while reducing the administrative burden on them?
  • Question 38: What criteria should the Treasury consider in assessing requests for an extension for further time to distribute NEU payments?

(Page 110 of the interim final rule)