Keystone Research Center Releases New Brief for Local Governments: ‘Considerations on American Rescue Plan Funds for Pennsylvania’s Local Governments’



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Keystone Research Center Releases New Brief for Local Governments: Considerations on American Rescue Plan Funds for Pennsylvania’s Local Governments Issue Brief by senior research analyst, Diana Polson

Harrisburg, PA — Today the Keystone Research Center’s senior analyst, Diana Polson, released a new issue brief detailing how local Pennsylvania governments can best use American Rescue Plan Funds to recover from pandemic catastrophe and rebuild better for all citizens. 

Excerpts, below. You can find the full paper, here

Pennsylvania’s local governments received a total of nearly $5.8 billion in Coronavirus Local Fiscal Recovery Funds via the American Rescue Plan, the $1.9 trillion federal relief package. 

Funds provided to state and local governments via the American Rescue Plan represent an incredible opportunity. This brief discusses the intentions and purpose of the American Rescue Plan and considerations for local decision-makers and advocates. 

Guidance Issued by the U.S. Department of the Treasury 

The Treasury guidance is there to help local governments figure out how best to use this money and throughout the guidance, state and local governments are urged to 

– respond to and address the needs of those most impacted by the crisis, which tend to be communities that were already struggling pre- pandemic. 
– act quickly, yet thoughtfully, with these funds. 
– seek and prioritize community input, especially from those most affected by the COVID-19 crisis. 
– think long-term about how investments today can build a better tomorrow. 
Specifically, the Treasury encourages recipients to consider the following funding uses which foster a “strong, inclusive, and equitable recovery, those with long-term benefits for health and economic outcomes.”

Replacement of lost public sector revenue. So the pandemic doesn’t lead to harmful cuts to public services, the Treasury’s interim final rule provides a formula to calculate how much a local government’s revenues have fallen below expected levels as a result of the pandemic and allows localities to use their relief funds to fill this gap. 

Payment of premium wages to essential workers. Funds can be used to offer additional support to those who have taken on the greatest health risks because of their service in critical infrastructure sectors. Premium pay can be up to $13 per hour in addition to wages otherwise received, not to exceed $25,000 per eligible worker. 

Investment in water, sewer, and broadband infrastructure. Funds can be used to make necessary improvements to improve access to clean drinking water, support vital wastewater and stormwater infrastructure, and expand access to broadband. 

Targeting of services to the hardest-hit communities. Beyond the specific uses noted above, the Treasury guidance explains that a wide range of services to low-income residents and communities are allowable uses of local fiscal recovery funds. For example, ARP spending is deemed allowable if funds are provided within a qualified census tract (QCT – which is a low-income area designated by the Department of Housing and Urban Development) to families living in a QCT or to other populations disproportionately impacted by the pandemic. These eligible uses include 

> addressing health disparities and the social determinants of health. This can be through funding community health workers, public benefits navigators, remediation of lead hazards, and/or community violence intervention programs. 

> investing in housing and neighborhoods, including services to help those facing homelessness, housing vouchers, affordable housing development, residential counseling, etc. 

> addressing educational disparities through new or expanded early learning services, services to high-poverty districts, and after-school programs or services to address the emotional, social, and mental health needs of students. 

> promoting healthy childhood environments through high-quality child care, home visiting programs, and enhanced services for child welfare.
With these funds, permanent reforms could strengthen mental health care and substance misuse services, preventative health care, housing stability, quality child care, pre-K education, workforce training, and more, allowing people to better care for their families, go back to work, and make important contributions to their communities. 

Additionally, figuring out ways to raise additional revenue from corporations and individuals who have financially benefited during this crisis — and should pay their fair share in taxes — is important to ensuring our local governments have the funds they need. In fact, while many residents have been struggling since the onset of the pandemic, the wealth of Pennsylvania’s billionaires doubled between March 2020 and August 2021 from $33 to $61 billion. 

Process Considerations for Local Governments

As local governments work to develop a plan to best use these ARP funds to address deep economic and racial inequities and to support a robust recovery, they should consider the following: 

Engage in a robust public input process to help inform spending strategies. The Treasury guidance on the ARP urges “…local governments to engage their constituents and communities in developing plans to use these payments, given the scale of funding and its potential to catalyze broader economic recovery and rebuilding.” Each locality is required to report on its community input process following this instruction: “Please describe how your jurisdiction’s planned or current use of funds incorporates written, oral, and other forms of input that capture diverse feedback from constituents, community-based organizations, and the communities themselves.”

Ensure funds are allocated in a transparent manner. Once robust public input is gathered, local residents should have clear information about how local input was gathered and considered and how final decisions were made on how to spend ARP funds. Once allocated, clear details on spending plans and regular updates should be given and made accessible to the public. 

Strive to invest now in order to prevent need later. Some local governments are either letting funds sit in hopes that the Treasury expands its allowable uses or are only considering short-term projects that don’t need sustained funding while investing now. Local governments have three years to spend ARP money giving them plenty of time for their economies to grow resulting in stronger revenues, which could be used to try new approaches to solving problems and sustain successful programs.
The Keystone Research Center is a nonprofit, nonpartisan research organization that promotes a more prosperous and equitable Pennsylvania economy. The Pennsylvania Budget and Policy Center is a nonpartisan policy research project that provides independent, credible analysis on state tax, budget, and related policy matters, with attention to the impact of current or proposed policies on working families.