Monitoring Your Money: How Restrictions, Guidelines Under U.S. Treasury Rules Impact Local Governments

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WASHINGTON, D.C. – The U.S. Treasury oversees just how state and local governments can spend the combined $350 billion they are receiving in American Rescue Plan relief money. Earlier this year, they offered interim guidance on those rules. 

We reached out to the Treasury Department over the last week or so to see if those rules have changed. Treasury Department officials declined an on-camera interview for our story, but a Treasury spokesperson tells us that local governments should continue relying on the interim rule as they begin receiving and spending their money.

So, we looked into the 39-page rule, which serves as a roadmap for local and county governments, to see if Treasury and the Biden administration suggests local officials spend that money on one key area. It turns out that the list of eligible uses is pretty long and, at points, broad. There are four main eligible use categories: public health and aid to those economically impacted by the pandemic; premium pay for essential workers; off-setting pandemic-related tax revenue losses in the last fiscal year; and water, sewer, and broadband internet infrastructure upgrades.

“For 3,000 counties in America, we’re seeing 3,000 different ideas about how to improve their residents’ lives’ locally,” said Mark Ritacco, director of government affairs at the National Association of Counties, a Washington, D.C.-based non-governmental organization.

Ritacco noted the language is intentionally vague because some of counties were hit harder by COVID-19 than others, meaning they will have different needs moving forward.

“That’s what we are counting on all of America’s 3,069 counties to do, which is to invest this money wisely and efficiently in these types of services that our residents say they need to be prosperous in the 21^st century,” Ritacco said.

There are two areas where relief funds cannot be used: padding pension programs, and states or territories cannot use the money to cut taxes. There is one other option for local and county governments to get the most bang for their buck: pooling their money together.

“Intergovernmental transfers are allowed in Treasury’s Interim Final Rule,” he explained. “Maybe a town or a city will transfer money from a county for a large broadband project.  Or, a state, county, and a city will pool their money together to enter a public-private partnership with a local service provider.”

Treasury officials tell us that of the $350 billion approved in the American Rescue Plan for state, county, and local governments, over $230 billion has already been dispersed.