H.R. 1319, better known as the American Rescue Plan, was signed into law on March 11, 2021.
The $1.9 trillion emergency relief bill provides $65.1 billion to municipal governments to respond to the COVID-19 public health emergency, offset revenue losses, bolster economic recovery and provide premium pay for essential workers.
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Leveraging Local ARP Dollars
In August 2022, the SC Office of Resilience announced that it would make $55 million of its American Rescue Plan funds available to assist local governments to carry out stormwater infrastructure projects. Learn about the Stormwater Infrastructure Program, and download the SC Office of Resilience presentation.
- Respond to the COVID-19 public health emergency or its negative economic impacts, including assistance to households, small businesses, and nonprofits, or aid to impacted industries such as tourism, travel and hospitality.
- Respond to workers performing essential work during the COVID-19 public health emergency by providing premium pay to eligible workers that are performing such essential work, or by providing grants to eligible employers that have eligible workers who perform essential work.
- Provide government services to the extent of the reduction in revenue due to the COVID-19 public health emergency relative to revenues collected in the most recent full fiscal year prior to the emergency.
- Make necessary investments in water, sewer or broadband infrastructure.
The Association strongly recommends that ARP funds not be used to provide hazard or premium pay to elected officials.
- First, state law provides that council members cannot increase their own compensation "until the commencement date of the terms of two or more members elected at the next general election" after the compensation increase is approved. See S.C. Code Section 5-7-170.
- Second, the South Carolina Constitution states that governments "shall never grant extra compensation, fee or allowance to any public officer, agent, servant or contractor after service rendered." See S.C. Const. Art. III, sec. 30.
- Finally, the South Carolina Ethics, Government Accountability, and Campaign Reform Act prohibits council members for voting on any matter in which they have an economic interest. See S.C. Code Section 8-13-700. The Ethics Commission has been clear that council members have an economic interest in their own compensation.
Taken together, these provisions mean that providing hazard or premium pay to elected officials under ARP would likely violate state law.
Covered PeriodThe Interim Final Rule permits ARP funds to be used to cover costs incurred beginning on March 3, 2021. Funds must be obligated by December 31, 2024 and spent by December 31, 2026.
ARP BudgetingWhile not required by the U.S. Department of Treasury, South Carolina law requires city and town councils to appropriate funds from the Local Fiscal Recovery Fund. This means that councils should budget their ARP funds as a part of their annual budget or through a separate ordinance. Cities may appropriate ARP dollars within an existing fund, or appropriate them into a dedicated special revenue fund exclusively for ARP.
The Municipal Association of SC has created a model budget ordinance that cities and towns can modify and adopt to comply with state law.
On January 6, 2022, the U.S. Department of the Treasury adopted a final rule implementing the American Rescue Plan's Coronavirus State and Local Fiscal Recovery Funds.
The final rule – which took effect on April 1, 2022 – provides local governments with broader flexibility to pursue a wider range of uses to respond to local public health and economic needs --- as well as greater simplicity to focus on responding to the needs in their communities and maximizing the impact of their funds.
Treasury has released two documents to accompany the Final Rule
- The Statement Regarding Compliance with the Coronavirus State and Local Fiscal Recovery Funds Interim Final Rule and Final Rule provides more information on the effective date
- The Overview of the Final Rule, is a user guide that distills the Rule into an easy-to-understand summary and includes a non-exhaustive list of projects that recipients can undertake without undergoing additional independent analysis.
The U.S. Department of Treasury has released multiple resources to help local governments complete and submit required reports. These resources, which include including how-to videos, can be found at Treasury’s ARP reporting website.
The Municipal Association of SC does not have access to Treasury’s Reporting Portal, but will be available to assist as you submit your report.