Treasury Releases Final Rule For State And Local Fiscal Recovery Funds Program

The Treasury Department on Jan. 6 issued the final rule for the Coronavirus State and Local Fiscal Recovery Funds (CSLFRF) program, enacted as a part of the American Rescue Plan, which provided $350 billion to state, local, and tribal governments to support their response to and recovery from the COVID-19 pandemic.

The American Public Power Association (APPA) commented on the Interim Final Rule, which was issued in 2021.

APPA praised the decision to allow CSLFRF to be used for utility assistance programs and to allow such assistance to be predicated on the assumption that households or populations experiencing economic harm during the pandemic experienced that harm due to the pandemic, and thus qualify for assistance.

“APPA believes this flexibility is appropriate and will help reduce barriers to relief to those who need it most,” the trade group said.

Utility assistance remains one of the stated eligible uses for CSLFRF, but Treasury said that the final rule further clarifies that CSFLRF recipients “may administer utility assistance or address arrears on behalf of households through direct or bulk payments to utility providers to facilitate utility assistance to multiple consumers at once, so long as the payments offset customer balances and therefore provide assistance to households.”

APPA also asked that utility revenues be allowed to be considered as “lost revenue” for a local recipient of CSLFRF funds. The distinction is significant because CSLFRF funds spent to the extent of “lost revenue” can be spent on any governmental program — a substantial flexibility.

“Treasury has adjusted the definition (of lost revenue) 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. This change responds to comments from recipients indicating that revenue from utilities is used to fund other government services and that utility revenues have declined on aggregate,” Treasury said in the announcement of the final rule.

The final rule is available here.