Direct Funding For State and Local Governments

Direct Funding to State and Local Government (as of May 2021)

The American Rescue Plan provides direct funding to States, Counties, and Municipalities to help combat the COVID-19 pandemic. Many states have sustained massive revenue shortfalls and face a host of increased spending requirements.  The need is particularly pronounced at the local level: a National League of Cities survey showed a 21-percent revenue decline among cities with losses and the National Association of Counties projected a 20-percent revenue decline.

Eligible Use of Funds

On May 10, 2021, the U.S. Department of the Treasury announced the launch of the Coronavirus State and Local Fiscal Recovery Funds which will provide $350 billion in emergency funding for eligible state, local, territorial, and Tribal governments. The Department also announced details regarding how these funds can be used to respond to acute pandemic response needs, fill revenue shortfalls among these governments, and support the communities and populations hardest-hit by the COVID-19 crisis. According to these new guidelines, funds can be used to:

  • Support public health expenditures, by funding COVID-19 mitigation efforts, medical expenses, behavioral healthcare, and certain public health and safety staff;

  • Address negative economic impacts caused by the public health emergency, including economic harms to workers, households, small businesses, impacted industries, and the public sector;

  • Replace lost public sector revenue, using this funding to provide government services to the extent of the reduction in revenue experienced due to the pandemic;

  • Provide premium pay for essential workers, offering additional support to those who have borne and will bear the greatest health risks because of their service in critical infrastructure sectors; and,

  • Invest in water, sewer, and broadband infrastructure, making necessary investments to improve access to clean drinking water, support vital wastewater and stormwater infrastructure, and to expand access to broadband internet.

Within the categories of eligible uses, recipients have broad flexibility to decide how best to use this funding to meet the needs of their communities. More detailed guidelines can be found here.

How to Request Funding

Treasury will distribute funds to eligible state, territorial, metropolitan city, county, and Tribal governments.  Eligible entities can apply here.

Eligible local governments that are classified as non-entitlement units of local government should expect to receive this funding through their applicable state government.  Jurisdictions classified as non-entitlement units of local government are not eligible to receive this funding directly from Treasury and should not request funding through the Treasury Submission Portal.

Funding for State of Alabama, Cities, and Counties:

***Because the State of Alabama distributes the ARP funds to non-entitlement governments, amounts for non-entitlement governments are estimates***