Congress Gives Cities More Flexibility for Recovery Funds

By:

  • McKaia Dykema
  • Brittney D. Kohler
  • Michael Wallace

In the late days of December, Congress passed the final budget package for 2023, setting funding levels for every federal agency and grant program for the year and averting a government shutdown. The package also included a significant provision the National League of Cities actively supported to make each city’s current funding from the American Rescue Plan’s State and Local Fiscal Relief Funds (SLFRF) more flexible, known as ARPA Flex.

What does ARPA Flex do?

The ARPA Flex provision provides additional flexibility for States, Tribes, and units of local government to spend their allocations of the Coronavirus State and Local Fiscal Recovery Funds. The new eligible SLFRF grant expenditures will include: 

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  • Spending to provide emergency relief from natural disasters, including temporary emergency housing, food assistance, financial assistance for lost wages, or other immediate needs. 
  • Spending on transportation infrastructure eligible projects and matching funds. 
  • Spending on any program, project, or service that would also be eligible under HUD’s Community Development Block Grant program

The new flexibility will not be unlimited, however. The amendment caps the amount a grantee may spend on these new purposes at the greater of $10 million or 30% of the total grant amount. Importantly, the amendment does not include any new spending mandates or conditions that would elevate the risk of clawback of grant funds.  

This legislative win was led by Senators John Cornyn (R-TX) and Alex Padilla (D-CA) and supported by an effort in the House by Representatives Dusty Johnson (R-SD) and Carolyn Bourdeaux (D-GA) that gained significant House support. These ARPA Flex provisions will allow communities to meet their greatest needs and even use ARPA dollars in conjunction with federal infrastructure grants.  

Treasury Updates Coming in February 

Treasury has 60 days from passage to finalize these ARPA Flex changes from Congress in the SLFRF rules. When we receive those, expected in February, NLC will provide more updates and information to our members so that each community can factor this into their plans for spending their SLFRF. For now, NLC recommends making your council and city administrative staff aware of these changes for planning purposes.   

Additionally, the bill also provides the Treasury Department the necessary authority to restore live administrative and technical assistance to grantees, which had been largely shuttered and automated when funding for such services ran low earlier last year. Many cities needed support from Treasury during reporting periods to answer SLFRF questions so restoring this capacity was essential.

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About the Authors

McKaia Dykema

About the Authors

McKaia Dykema is the Legislative Specialist on NLC’s Federal Advocacy team.

Brittney D. Kohler

Brittney Kohler is the Legislative Director for Transportation and Infrastructure on NLC’s Federal Advocacy team. 

Michael Wallace

Michael Wallace is the Legislative Director for Community and Economic Development on NLC’s Federal Advocacy team.