Legislative Update 3-18-22

NACo updates Capitol Hill situation on ARP ‘clawback’

The National Association of Counties provided the following update this week on the “state of play with Congress and the White House on a potential recission (or clawback) of ARP Recovery Funds for counties:

“While congressional leaders pulled the recent agreement for $11.5 billion in new COVID investment for testing and PPE with over $7 billion offset from the STATE portion of Recovery Funds, we are still watching closely and urging all counties to let their congressional delegations know how their counties are INVESTING these dollars in important community priorities.

“Below are important talking points, with more context:

1. Under the structure of the American Rescue Plan Act (ARP), which Congress passed in March 2021, counties are still scheduled to receive their second tranche of funding no earlier than ONE YEAR after they certified for their first tranche of funding. For most counties, this will occur in May 2022.
2. Unrelated to ARP, in the original FY22 omnibus spending package, there was a provision that was included to provide an additional $15 billion in COVID-19 funding for therapeutics and testing, with congressional demands to offset these new additional COVID funding. To pay for a portion of the relief, $7.055 billion of unobligated ARP Coronavirus State and Local Fiscal Recovery Funds (Recovery Fund) would be rescinded. This was eventually removed from the bill and did not occur.
   
   
   • Under this original offset mechanism, the bill would first look to the second tranche of ARP funding for 31 states for the clawback, and if there was not enough to cover the portion, it would be a waterfall of different levels of government – territories are the second option, tribal governments the third option and counties and cities as the LAST AND FOURTH option. NACo was given assurances that there were enough unobligated monies at the state level to cover this potential requirement.
3. Although we avoided an ARP clawback with the omnibus package, we need to be aggressive in messaging how counties are making wise and timely investments to support our residents and economies. The consideration of how to invest these dollars and understand how they can best support our communities takes time.

• Highlight county plans through NACo’s Untold Stories campaign
• Work with local news and use NACo’s media toolkit

4. We need to remind our federal partners of the Treasury certification process and steps for implementation and distribution of dollars:

• Although the ARPA was signed into law in March 2021, the U.S. Department of Treasury did not stand up the Coronavirus State and Local Fiscal Recovery Fund program until May 10, 2021, with the Final Rule only issued at the end of December 2021.
• The first report (Interim Report) was due on Aug. 31, 2021. Only counties that had certified for funds by July 15, 2021, were required to submit a report. Any county that certified after that date could submit a report 60 days after receiving dollars (beyond the Aug. 31, 2021, deadline).
• Therefore, despite 99 percent of counties now certified, the first wave of reports did not capture the amount counties have obligated and/or spent.
• Beyond the certification process, counties did not rush to invest funds for non-emergency uses to ensure coordination with state and local partners when allocating dollars to support residents and communities.
• County boards are moving wisely to approve plans and then work with internal and external partners to allocate funds.

“Future data from Project and Expenditure Reports due on Jan. 31, 2022, and April 30, 2022, will better capture the true investments made with Recovery Funds.”

For questions on this issue, contact Executive Director Stephan Currie at scurrie@micounties.org.