This report transmits a balanced budget for fiscal year (FY) 2021-22. Following the
presentation of the Trial Budget on March 16, 2021, the 14 Virtual Community Budget
Hearings held from April 2 - April 20, 2021, and presentation of the City Manager's
Proposed Budget on May 4, 2021, staff recommends approval of the FY 2021-22
proposed budget. The General Fund Budget for action is the same as presented
on May 4, 2021.

THIS ITEM IS FOR DISCUSSION AND POSSIBLE ACTION.

The 2021-22 Proposed Trial Budget presented to City Council on March 16, 2021
included proposed increases in employee compensation and additions of a variety of
City programs and services using the General Fund (GF) projected surplus of $153M.
Staff revised revenue estimates based on 8-month technical revenue reviews and an
additional $1.8M in resources is available for community priorities identified by
residents at 14 virtual budget hearings, from the FundPHX tool, and comments
received directly to the Budget & Research Department. This feedback from our
residents was taken into consideration and changes to the Trial Budget are reflected in
this report.

Summary
As presented on May 4, 2021, the GF revised projected surplus for FY 2021-22 is
$154.8M. Due to the leadership of the City Council over the past year, it represents a
remarkable turnaround from the budget of 2020-21 when we instituted hiring freezes to
prevent COVID-related deficits. The surplus is available for negotiated employee
compensation increases and additions to programs and services in several important
categories. The surplus is largely made up of $98M in one-time funds and a newly
revised $56.8M in ongoing resources. One-time funds represent resources from the
Council approved transfer of funding from the Coronavirus Relief Fund (CRF) to offset
public safety salaries as permitted by the Federal guidelines. Ongoing resources
represent primarily anticipated growth in revenues for next fiscal year. Proposed
Budget additions, including changes from the Trial Budget as a result of community
input, are summarized below and more detailed explanations are provided in
Attachment A (GF Proposed Additions) and Attachment B (Non-GF Proposed


Page 5

Additions). Community input on the budget is also summarized in this report.
Additionally, all resident comments received on the budget and the youtube videos of
all 14 virtual budget hearings are available on the Budget & Research website at
https://www.phoenix.gov/budget. This report also includes explanations of items not
included in the proposed budget, but commented on by the public, as well as detailed
schedules on the 2021-22 proposed budget for all City funds (Schedules 1 - 11).

Additionally, in an effort to improve amenities and activate safe places for the
community to play, the Parks & Recreation Department will design and install two
splash pads at El Oso and Mariposa Parks using available Capital Improvement
Program funds. Staff will also begin to research the availability of vacant land and
partnerships with schools in the areas without public parks in Council District 5.

Proposed Changes and Additions to the City Manager's Budget
As presented on May 4, 2021, the City Manager's (CM) Proposed Budget includes
several recommendations that continue to move the City forward in addressing critical
community priorities and ensuring our most important asset, our employees, are fairly
compensated for the outstanding work they do for the community. The 2021-22 Trial
Budget presented to City Council and the community on March 16, 2021 has been
revised to account for resident feedback. Changes to the Trial Budget are identified in
this report as *NEW* and are included in Attachments A and B. The following is a
summary list of the proposed changes:

· Build and set-aside operating funds for three new neighborhood Parks in the
Southwest area of Phoenix, which can be built with impact fees.
· Maintenance at the Highline Canal.
· Additional staff for the Pueblo Grande Museum.
· Resources for advancement of Fast Track City initiatives to promote AIDS
awareness and prevention.
· A City Navigator for Veterans' services.
· Additional funding for the City's Adaptive Reuse Program.
· Additional staff to properly maintain City cemeteries.
· Additional staff in the Water Department (non-general funded from Water Services)
to implement recommendations from the Water Conservation Ad Hoc Committee.

Including the above changes to the proposed budget from community input, GF
priorities include the following recommended increases totaling $154.8M by category
and are summarized below:

· Negotiated Employee Compensation Increases (Ongoing and One-time) - $118.3M


Page 6

· Public Safety Reform & Responsiveness - $20.5M
· COVID Relief & Resiliency - $2.6M
· Climate Change & Heat Readiness - $2.8M
· Affordable Housing & Homelessness - $2.8M
· Building Community & Responding to Growth - $4.7M
· Administrative Accountability - $3.1M

The proposed Trial Budget also includes additions of $4.3M for Non-GF Departments
including Water, Planning and Development, Solid Waste and Streets Transportation.
Information on proposed Non-GF budget additions are summarized in this report and
detailed in Attachment B.

Proposed General Fund Additions - $154.8M and 318.2 positions

Below is a summary by category of the proposed GF additions to the 2021-22 City
Manager's Budget. Detailed information about each supplemental by department is
provided in Attachment A.

Employee Compensation - $118.3M
Current labor contracts expire June 30, 2021, and all five union contracts have been
ratified and approved by City Council. Based on available resources, service needs
and the Five-Year GF Forecast presented to Council on February 23, 2021, the City is
proposing to allocate 76 percent or $118.3M of the total GF Surplus to address
employee compensation.

Public Safety Reform & Responsiveness - $20.5M and 226.9 positions
The Mayor, City Council and residents have expressed the need for more
accountability, responsiveness, transparency and trust from public safety programs.
The spending proposals in this category will help to accomplish improved trust and
service delivery from our public safety departments. Primary in this category is
additional resources for a bold investment of $15M towards expanding an existing
civilian only program for responding to mental and behavioral health calls for service.

Mental and Behavioral Health Calls for Service: Community members, first responders
and mental health professionals have all identified the need for enhanced mental
health and crisis response support in Phoenix. Vulnerable communities including
children and the elderly, individuals experiencing abuse, poverty and homelessness,
residents with behavioral and mental health disorders or people with alcohol and drug
dependencies all require additional support. In order to bridge this gap and to improve
service delivery to individuals contacting 911 experiencing behavioral and mental


Page 7

health issues or in need of emergency crisis response, the City has proposed adding
resources to the Community Assistance Program (CAP).

The plan includes increasing the number of crisis response units to a total of 10 and
establishing nine new behavioral health units across the city based on where the
highest concentration of calls are received. The concept is to create an effective City of
Phoenix behavioral and mental health crisis response program where multiple City
departments work alongside non-profit organizations and the behavioral health
community to improve the quality of life for residents in need. The proposed model
also recommends expanding the existing city contract with IMD medical group to offer
telemedicine services to residents who are experiencing comorbidities, where both a
mental and behavioral health problem exists along with a medical issue. This on call
medical platform would be accessible to the CAP program 24/7 and provide access to
licensed medical professionals who can access the Health Information Exchange
(HIE). The program would also seek to establish a contract for a public-private
partnership with a behavioral healthcare provider to create a comprehensive model
where individuals will receive both immediate service from the CAP units and be
connected to additional services through the contracted provider.

The proposed solution would accomplish several goals including:
· Increase behavioral health resources to the community by focusing on timely
immediate response to individuals in need.
· Crisis de-escalation and appropriate civilian trained response to improve
relationships in the community with public safety.
· Prevent criminalizing behavioral health issues and unnecessarily incarcerating
and/or hospitalizing individuals with mental illness.
· Provide alternate behavioral health care and connect community members in crisis
through a coordinated system-wide collaborative approach.
· Avoid duplicating behavioral health services.
· Outreach and connection to long term case management services to reduce repeat
calls to 911.
· Access to licensed medical professionals where needed to improve service
outcomes.
· Return PPD and PFD first responders to core public safety emergency incidents.
· Better use of taxpayer resources.

Implementation of a new behavioral and mental health program is a heavy lift. For this
reason, the City has proposed leveraging the already successful CAP, which has been
in existence since 1995, however has been under-resourced and unable to meet
community demands. The program currently responds to mental and behavioral health


Page 8

calls for service and is managed by licensed civilian professionals in social work and
counseling. Full implementation of the enhanced program is anticipated to take 18-24
months, and once fully operational the program is estimated to cost $15M based on
analysis conducted by the Budget & Research Department. Once the program is fully
operational, further analysis will be conducted to determine if budgetary savings have
been realized to the City. If resources are freed up in the Police and/or Fire
Departments which results in budgetary savings, the City Council can allocate those
resources as it deems appropriate based on actual data and experience for the
program.

A significant number of public comments were given on the proposed model at the
virtual budget hearings. It is clear a program that relieves police officers of being first
responders to mental and behavioral crisis situations where possible is supported.
There were questions and criticisms of the potential structure, including its assignment
in the Fire Department; an expressed desire for more money to be allocated and to
take that money directly from the Police Department; questions about potential
communication with federal ICE officials; and an expressed desire for community
involvement in the program design and implementation. In response to this feedback,
during the implementation phase the City plans to seek input from the community and
mental and behavioral health stakeholders to ensure the program meets the needs of
all. Staff also plans to engage independent experts to conduct thorough process
mapping, best practices identification, community engagement, performance
measures, and the scope of the behavioral health unit Request for Proposal. In terms
of ICE, as explained at the budget hearings, civilian employees (like CAP) do not call
ICE when providing services. The Police Department only calls ICE when a person is
arrested, booked into jail, or given a citation in lieu of detention. If a CAP call turns into
a situation requiring police intervention, and there is an arrest, citation or booking, only
then would ICE be involved according to current policy and state law.

Other proposed additions in this category include:

· Human Services Department ($90K) - a new Victim Services Caseworker III (1) to
serve as a navigator to services for relatives of decedents and juveniles as a result
of officer involved shootings or in custody deaths. This was a recommendation of
the Traumatic Incident Ad Hoc Committee.
· Fire Department ($800K) - In addition to the above CAP expansion for mental
health calls for service, staff recommends adding (15) civilian positions for
paramedic trainers (3), radio technicians (2) and 911 Dispatchers (10).
· Municipal Court ($350K) - additional staff (5) to provide operational support at the
new Maricopa County Intake, Transfer and Release facility (2) and to properly staff



Page 9

the Orders of Protection Office (3).
· Police Department ($3.7M) - proposed funding to add civilian staff (75) to improve
accountability, transparency and relationships with the community. The Phoenix
Police Department is down over 300 civilian positions since the Great Recession
and several functions struggle to meet service demands. The recommended civilian
positions will be used to: improve turnaround time for public records requests (15);
add staff to ensure data reporting compliance with the National Incident-Based
Reporting System (34); funding for positions (4) to manage a new Early
Identification & Intervention System (EIIS), which was recommended in 2019 by
community stakeholders, Arizona State University and City leadership. The system
is intended to use date analytics to proactively identify trends and intervene prior to
an employee's adverse actions; continue with the plan to civilianize the Central
Booking Detail (22) which is a more cost effective way to perform the administrative
booking function; and add $500k for a GF set-aside for Police reform to improve
community trust, and provide a comprehensive review of the Phoenix Police
department. This review will include a thorough evaluation of practices and policies,
actively solicit stakeholder and community feedback and provide recommendations
for improvement.
· Street Transportation Department ($600K) - funding for projects included in the
comprehensive Roadway Safety Action Plan approved by Council on March 2.

COVID Response & Resiliency - $2.6M and 7 positions
The COVID-19 pandemic has presented numerous challenges for the City concerning
protecting the public and employees during the pandemic. These efforts have included
consultation with medical experts to guide decision making in how to navigate the
pandemic, continuing service delivery remotely and/or implementing spatial distancing
measures, providing food assistance, providing mobile outreach and wifi services to
the community and quickly moving to virtual information technology platforms to
accommodate teleworking and video conferencing. Proposed additions are included in
the budget to provide services and to add staff to ensure the City not only continues to
responsibly navigate the pandemic, but also to provide these service enhancements
and information technology benefits going forward. Additions include:

· City Manager's Office ($150K) - add funding to continue the contract for expert
medical and public health consultation.
· Office of Environmental Programs ($300K) - add a Program Manager (1) and
funding to continue the Emergency Food Assistance Program and to achieve the
goals of the Council approved 2025 Phoenix Food Action Plan.
· Information Technology Department ($1.7M) - Add staff (3) and managed contract
services to support the technology deployed due to the pandemic for teleworking,


Page 10

new wifi locations, and video conferencing. Funds are also requested to ensure IT
security for projects arising from the pandemic including the new PHX 311 and
Learning Management Systems.
· Library Department ($200K) - add funding to continue mobile service for the "Mifi"
hotspot program, online programming and remote outreach, and laptop support.
· Public Works Department ($200K) - add positions (3) to staff the appointment
counter in City Hall and Calvin C. Goode. This counter has been well received by
the public and offers a streamlined way to make appointments with various City
departments.

Climate Change & Heat Readiness - $2.8M and 14.0 positions
Negative impacts from climate change and increasing Phoenix temperatures call for
strategies to address negative impacts to air quality from pollutants and carbon
emissions. The growing hazard of urban heat to the public, particularly vulnerable
populations such as the homeless, require a forward thinking approach to provide for a
sustainable environment for City residents. Proposed additions in this category include
establishing a new Office of Heat Response and Mitigation, provide additional
resources and staff to achieve the goals of the 2010 Tree and Shade Master Plan,
increase staff for the Energy System Inspection Program in the Fire Department and
add funding for conducting greenhouse gas emissions inventories and to assist with
implementing the City's newly created Climate Action Plan. Additions include:

· City Manager's Office ($500K) - add staff (4) to create a new Office of Heat
Response and Mitigation. This includes a Tree and Shade Administrator
recommended by the Environmental Quality and Sustainability Commission.
· Fire Department ($0) - add civilian staff (5) and equipment to support the Solar
Energy Inspection Program. Costs of this addition are offset by increased revenues
receive by the City for solar energy system inspections resulting in a net-zero
increase to the GF.
· Office of Environmental Programs ($200K) - add funding to conduct green house
gas emissions inventories and provide modeling and analysis regarding air quality.
· Parks Department ($600K) - add an additional Forestry crew (5) to plant additional
trees in City parks, and provide funding to update the tree inventory and database.
The City Council approved the Tree and Shade Master Plan in 2010 with the goal to
double the shade canopy by 2030. The additional staff and an accurate tree
inventory and database will help to accomplish this goal.
· Streets Transportation Department ($1.5M) - add funding to the Cool Corridors
Program, which was developed to align with the Tree and Shade Master Plan to
assist with planting 200 trees per mile for a total of 1,800 new trees planted across
nine project areas, one in each Council district and citywide.


Page 11


*NEW* Affordable Housing & Homelessness - $2.8M and 4.0 positions
The City of Phoenix has a lack of affordable housing and a growing homeless
population in need of assistance. The City Council approved a Housing Phoenix Plan
in 2020 and recently the Homeless Strategies Plan to find solutions specifically to
identify funding to increase and improve affordable housing units as well as to
leverage federal funding and work with community partners to help the homeless.
Additionally, the COVID-19 pandemic has increased the homeless population in the
downtown area and the Hatcher Road area of Sunnyslope, requiring additional
cleanings in these areas for waste removal, trash pickup and sanitization. The
proposed additions listed below will assist with achieving the critical mission of
increasing affordable housing and helping the homeless. Additions in this category
include:

· Housing Department ($1.6M) - *NEW* add a Special Projects Administrator (1) (this
position was previously a Project Manager in the Trial Budget) to coordinate the
RFP process and contract management for development of affordable or mixed
income housing on City-owned land and to conduct community outreach. Add one-
time funding of $1.4M for infrastructure improvements at Santa Fe Springs
affordable apartment homes.
· Human Services Department ($175K) - add positions (2) to create a homeless
advocate workforce specialist and administrative support to help the homeless find
employment to achieve self sufficiency and to ensure compliance with federal
regulations for $33M in Emergency Solutions Grants and Community Development
Block Grants.
· Neighborhood Services ($100K) - add a Neighborhood Specialist (1) focused on
serving the Human Services Campus area neighborhoods and businesses.
· Public Works Department ($800K) - add funding for positions (3) and equipment to
support the Human Services Campus downtown area clean-ups. Positions will be in
the Solid Waste Division and charged to the GF.
· Streets Transportation Department ($130K) - add funding for contracted services to
provide sidewalk and right-of-way cleanups at the Human Services Campus in the
downtown area and the Hatcher Road area of Sunnyslope.

*NEW* Building Community & Responding to Growth - $4.7M and 39.3 positions
This category proposes multiple additions across several City departments with the
intent to provide targeted economic development opportunities for the West region of
the City, to expand the successful College Depot Program for our younger residents,
increase funding for the Arts and Historic Preservation, provide for adequate floodplain
management, add funding for landscape management due to recently completed


Page 12

capital projects, and address the need for more resources due to growth and demand
for city amenities and services. *NEW* resident feedback included a desire for more
parks in the Southwest region of the city, a dedicated Veterans Advocate position,
resources for maintenance of the Highline Canal, staff for Pueblo Grande Museum,
additional funding for the successful Adaptive Reuse Program and for Fast Track City
initiatives.

· Community and Economic Development Department ($300K) - add positions (2) for
the Small Business and Community Retail Redevelopment Program.
· Human Services Department ($345K) - *NEW* add funding for Fast Track Cities
initiatives to increase engagement and connection to treatment for residents with
HIV/AIDS. Add a Veterans Advocate position (1) to serve as a navigator for
connection to services for our residents who are veterans of the military.
· Library Department ($200K) - add positions (2) to expand the College Depot
Program to provide increased outreach and more assistance to prepare students for
high school equivalency testing and college entrance exam testing. The additional
resources would also increase the number of high school students who can be
assigned to an advisor in the program to ensure a successful transition to college.
· Office of Arts & Culture ($200K) - add funding for additional community arts grants,
increase opportunities to engage youth in arts programs, provide training to art
professionals through skill workshops. Funding will also be used to provide "pop-up"
art programming around the city at libraries, community centers and cultural
centers.
· Parks and Recreation Department ($2.9M) - add full-time and part-time positions
(29.3) to support growing needs at various parks and recreation centers, including
the new Cesar Chavez Community Center scheduled to open in the Fall 2021,
Margaret T. Hance Park and Deem Hills (13.3). Funding is also requested to add
positions for urban park and facility management (2) and to continue the successful
Adaptive Inclusion Recreation Program (3) started during the pandemic via a
partnership with the Phoenix Suns. *NEW* add a GF set-aside of ($945K) for (6)
new positions and operating and maintenance costs for three new parks located at
55th Avenue & Samantha Way in District 8, 71st Avenue & Meadows and 87th Ave
& Lower Buckeye Rd in District 7. Costs for design and construction of the three
new parks in the Southwest region is included in the proposed Capital Improvement
Program for FY 2021-22 using resources from available impact fees. Funding is
also included for (1) position for Pueblo Grande Museum, and (4) positions to
properly maintain the Highline Canal and city cemeteries.
· Planning and Development Department ($600K) - add positions (3) to support
Council and community-initiated projects and priorities. The team will devote
significant time to Rio Reimagined, leading the development of a plan with the


Page 13

vision, goals, policies and strategies that guide the future growth, redevelopment
and preservation along the banks of the Salt River. The Planning team will work
with the Mayor and Council and community, along with multiple City departments,
consultants and other partners to establish a Rio Reimagined Plan that provides a
foundation for future actions and investments, including sustainable land use, heat
mitigation, diverse housing options, economic development and other important
programs. Funding is also included for historic preservation grants to assist
homeowners with maintaining their historic properties. *NEW* increase funding from
$25K to $30K for the successful Adaptive Reuse Program to revitalize existing
buildings, and help small businesses and neighborhoods.
· Public Works Department ($100K) - add a position for Floodplain Management (1)
to ensure compliance with the National Flood Insurance Program and the
Community Rating System, which provides discounts to residents for the rising cost
of flood insurance.
· Streets Transportation Department ($150K) - add contracted services to provide for
increased landscape management and litter removal along the Grand Canal Phase
II and the Avenida Rio Salado areas, and add a position in the Central Records
Division (1) to assist with the increasing number of requests for public records
relating to the City's right-of-way, street infrastructure, traffic services and storm
drains. The cost of this position is assessed to capital projects and non-GF
departments resulting in a net zero cost addition to the GF.

Administrative Accountability - $3.1M and 27.0 positions
As the City continues to become more diverse and grow in both population and
demand for services, additional resources are needed for a variety of departments for
operational and administration purposes. It is also important the City foster and
promote a diverse, equitable and inclusive environment to both live and work for
residents and employees. Proposed additions will provide for timely, effective and high
quality service delivery in areas concerning city elections, public records requests,
contract management, information technology, human resources, legal services, fiscal
support, and to increase funding for maintenance of the City's aging fleet of vehicles.
Resources will also be used to develop a new Office of Diversity, Equity and Inclusion.

· City Manager's Office ($270K) - add positions (2) to establish the Office of Diversity
Equity and Inclusion (DEI) to ensure the City is both a place to work and live which
promotes equitable and respectful treatment of all people.
· City Clerk Department ($300K) - provide funding for contracted services to develop
an implementation plan for upgrading, enhancing and creating new platforms for
election services to ensure continued transparency and engagement in City
elections.


Page 14

· Communications Office ($100K) - add a position to the Public Records Request
Division (1) to process increasing requests for public information.
· Human Resources Department ($400K) - add positions (3) for human resource
related procurement activities, data analytics to provide more robust reporting to
foster business process improvements and data driven decision making, and
conduct internal investigations into employee misconduct.
· Information Technology Department ($1.3M) - add positions (3) and funding for
managed services to sustain technology infrastructure and remediate vulnerabilities
to protect City systems and applications from ever evolving security threats.
· Law Department ($0) - add positions (2) by converting existing funding for
contracted paralegal services for civil litigation support. The department expects in-
sourcing of paralegal services to result in a higher quality of legal research, writing
and investigations. This is a net-zero cost to the GF.
· Library Department ($400K) - add positions (3) for information technology support
of library applications and systems and for accounting and fiscal support. The
increase in virtual programming and applications requires appropriate technology
support and the department does not currently have enough resources for
accounting and fiscal related duties.
· Parks and Recreation Department ($200K) - add positions (2) for information
technology desktop and application support. The number of computers, applications
and systems has grown and requires additional positions to ensure functionality.
· Public Works Department ($130K) - restore and add positions (11) for the Fleet
Services Division (10) and human resources support for the Solid Waste Division
(1). Fleet Services is in need of additional positions to adequately maintain the
City's fleet of vehicles. The division is responsible for maintaining 7,000+ units and
assists City departments with procurement of new vehicles. The division is currently
under resourced and is not capable of providing the needed maintenance on the
City's aging and diverse fleet. The cost estimate of $130K for the GF accounts for
savings from reducing outside labor and charges to non-general fund customer
departments. This addition also adds one new human resources position to be paid
for by the Non-GF Solid Waste Division of Public Works (identified under the Non-
GF proposed additions listed below).

Position Conversions to Maintain Services - $0 and 29.5 positions
The Trial Budget includes converting 29.5 GF temporary positions to ongoing status.
Funding for these positions has been identified in each respective department's
existing operating budget and therefore represent a no-cost addition to the GF. The
position conversions are requested because the duties of each position are no longer
temporary in nature and are necessary to maintain existing service levels. A list of GF
position conversions by department is detailed in Attachment A.


Page 15


Proposed Non-General Fund Additions - $4.3M and 28.0 positions
The City budget is made up of three fund sources: the General Fund, Enterprise Funds
and Other Restricted Funds. Recommendations for the General Fund were discussed
above. Enterprise Funds include Aviation, Water, Wastewater, Solid Waste and the
Convention Center. These funds, with the exception of the Convention Center, are
funded with user fees. The Convention Center includes fees paid by those who use the
facility and Convention Center parking garages and certain earmarked sales tax
categories. Enterprise funds can only be used for costs directly associated with
delivering enterprise services. The Restricted Funds category includes federal and
state grants, gas taxes (AHUR), debt service, the Development Services Fund, the
Public Safety Specialty Funds, the Phoenix Parks and Preserve Initiative (PPPI) and
the voter-approved Transportation 2050 Fund. These funds can only be used in
accordance with grant and other statutory rules.

Total Non-GF proposed additions are summarized below by category. Detailed
information about each supplemental by department is provided in Attachment B.
Below, is a summary of the Non-GF additions:

*NEW* Climate Change & Heat Readiness - $724K and 5.0 positions
· Water ($724K) - add positions (5) and contractual services to achieve
recommendations made by the Water Conservation Ad Hoc Committee, which
includes implementing a total of 13 water conservation programs.

Affordable Housing & Homelessness - $0 and 3.0 positions
· Solid Waste ($0) - add positions (3) and equipment to support the Human Services
Campus downtown area clean-ups. Positions will be in the Solid Waste Division and
charged to the GF (identified earlier in this report under the GF section for proposed
additions).

Building Community & Responding to Growth - $3.5M and 20.0 positions
Proposed Non GF additions are included to add resources to support growth in
Development Services, Solid Waste and Street Transportation. These additions are
necessary for plan reviews, inspections, information technology and human resource
needs, records management, solid waste refuse and disposal management, street
cleaning and GIS services.

· Planning and Development Department ($950K) - add positions (10) for residential
and commercial plan reviews necessary due to significant increases experienced
caused by moving to electronic plan reviews (6), new positions for accounting and



Page 16

technology support are required due to the new KIVA permitting system and to
adequately maintain the departments IT assets (2), higher incidents of non-
permitted construction activity requires more resources for processing citations and
preparing court documents (1), the new Remote Inspections Program implemented
in the spring of 2020 has been successful and requires a dedicated staff member to
adequately maintain the program (1).
· Solid Waste ($2.1M) - add positions (5) for residential refuse and recycling
collection necessary due to household growth (4), increased funding for a position
at the SR85 Landfill needed due to citywide growth in solid waste tonnage and to
maintain adequate staffing levels (1).
· Streets Transportation Department ($400K) - add positions (5) to be funded by the
Arizona Highway User Revenue Fund (AHUR) for geographic information systems
(GIS) support necessary for the accelerated pavement maintenance program and to
support the workload necessary for the land base system due to growth in
development activity (2), restore supervisory positions for preventative street
maintenance and cleaning (2), and add a position for the Field Operations
Administration section to manage incoming requests from the public for street
services (1).

Administrative Accountability - $100K and 0 positions
· Solid Waste ($100K) - add funding for a position to reside in the GF for human
resources support necessary for recruitment and employee training and discipline.
The position will be in the Public Works Department (identified earlier in this report
under the GF section for proposed additions) and charged to the Solid Waste Fund.

Position Conversions to Maintain Services - $0 and 21.0 positions
The Trial Budget includes converting 21.0 Non-GF temporary positions to ongoing
status. Funding for these positions has been identified in each respective department's
existing operating budget and therefore represent a no-cost addition. The position
conversions are requested because the duties of each position are no longer
temporary in nature and are necessary to maintain existing service levels. A list of Non
-GF position conversions by department is detailed in Attachment B.

Community Feedback
Resident input was solicited at 14 virtual community budget hearings held between
April 2, 2021 and April 20, 2021. Residents also provided feedback online using the
FundPHX tool and comments were received directly to the Budget & Research
Department via email and voicemail. In total between March 8, 2021 and May 4, 2021,
we received 2,094 comments from 1,464 individuals on the proposed Budget. Several
residents commented multiple times on the same topic. A summary of the number of



Page 17

resident comments by topic is listed below. The public can access all comments
received on the budget including the written minutes and video recordings of
completed budget hearings at https://www.phoenix.gov/budget/hearings.

Resident Comments for additional funding/support of the proposed budget:
· (223) additional funding for a civilian-only response for mental health and crisis
response calls for service, and/or for it to be an independent function from Public
Safety, and to have community involvement in the proposed model.
· (121) additional funding for affordable housing, rental assistance, and veterans
housing.
· (86) additional funding for green spaces, cool corridors, heat readiness, climate
resiliency, the Tree and Shade Master Plan, water conservation, and the Office of
Heat Response and Mitigation.
· (83) additional funding for programs assisting individuals experiencing
homelessness.
· (63) additional funding for Human Services, workforce development, childcare and
senior programs.
· (53) additional funding for Parks and Recreation parks and community centers.
· (48) additional funding for the park on 55th Avenue and Samantha.
· (47) additional funding for expanded Public Transit services, dedicated bus lanes,
shaded bus stops, and neighborhood circulators.
· (39) additional funding for Arts and Culture and public art maintenance.
· (33) additional funding for HUUB/Phx Biz Connect.
· (32) additional funding for Street Transportation maintenance, cleaning, and repair.
· (30) in support of the budget.
· (27) additional funding for Police officer, 911 operator and civilian hiring and
training.
· (23) additional funding for youth programs, housing, and sports.
· (16) additional funding for historic preservation.
· (15) additional funding for street improvements at 3rd and 5th Avenue in the Willo
neighborhood.
· (10) additional funding for Libraries and College Depot.
· (9) additional funding for Environmental Programs.
· (7) additional funding for HAWK signals, bicyclist and pedestrian safety.
· (6) additional funding for gated alleys and alley clean-ups.
· (5) additional funding for Police reparations.
· (5) additional funding for public records.
· (4) additional funding for Fast-Track Cities initiative to end HIV/AIDS in Phoenix.



Page 18

· (3) additional funding for Carnegie Library.
· (3) additional funding for Planning and Development.
· (3) additional funding for universal basic income pilot program.
· (2) additional funding for landscape and neighborhood support near 19th Avenue
and Southern.
· (2) additional funding for Neighborhood Services.
· (2) additional funding for public WiFi and technology programs.
· (1) additional funding for Budget and Research.
· (1) additional funding for City employee education, health and wellness.
· (1) additional funding for Economic Development.
· (1) additional funding for elections.
· (1) additional funding for improvements and maintenance of the bike trails at 6th
Avenue and 12th Street.
· (1) additional funding for LGBTQ+ programming and education.
· (1) additional funding for Municipal Court.
· (1) additional funding for Office of Accountability and Transparency.
· (1) additional funding for Public Defender.
· (1) additional funding for Public Health.
· (1) additional funding for Public Works.
· (1) additional funding for Pueblo Grande.
· (1) additional funding for Solid Waste.
· (1) additional funding for street lighting.
· (1) in support of increasing reserves.
· (1) in support of increasing taxes.

Resident Comments for reduced funding/opposition of the budget:
· (387) in opposition of additional funding for Police and/or reducing the Police
budget, including (302) for the reallocation of Police funding to addiction and
substance abuse programs, rehabilitation services and centers in West Phoenix,
and elimination of Public Transit Fares.
· (33) in opposition of the budget.
· (4) in opposition of increased funding for Street Transportation.
· (3) in opposition of increased funding for Fire.
· (3) in opposition of increased funding for historic preservation.
· (3) in opposition of increased funding for Public Works.
· (2) in opposition of increased funding for Environmental Programs.
· (2) in opposition of increased funding for Human Services.
· (2) in opposition of increased funding for Information Technology Services.


Page 19

· (2) in opposition of increased funding for Parks and Recreation.
· (2) in opposition of increased funding for Public Health.
· (1) in opposition of increased funding for Housing.
· (1) in opposition of increased funding for Human Resources.
· (1) in opposition of increased funding for Municipal Court.
· (1) in opposition of increased funding for Park Rangers.
· (1) in opposition of increased funding for Sustainability.

In addition, the following social media statistics were recorded from March 16, 2021 -
May 4, 2021:

Facebook Posts - 35
· 62,000 Users Reached
· 213 Reactions

Twitter - 176 City of Phoenix Tweets (across three City accounts, including the City's
bilingual account)
· 308 Replies
· 177 "Likes"
· 81 Retweets

YouTube
2,401 Views

Residents also provided feedback on several topics not included as proposed
increases to the 2021-22 budget. For the below topics, residents spoke either in favor
of additional resources to develop, expand or continue the items or requested more
information be provided by City staff, below is an explanation of each item:

PHXBizConnect by HUUB
Due to COVID-19, City Council approved allocating $500K from the Coronavirus Relief
Funds for PHXBizConnect to serve as a resource for small businesses impacted by
the pandemic. The platform has been very successful and hundreds of small
businesses in the community have used it to connect to resources and networking
opportunities. Several residents expressed a desire to continue funding this successful
program. As a result, staff plans to request Council approval to include this program in
the American Rescue Plan Act (ARPA) Strategic Plan under the "Phoenix Business
and Employee Assistance Programs" category.




Page 20

Streets Projects - 3rd & 5th Avenues and Hidalgo & 19th Avenue
The Street Transportation Department’s 3rd and 5th Avenues North project is a bicycle
and pedestrian improvement project located along 3rd Avenue between McDowell
Road and Muhammad Ali Way (just north of Thomas Road) and along 5th Avenue
between McDowell Road and Thomas Road. Project improvements will include two-
way protected bicycle lanes along 3rd Avenue, a bicycle lane on 5th Avenue, curb
ramps, streetlights, traffic signals, pedestrian improvements, and pavement mill and
overlay. The project design is currently at 60 percent, and is anticipated to be
completed in Fall 2021. There is anticipated right-of-way and easement acquisition
required for the new improvements and the earliest time-frame for construction is
summer of 2022. The current estimated construction cost is $5.5M. Based on the
current design schedule, Streets will review this project for inclusion in the
Department’s Capital Improvement Program (CIP) in the Fall 2021. It should be noted
that during the annual CIP update process in late 2020, due to COVID related impacts
to Department revenue forecasts, the Street Transportation Department reduced its
five-year CIP by nearly $40 million. Due to these reductions, existing budgeted
projects were delayed and annual programs were reduced; therefore, there was no
capacity to add new projects to the CIP.

The Street Transportation Department will also replace missing trees and install an
irrigation system in the medians on Hidalgo Avenue between 20th Avenue and
Southern Avenue. The work will include installing a new water meter, underground
directional boring to connect the medians with irrigation sleeving, installing a new
irrigation system, and planting 30 trees. This project is anticipated to take
approximately two months to complete and will cost approximately $60K. The funding
is already included in the department's budget.

Transit Services in the Southwest Phoenix Area
In the Southwest Phoenix area bus service improvements have included extending
service hours on weekdays, Saturdays, and Sundays. Future transit improvement
plans for the Southwest Phoenix area include extending routes on 43rd Avenue, 67th
Avenue, 75th Avenue, 83rd Avenue, Lower Buckeye Road, Broadway Road, and
Southern Avenue and the addition of new routes on 91st Avenue, 99th Avenue, and
Dobbins Road. In response to public input seeking to address transit service needs in
the area south of Interstate 10 to Van Buren Street, between 59th and 67th Avenues,
the Public Transit Department will study potential expansion of the existing free MARY
neighborhood circulator into this area. Staff will develop cost estimates, explore routing
options and work with local community stakeholders on a potentially revised route that
enhances service to this community.



Page 21

Phoenix’s four neighborhood circulator routes operate as free services. All other transit
services (local bus, RAPID, Express, light rail, Dial-a-Ride) require a fare to help fund
transit services. As Phoenix partners with the Regional Public Transportation Authority
(RPTA) and its member cities and the county to provide Valley Metro-branded bus
service across the region, consistent fares are charged by both Phoenix and RPTA to
provide a seamless customer experience. Additionally, in a typical year, total regional
transit fare revenues amount to approximately $65 million, with Phoenix’s share at
nearly $40 million. Without this operating revenue source, other sources of revenue
would be needed, or transit service would need to be reduced a commensurate
amount.

Carnegie Library
The Carnegie Library and Park, located at the southwest corner of 10th Avenue and
Washington Street, was placed on the National Register of Historic Places in 1974,
and designated by the City Council as an historic Landmark (HP-L Overlay Zoning) in
2004. The library itself was constructed in 1907 and was the first library in Phoenix,
continuing as the City’s main library for 44 years. In 1984 the City of Phoenix agreed to
lease the site to the State of Arizona, through the Arizona Legislative Council of the
Arizona State Legislature, on condition that the State renovate, maintain, and operate
the building and grounds in a manner that preserves the historical qualities and design
features, at the State’s sole expense. The State’s use of the site must be for library or
museum-related public purposes. The lease term was an initial 50 years, ending
August 31, 2034, with two 25-year renewal options. The State has used the site for
various library or museum-related purposes, but the library building is presently
vacant. Numerous organizations have expressed interest in the library building, and
any use by a third party requires an agreement with the State consistent with the lease
provisions, as well as written consent from the City. The State and City could conduct a
competitive process to determine the proposer and use that best fullfills the lease
terms and historical significance of the site. Alternatively, the City and State could
agree to terminate the lease and the City could conduct its own competitive process. In
that case, the City would take back responsibility for the library and funding would
need to be identified for a thorough facility assessment, to make any required repairs
and for ongoing operating costs of the library.

Community Center at 75th Ave & Van Buren
Currently, there are no plans or funding for a new community or recreation center in
the area of 75th Ave and Van Buren. This area however is currently served by
approximately five City of Phoenix parks within a three mile radius, and a multi-
generational community center at Desert West Park located at 67th Avenue & Encanto
is 3.9 miles away. Desert West Community Center offers programming for youth,


Page 22

teens, adults and seniors. It is the hub of the award winning PHXteens program and
includes an indoor gym and classrooms. It features outdoor tennis, mini pitch soccer,
basketball, hard court volleyball, sand volleyball, racquetball and bike polo courts. The
park itself features an urban fishing lake, soccer complex, softball complex, a fitPHX
walking path and the Desert West Skatepark. In addition, the following five parks are
within three miles of 75th Ave and Van Buren:

· 2.7 miles El Oso Park 75th Ave & Osborn
· 2.9 miles Desert Star Park 85th Ave & Encanto
· 2.9 miles Starlight Park 78th Ave & Osborn
· 2.9 miles Santa Maria Park 71st Ave & Lower Buckeye
· 3.0 miles Sun Ridge Park 63rd & Roosevelt

Staff estimates the cost to build a new community center at this location would be
approximately $2.0M to $2.5M and ongoing operating expenses are estimated at
$300K - $400K per year. Resources are not currently available in the budget and
would need to be identified for both the design and construction of the community
center as well as ongoing operating expenses.

Drug Addiction Rehabilitation Center
The City does not currently provide drug rehabilitation services or centers in the
community. The City may look into the possibility of providing this service in the future
to determine if providing these services would be legally permissible, including any
licensing requirements, and financially feasible.

Additional Information
The proposed balanced 2021-22 GF budget is $1,607.6M. This is a $182M increase or
12.8% from the adopted 2020-21 GF Budget of $1,425.6M. The increase accounts for
the additions mentioned earlier in this report and increases in capital pay-as-you-go
projects, employee pension costs, and an increase in the contingency fund to maintain
4% of GF operating expenditures. Projected GF revenue in 2021-22 is estimated to be
$1,355.8M and represents an increase of $32.9M or 2.5% over the 2020-21 Revised
Estimate of $1,322.9M, excluding one-time revenues of $109.2M from the Council
approved transfer from the Coronavirus Relief Fund to offset public safety salaries as
permitted by the Federal guidelines. Growth in 2021-22 reflects anticipated increases
in city and state sales taxes and state-shared vehicle license taxes, this growth is
offset by estimated declines in state-shared income tax revenues, which is based on
collections from two years prior. This decline is due to the State's action to delay
income tax filings in the last quarter of FY2019-20 in response to the COVID-19
pandemic. Schedule 2 included in this report provides more information on City


Page 23

revenue estimates and additional information can be found on the Budget and
Research website at https://www.phoenix.gov/budgetphoenix.gov/budget. Total GF
resources for FY 2021-22 are estimated at $1,607.6M and includes the estimated
beginning fund balance of $244.7M (largely made up of one-time funds discussed
earlier in this report), estimated revenue of $1,355.8M and fund transfers and
recoveries estimated at $7.1M.

For all funds, which includes General, Enterprise and Special Revenue funds such as
grants, and all debt service and pay-as-you-go capital costs, the proposed 2021-22
budget is $5,626.5M. Included in this proposed budget amount is $416M allocated to
the City by the Federal government in the American Rescue Plan Act (ARPA). Details
on the 2021-22 proposed budget for all City funds is attached to this report in
Schedules 1-11 and include:

· Resources and expenditures by Fund for 2019-20 actual; 2020-21 estimate; and
2021-22 proposed budget.
· Proposed revenues for all City funds by major source.
· Proposed operating expenditures by department, including fund source.
· Proposed debt service by program, source of funds, and expense type.
· Preliminary 2021-22 Capital Improvement Program budget financed by operating
funds.
· Proposed interfund transfers.
· Proposed full-time equivalent (FTE) positions by department.
· Preliminary 2021-22 Capital Improvement Program resources and expenditures by
capital fund, program and fund source.
· Summary of proposed property tax levy and rate information. The levy is anticipated
to grow due to growth in assessed property valuations, however as described below
in this report the combined property tax rate is proposed to drop by $0.01 from
$2.13 to $2.12.

Next Steps
The City Manager's Proposed Budget was presented for information and discussion at
the May 4, 2021 City Council meeting for review and comment. Following the
Council's budget action on May 18, both the City Charter and State law require
subsequent public notification, advertising, and City Council actions. The May 18
Council action provides staff with direction and sufficient time to prepare the required
legal publications for the following actions:

Date Event
June 2, 2021 2021-22 Tentative Budget Ordinance Adoption


Page 24

June 16, 2021 2021-22 Funding Plan and Final Budget Ordinance Adoption
July 1, 2021 2021-22 Property Tax Levy Ordinance Adoption

On July 1, 2021 City Council is scheduled to adopt property tax as the last step in the
legally required budget adoption process. Primary property tax revenues support
operating costs for General Fund programs and services, while secondary property
taxes pay the bonded debt service for facilities like libraries, police and fire stations,
storm drains and parks. The total combined primary and secondary property tax rate
for FY2021-22 of $2.12 represents a one-cent (or 0.6%) reduction from the 2020-21
combined rate of $2.13. The proposed primary property tax rate for FY2021-22 of
$1.31 will remain unchanged and is consistent with City Council policy to maximize the
primary rate within City Charter Limits. If approved, the secondary property tax rate will
drop one-cent from $0.82 to $0.81. Although the primary property tax rate remains
constant, the primary property tax levy increases for FY 2021-22 to $191.3M, which is
$11.4M or 6.3% more than the FY 2020-21 revenue estimate of $179.9M due to
increasing net assessed valuations (property values) and new construction.
Additionally, State law requires a Truth in Taxation hearing notice to property owners,
which requires notification any time the average primary property tax bill increases,
even if the tax rate is not increased. The law does not require notice on the City’s
secondary property tax. The hearing is scheduled to take place at the City Council
Formal meeting on June 16, 2021.

Responsible Department
This item is submitted by City Manager Ed Zuercher, Assistant City Manager Jeff
Barton and the Budget and Research Department.




Page 25
ATTACHMENT A

2021-22

PROPOSED SUPPLEMENTALS
GENERAL FUND

View the Inventory of Programs published online for program details.


Department/Program 2021-22
Total

EMPLOYEE COMPENSATION

Labor
1. Current employee contracts expire June 30, 2021. All five union contracts $118,300,000
have been ratified and approved by City Council. The proposed budget includes
allocating approximately 76 percent of the available surplus for employee
compensation.


TOTAL EMPLOYEE COMPENSATION $118,300,000


PUBLIC SAFETY REFORM AND RESPONSIVENESS

Fire
1. Emergency Medical Services $382,000
Paramedic Training: Add funding for two Paramedic Training Coordinators and one 3.0
Admin Aide position. These positions will support current and future programs of
Emergency Medical Services including the addition and implementation of a new
electronic patient care reporting (EPCR) system. These positions will also restore
previously eliminated positions from prior budget reductions.


2. Administration $260,000
Radio Repair: Add funding for one User Technology Specialist to support the 2.0
maintenance and repair of radios used by Firefighters. Add funding for one Admin
Aide to provide administrative support to the Phoenix Fire Regional Dispatch
Center. The onetime costs include one vehicle, technology equipment, and office
space reconfiguration.




Page 26
Department/Program 2021-22
Total

3. Crisis Intervention $15,000,000
Crisis Response: Expand the City of Phoenix Community Assistance Program in 130.9
order to provide additional resources for responding to behavioral and mental
health calls for service using a civilian model. Full implementation of the enhanced
program is anticipated to take 18-24 months. During this time the City plans to
seek input from the community and mental and behavioral health stakeholders to
ensure that the program meets the needs of all. Staff also plans to engage an
independent consultant to conduct a thorough review of the program to include
process mapping, best practices identification, community engagement,
developing performance measures, and developing the scope of the behavioral
health unit request for proposal. The concept is to create an effective City of
Phoenix behavioral and mental health crisis response program where multiple city
departments work alongside non-profit organizations and the behavioral health
community to improve the quality of life for residents in need. The program will also
allow first responders to return to core public safety emergencies to reduce
response times.


4. Fire Emergency Medical Services and Hazardous Incident Response $87,000
Fire Dispatch: Add funding for 10 new positions consisting of two Fire 10.0
Communications Supervisor, two Fire Emergency Dispatcher * Lead, and six Fire
Emergency Dispatchers for the Phoenix Fire Regional Dispatch Center (PFDRDC)
which provides 9-1-1 fire and medical emergency call taking and dispatching
services for the City of Phoenix and 26 other jurisdictions. Funding is shared
between the City of Phoenix (50%) and the 26 partner jurisdictions (50%). In FY
2020-21, the City Council approved eight positions fully funded by the City of
Phoenix with the shared cost beginning in FY 2021-22. The FY 2021-22 cost
shown represents additional funding needed for one position since eight are
already funded in the General Fund. The cost of the remaining nine positions will
be paid for by the partner cities.

Total Fire $15,729,000
145.9

Human Services
1. Victim Advocacy Services $93,000
Traumatic Incident Liaison: Add a Caseworker III position to assist relatives of 1.0
decedents, incapacitated individuals and juveniles as a result of a police
interaction. Relatives of decedents may not be entitled to victims rights advocacy
until the determination of a criminal offense. This position will provide case
management services to relatives to address needs outside of the criminal justice
system.

Total Human Services $93,000
1.0




Page 27
Department/Program 2021-22
Total

Municipal Court
1. Civil Courtroom Operations - Civil Division $133,000
Intake, Transfer, and Release (ITR) Staff: Add two Bailiff positions to provide 2.0
judicial and operational support in a criminal courtroom located at the new
Maricopa County ITR facility that opened in November 2020. This criminal
courtroom is designed to handle initial appearances for individuals who have been
arrested and held by the City of Phoenix. Funding would provide for the continued
processing of cases in a timely and efficient manner.

2. Civil Courtroom Operations - Civil Division $224,000
Orders of Protection: Add one Court Interpreter and two Court/Legal Clerk II 3.0
positions to support the operations of the Order of Protection Office. In September
2019, the Phoenix Municipal Court implemented the mandated firearm transfer
process for defendants that are deemed a credible threat in an Order of Protection
(OOP) case. Additionally, in January 2020, the Arizona Administration Office of the
Courts (AOC) required the utilization of an on-line public portal system. Both
process changes have caused increased staff workload and wait times. Staff and
resources are needed in a customer service capacity, for administrative
documentation and translation services.


Total Municipal Court $357,000
5.0

Police
1. Fiscal Management Bureau - Public Records Unit $1,009,000
Public Records Support: Add funding for nine Administrative Aide, three Forensic 15.0
Photo Specialist, two Administrative Assistant I, and one Forensic Photo Specialist
Lead positions to provide additional staff support for the Public Records and
Services Unit. These positions will help eliminate public records request backlogs,
ensure timely request processing, and improve overall customer service and
transparency.

2. Professional Standards Bureau - Inspections Unit $298,000
Early Intervention: Add two Administrative Aide, one Management Assistant I, and 4.0
one Police Research Analyst positions to support the Early Intervention System
(EIS). These positions will ensure timely and accurate data and implement
intervention recommendations, with the goal of identifying employee risk and
preventing adverse events.




Page 28
Department/Program 2021-22
Total

3. Strategic Information Bureau $1,924,000
Data Transparency: Add staffing required to meet federal National Incident-Based 34.0
Reporting System (NIBRS) standards, additional demands for increased
transparency in policing and timely publication of data, and increased workload
due to Proposition 207's requirement to purge prior criminal records related to
marijuana offenses. This funding will allow for 22 ongoing positions, including 12
Police Coding Clerk, six Admin Aide*U7, two Police Records Clerk, one Criminal
Intelligence Analyst, and one Police R&I Bureau Shift Supervisor. It also includes
funding for 12 temporary part-time Police Coding Clerk positions.


4. Centralized Booking Detail $0
Civilianize Central Booking: Add funding for 18 temporary Detention Officer 22.0
positions and four temporary Detention Supervisor positions in the Centralized
Booking Detail. These civilian positions will take the place of sworn positions,
allowing officers to be redeployed to higher priority duties. Vacancies in the
department will offset the cost of the new positions.

5. Various $500,000
Police Reform Reviews: To support police reform, community trust, and enhanced 0.0
transparency we are recommending a comprehensive review of the Phoenix Police
Department. Funds will be used to hire independent third-parties that have a
demonstrated track record with assisting police departments across the country
achieve these goals. Reviews will include practices and policies, stakeholder and
community feedback, and provide recommendations for improvement.


Total Police $3,731,000
75.0

Street Transportation
1. Traffic Safety and Neighborhood Traffic $600,000
Pedestrian Safety: Add funding as part of the Roadway Safety Action Plan adopted 0.0
by City Council on March 2, 2021. The plan addresses comprehensive roadway
safety issues on City streets. The effort will be funded using the General Fund, the
Transportation 2050 fund (T2050), and the Arizona Highway User Revenue fund
(AHUR). The General Fund portion being requested is six-hundred thousand per
year over five years.

Total Street Transportation $600,000
0.0

TOTAL PUBLIC SAFETY REFORM AND RESPONSIVENESS $20,510,000
226.9




Page 29
Department/Program 2021-22
Total

COVID RESPONSE AND RESILIENCY

City Manager's Office
1. Oversight of and Assistance to Departments; City Council Support; Strategic $150,000
Planning
Public Health Advisors: Continue funding for COVID-19 consultants, including 0.0
medical experts, to advise the City on reopening facilities and providing up-to-date
guidance from the CDC.

Total City Manager's Office $150,000
0.0

Environmental Programs
1. Brownfields Land Recycling $300,000
Food Program: Add funding for a Program Manager to continue the COVID-19 1.0
emergency food assistance program, the 2025 Phoenix Food Action Plan
approved by Council in March 2020, and community engagement by hosting
educational events and workshops including Phoenix Food Day.

Total Environmental Programs $300,000
1.0

Information Technology Services
1. Enterprise Business Applications Services $585,000
City Services IT Support: Add contractual services funding to provide development 0.0
support for the 311 and Learning Management System projects. Funding three
additional senior developers will continue citywide integration and mobile app
development for these critical initiatives, which enhance citizen access to City
services and provide a needed virtual learning environment for City employees.


2. IT Project Management Services $350,000
311: Add contractual services funding for project management services of several 0.0
large-scale projects that emerged due to COVID-19, including 311, Learning
Management System, enhanced security needs, and conference room technology
upgrades. The City's 311 system significantly expanded due to COVID-19,
providing enhanced connectivity to City services for residents. This expansion
requires additional ongoing support to ensure continued seamless integration with
City applications.

3. Enterprise Infrastructure Services $169,000
WiFi Support: Add funding for one Senior Information Technology Systems 1.0
Specialist to serve as a Senior WiFi Engineer. This position will provide ongoing
support and management for the 50+ new public WiFi locations the City added
during COVID-19 to address public need for WiFi. These locations are currently
managed by a temporary position.




Page 30
Department/Program 2021-22
Total

4. Various $354,000
IT Security: Add one Lead Information Technology Systems Specialist and one 2.0
Senior Information Technology Systems Specialist. These positions are needed to
support security applications and additional infrastructure support required as a
result of COVID-19 related enhancements.

5. Enterprise Infrastructure Services $323,000
Remote Work Support: Convert one temporary Information Technology Systems 0.0
Specialist and one temporary Senior Information Technology Systems Specialist to
ongoing to provide coordination and administration of City video conferencing
needs. The City continues to require vastly expanded video conferencing
capabilities, which facilitates virtual work and helps ensure public access to City
Council and other meetings. The temporary positions are currently being funded by
vacancies in the department.

Total Information Technology Services $1,781,000
3.0

Library
1. Administration $181,000
Add funding to continue mobile and self-serve computing services initiated as a 0.0
result of the COVID-19 pandemic. These include cellular service for the MiFi
hotspot loan program, annual maintenance for additional self-checkout payment
kiosks, and security software for the laptop loan program.

Total Library $181,000
0.0

Public Works
1. Property Management Services $191,000
City Hall by Appointment: Add staff and resources to support the operation of the 3.0
appointment only counter at Phoenix City Hall and the Calvin Goode building. In
response to COVID health concerns, three full-time Support Service Aide positions
will support, coordinate and schedule appointments for residents and manage
authorized access to these facilities. The appointment only desk is currently being
staffed on a temporary basis with part-time Parks and Recreation staff that were
displaced due to COVID closures.


Total Public Works $191,000
3.0

TOTAL COVID RESPONSE AND RESILIENCY $2,603,000
7.0




Page 31
Department/Program 2021-22
Total

CLIMATE CHANGE AND HEAT READINESS

City Manager's Office
1. Professional Administration of Policies and Objectives Set Forth by Mayor and $475,000
Council
Office of Heat Response and Mitigation: The office will establish a cohesive 4.0
strategy and action plan to address the growing hazard of urban heat, which
threatens the City’s economic viability and health and well-being of vulnerable
residents. The office will increase the community’s capacity to prepare for and
respond to both extreme heat events and the increasing frequency of high
temperature days that adversely affect residents’ and visitors’ comfort. The office
will build a research and practice-informed process to ensure that heat is
addressed in an effective manner by using technology and innovative, locally-
relevant solutions, providing preventative information and education, and
encouraging coordination and cooperation among diverse stakeholders. Will
include a Chief Heat Response Officer, Tree and Shade administrator, shade
infrastructure manager, and an Administrative Aide.

Total City Manager's Office $475,000
4.0

Environmental Programs
1. Air Quality $200,000
Climate Change and Support: Add funding to support existing and future needs 0.0
relating to air quality, climate and resilience planning. Funds will be used to
conduct greenhouse gas emissions inventories, facilitate bilingual community
engagement, implementation of the Climate Action Plan and efforts to reduce
emissions.

Total Environmental Programs $200,000
0.0

Fire
1. Fire Prevention General Inspections $0
Solar Energy Inspection: Add funding for vehicles, supplies, and five new positions 5.0
for a new energy system inspection program. The new positions include one
Planning and Development Team Lead and four Fire Prevention Specialist II. This
program will provide Fire Prevention the staff to conduct plan reviews and
inspections of photovoltaic and energy storage systems. This addition is offset with
$698,000 in revenue generated from permit fees.

Total Fire $0
5.0




Page 32
Department/Program 2021-22
Total

Parks and Recreation
1. Specialized Maintenance-Skilled Trades $674,000
Parks Trees: Add staff and equipment to create an additional Forestry Crew to 5.0
maintain the increasing citywide tree inventory. The City adopted the Tree and
Shade Master Plan in 2010 with a goal to double the tree and shade canopy by
2030. This has led to a significant increase in tree planting on City property and
rights-of-way to mitigate the effects of the urban heat island in vulnerable
neighborhoods that have a limited tree canopy and where residents have a greater
exposure to heat while walking to transit, schools and work. The Parks and
Recreation Department Forestry section provides citywide tree planting, tree
maintenance activity, technical support, and 24/7 emergency response for several
City departments.

Total Parks and Recreation $674,000
5.0

Street Transportation
1. Landscape Management $1,483,000
Cool Corridors: Add funding for the Cool Corridors Program to plant 1,800 trees 0.0
annually. Each year tree plantings will occur in one-mile roadway segments
located in each Council district, plus a one-mile roadway segment for the Mayor’s
Office. This program will contribute to achieving the City of Phoenix’s goals for the
Tree and Shade Master Plan, reducing the City’s overall carbon footprint and
reducing climate impacts through the cooling effects of shade trees.


Total Street Transportation $1,483,000
0.0

TOTAL CLIMATE CHANGE AND HEAT READINESS $2,832,000
14.0


AFFORDABLE HOUSING AND HOMELESSNESS

Housing
1. Family Housing $162,000
*NEW* Affordable Housing Manager: Add one Special Projects Administrator 1.0
position to continue implementation of the Housing Phoenix Plan, focusing on
redevelopment of city-owned land for mixed-income housing. This position will help
to achieve the goal of creating or preserving 50,000 housing units by 2030.




Page 33
Department/Program 2021-22
Total

2. Family Housing $1,400,000
Santa Fe Springs Rehabilitation: Add funding to complete critical safety and 0.0
infrastructure repairs at Santa Fe Springs Apartments. These repairs will address
community safety and quality of life concerns, including improved lighting,
cameras, and fencing, as well as the rehabilitation of deteriorated structures and
amenities.

Total Housing $1,562,000
1.0

Human Services
1. Business and Workforce Development $89,000
Employment Connection: Add a Workforce Development Specialist position to link 1.0
with rapid rehousing programs to incorporate employment support by providing
direct client services for individuals experiencing homelessness to better access
employment benefits and training. This will support a key goal of the Strategies to
Address Homelessness Plan by helping to achieve seamless comprehensive, and
integrated access to services.

2. Homeless Emergency Services $88,000
Homelessness Strategy Support: Add an Administrative Assistant I position to 1.0
support the Homeless Services Division by assisting with monitoring federal
regulatory requirements for grant funds, contract and fiscal compliance as well as
various administrative tasks needed to support the programs around the Strategies
to Address Homelessness Plan.

Total Human Services $177,000
2.0

Neighborhood Services
1. Neighborhood Engagement Program $99,000
Neighborhood Specialist Homeless Strategies: Add a Neighborhood Specialist 1.0
position to serve within a three mile radius of the Human Services Campus. This
position will work with businesses and neighborhoods to provide better
communication, as well as a more coordinated team effort within the surrounding
area by assisting neighborhoods in organizing community meetings, coordinating
cleanups, and working with other City departments, partner agencies and the
business community to bring needed resources to the community.


Total Neighborhood Services $99,000
1.0




Page 34
Department/Program 2021-22
Total

Public Works
1. Education and Enforcement $815,000
Human Services Campus Cleanup: Add funding to support the coordination and 0.0
expansion of the Human Services Campus Clean-Up service. The request
includes adding one Supervisor and two Solid Waste Equipment Operator
positions, one Rear Loader, one Articulator Loader, and one Trailer positions.
Positions will be in the Solid Waste Division of Public Works.

Total Public Works $815,000
0.0

Street Transportation
1. Street Cleaning $134,000
Street Cleaning: Convert federally-funded deep-cleaning process around the 0.0
Human Services Campus (HSC) and the right of way in the West Hatcher Road
area of Sunnyslope to General Fund. The process uses antibacterial chemicals
and high-pressure sprayers to clean and sanitize the sidewalks and right-of-way
surrounding the HSC facility and the right-of-way in the area of 10th Street and
Hatcher. Service is completed once or twice a month.

Total Street Transportation $134,000
0.0

TOTAL AFFORDABLE HOUSING AND HOMELESSNESS $2,787,000
4.0


BUILDING COMMUNITY AND RESPONDING TO GROWTH

Community and Economic Development
1. Business Development $301,000
Retail Revitalization: Add funding for one Economic Development Program 2.0
Manager and one Project Manager to support citywide retail revitalization projects.
The positions will facilitate small business growth, redevelopment, and potential
new development, including infill of commercial projects.

Total Community and Economic Development $301,000
2.0




Page 35
Department/Program 2021-22
Total

Human Services
1. Administration $250,000
*NEW* Fast Track Cities: Add contractual services to support the Fast Track Cities 0.0
Initiative. Fast Track Cities is an international effort working to end the HIV/Aids
pandemic and the City of Phoenix is one of 25 cities in the U.S. working to reach
this goal. The additional funding will help increase engagement and awareness so
that people know their HIV status, are linked to treatment, are retained in care, and
follow-up is conducted with patients that fall out of care. Support can also help
with advocacy and enhance access to care for evolving Antiretroviral Treatment
and continue outreach to communities of color who are disproportionately
impacted by HIV and AIDS. The goal of this outreach is for 90 percent of
Phoenicians to know their status, 90 percent who know their HIV-positive status to
be in antiviral treatment, 90 percent who are on antiviral treatment to achieve viral
suppression and to have no stigma or discrimination.


2. Administration $95,000
*NEW* Veterans Case Management: Add a Caseworker III position that will be 1.0
responsible for coordinating with the U.S. Department of Veterans Affairs (VA) to
assist with navigation and referrals to social services such as emergency
rental/utility assistance, counseling, housing needs, healthcare, employment and
other supports necessary to promote self-sustainability or stabilization for veterans.
This position would also assist the VA case managers in providing general needs
assessments, recommendations on root causes of the veteran’s needs and follow-
up ensuring services have been provided.


Total Human Services $345,000
1.0

Library
1. College Depot $210,000
Add an Administrative Assistant II position and a Caseworker II position for the 2.0
expansion of the College Depot program to accommodate growing demand for
additional GED classes, ACT/SAT prep classes, and one-on-one counseling
appointments. The program expansion is projected to serve 291 additional
students, offer 103 additional classes, and increase the one-on-one GRIT
appointments by 546 hours.

Total Library $210,000
2.0

Office of Arts and Culture
1. Community Investment and Engagement Program $110,000
Increase funding for arts grants for nonprofit arts and cultural organizations. Arts 0.0
grants enable artists, arts and culture organizations, youth, and neighborhood
groups to carry out high-quality arts programming for all residents.




Page 36
Department/Program 2021-22
Total

2. Community Investment and Engagement Program $30,000
Add funding for youth arts and culture development programs, professional 0.0
development and technical assistance for artists and arts administrators, and pop-
up programming around the city to promote the Latino Cultural Center. This
funding will supplement increasingly unreliable funding from the State of Arizona.


3. Public Art Program $60,000
Increase funding for public art maintenance which would allow residents to enjoy 0.0
the collection, showcase the city's initial investment, and help avoid safety issues
with artwork in the community. Maintenance includes lighting upgrades, annual
maintenance, and renovations to address wear and damage. The public art
collection includes over 200 art installations.

Total Office of Arts and Culture $200,000
0.0

Parks and Recreation
1. Community Centers $911,000
Cesar Chavez Community Center: Add staff and supplies for the new Cesar 9.8
Chavez Community Center, scheduled to open in the fall of 2021. The Cesar
Chavez Community Center will offer a variety of activities to the general public.
These activities will include special events, sports programs, specialty classes,
adaptive/inclusive programs, out-of-school time sessions, field trips, and provide
meeting space for events and community groups.

2. Parks Maintenance $260,000
Hance Park: Add staff and equipment for grounds maintenance at Margaret T. 3.0
Hance Park. The Fiesta Bowl PLAY at Hance Park opened to the community in
December 2020. As part of this phase, a new landscape design incorporating over
7,000 new plants and trees was added. Maintenance of this plant material will
require staff with both horticultural and irrigation skills to maintain the new park
amenities.

3. Park Rangers-Community and Neighborhood Parks $106,000
Ranger Support: Add a Park Supervisor position to oversee the Urban Park 1.0
Ranger Patrol Program. This position will manage daily operations, establish
additional Field Operation Procedures, manage personnel issues and work directly
with PhxCARES to increase contacts to individuals requiring services.


4. Administration $108,000
Property Management: Add a Property Manager position to manage the 1.0
maintenance of Parks facilities. The Parks and Recreation Department directly
manages an estimated two million square feet of indoor space, various specialty
facilities (examples include: 29 public pools, South Mountain Tower site, historic
buildings, museums, and Tovrea Castle), and outdoor park and trail amenities.




Page 37
Department/Program 2021-22
Total

5. Parks Maintenance $34,000
Deem Hills: Add a part-time Groundskeeper position and supplies to maintain the 0.5
phase 3 project at Deem Hills Park, which includes: a sand volleyball court, a
tennis court, pickleball courts, a large ramada, three small ramadas, a .7 mile
nature trail interpretive loop, 25 additional parking stalls and other site furnishings
like new trees, irrigation system and landscaping.

6. General Recreation $68,000
Adaptive Recreation: Add staff and supplies to maintain the current 3.0
Adaptive/Inclusive Recreation Program with General Funds upon the expiration of
the existing donations and to expand the program citywide. This program started in
March 2020 and is currently funded until March 2022 based on a two-year funding
commitment from the Phoenix Suns. It offers adaptive recreation services to
individuals with developmental disabilities and adaptive recreation programming
and inclusion services for youth and adults, their families and caregivers to
enhance quality of life and to promote inclusion. Failure to continue funding this
program when the donations expire will result in the program not being able to
continue leaving the City without any adaptive recreation programs.


7. Parks Maintenance $945,000
*NEW* New Parks: Add a General Fund set-aside for staff, supplies and 6.0
equipment to operate three new parks expected to open in fiscal year 2022-23.
The new parks will be located at 55th Ave. & Samantha Way, 71st Ave. & Meadow
Loop Rd., and 87th Ave & Lower Buckeye Rd. Construction of the parks will be
paid for using available resources from impact fees.

8. Parks Maintenance $171,000
*NEW* Historic Cemeteries: Add staff and equipment to provide more frequent 2.0
maintenance at two historic cemeteries, the Phoenix Pioneer and Military
Cemetery and Cementerio Lindo Cemetery, and to begin providing maintenance
services for the historic Sotelo Heard Cemetery located at 4545 South 12th Street.
The cemeteries are highly visited by residents and out of town tourists alike as part
of the History of the City of Phoenix tours offered by the nonprofit Phoenix
Cemetery Association (PCA).

9. Parks Maintenance $171,000
*NEW* Highline Canal Trail: Add staff, supplies and equipment to maintain the 2.0
Highline Canal Trail between 7th Avenue and 40th Street. The trail includes a 6'
wide asphalt path, advanced irrigation system, trees and shrubs and two large
urban desert bosques (urban forests areas). In addition, the trail is also home to
the "Zanjero" Art Project, which includes numerous art features playing tribute to
the agrarian roots of South Phoenix.




Page 38
Department/Program 2021-22
Total

10. Art, Educational & Environmental Facilities Operated by City Staff $78,000
*NEW* Pueblo Grande Museum: Convert a temporary Museum Assistant position 1.0
to an ongoing position in the General Fund. The Museum Assistant is a
professional-level position responsible for the registration, curation, and care of
collections in the archaeological repository. This includes creating new repository
agreements, arranging curation deliveries, accessioning incoming collections, and
conducting registration activities for repository collections.


Total Parks and Recreation $2,852,000
29.3

Planning and Development
1. Long Range Planning $296,000
Community Planning: Add two Planner II positions and a Planner III position to 3.0
support Council and community-initiated projects and priorities. The team will
devote significant time to Rio Reimagined, leading the development of a plan with
the vision, goals, policies and strategies that guide the future growth,
redevelopment and preservation along the banks of the Salt River. The Planning
team will work with the Mayor and Council and community, along with multiple city
departments, consultants and other partners to establish a Rio Reimagined Plan
that provides a foundation for future actions and investments, including sustainable
land use, heat mitigation, diverse housing options, economic development and
other important programs.

2. Office of the Customer Advocacy $30,000
*NEW* Adaptive Reuse: Increase funding for the Adaptive Reuse Program. The 0.0
program provides resources to assist small business owners who are locating their
businesses in Phoenix, and supports the City’s reenergized clean construction
efforts, resulting in the expanded use of underutilized/vacant existing buildings.
The City Manager is proposing a $5,000 increase to the Trial Budget proposal of
$25,000.

3. Administration and Enforcement of Local and Federal Historic Preservation Laws $200,000

Historic Preservation: Add funding for historic preservation grants to assist 0.0
residential property owners in maintaining their historic properties.

Total Planning and Development $526,000
3.0




Page 39
Department/Program 2021-22
Total

Public Works
1. Floodplain Management $107,000
Flood Plan Management: Add one Civil Engineer II to support the Flood Plain 1.0
Management program and assist in maintaining Federal Emergency Management
Agency (FEMA) compliance to the National Flood Insurance Program (NFIP) and
the Community Rating System (CRS) which provides insurance premium discounts
for residents. This position is needed to assist in completing the increasingly
complex compliance requirements.

Total Public Works $107,000
1.0

Street Transportation
1. Landscape Management $147,000
New Street Landscaping: Add funding to maintain street landscaping along newly 0.0
developed and renovated streetscapes. This includes maintenance for new
landscaping along the Grand Canal Phase II, Avenida Rio Salado from 35th
Avenue to 51st Avenue, and the east side of 107th Avenue from Indian School
Road to Camelback Road.

2. Central Records $0
Public Records Support: Add an Engineering Technician position in the Central 1.0
Records Section to support increased public records requests for right-of-way, City
infrastructure, facilities and private development plans and maps including paving,
storm drain, traffic services, and procurement and street maintenance records for
the public, media and legal request. This position will be charged out to
departments for whom records are being requested regarding their projects.


Total Street Transportation $147,000
1.0

TOTAL BUILDING COMMUNITY AND RESPONDING TO GROWTH $4,688,000
39.3




Page 40
Department/Program 2021-22
Total

ADMINISTRATIVE ACCOUNTABILITY

City Clerk
1. Elections Administration $300,000
Election Transparency: Add funding for consulting services to perform a strategic 0.0
assessment of the City’s election services information technology needs. This
would include the evaluation of the existing application portfolio and the
development of a strategic, multi-year plan. Additional requests for funding will
follow in future years once an overall information technology strategy is approved.
Improving the information systems supporting election services will enable the City
to meet the need for increased transparency in elections, and for voters,
candidates and elected officials to more easily engage in the elections process.


Total City Clerk $300,000
0.0

City Manager's Office
1. Professional Administration of Policies and Objectives Set Forth by Mayor and $272,000
Council
Diversity, Equity, and Inclusion: Add an Assistant to the City Manager position to 2.0
act as the Diversity, Equity, and Inclusion Officer and an Administrative Assistant I
position to provide administrative support. This new office will be charged with
ensuring equitable distribution of City services throughout the entire City and serve
as the champion for delivering racial equity programs for the community.


Total City Manager's Office $272,000
2.0

Communications Office
1. Public Records, Customer Requests, and Customer Service to the Public $94,000
Citywide Public Records Support: Add a Management Assistant I position to assist 1.0
with tracking and responding to public records requests. In the last several years
the volume of records requests has increased by more than 60%to over 9,500 per
year. Adding this position will allow for the maintenance of service levels.


Total Communications Office $94,000
1.0




Page 41
Department/Program 2021-22
Total

Human Resources
1. Various $391,000
HR Support: Add three positions for procurement, data management, and 3.0
investigations. A Contracts Specialist II*Lead position to conduct formal
procurement processes and manage contracts. Contract monitoring and
administration is critical to ensure contractors perform in accordance with the City's
terms and conditions and with satisfactory performance. A Human Resources
Officer position to conduct investigations as a result of the increase in citywide
complaints in recent years. These complaints have been received through a variety
of sources including departments, employees, citizens, and through the internal
integrity line. A Lead Business Systems Analyst position to create and collect data,
convert raw data into meaningful information, make recommendations to various
levels of City staff, and facilitate or participate in work groups tasked with making
business improvements.


Total Human Resources $391,000
3.0

Information Technology Services
1. Enterprise Business Applications Services $750,000
ERP System Support: Add contractual funding for a managed services agreement 0.0
with a technology provider specializing in Enterprise Resource Planning (ERP)
systems. This support is needed to bridge the technical expertise gap in existing
City personnel who support the City's SAP and Peoplesoft ERP systems. The
agreement will be to provide an ERP program manager, business analyst,
technical leader and other needed services in an effort to improve processes and
implement system advancements.

2. IT Strategic Services $523,000
IT Information Security: Add one Lead Information Technology Systems Specialist 3.0
and two Senior Information Technology Systems Specialist positions to support the
City's growing technology infrastructure. These critical positions are needed to lead
infrastructure and application vulnerability remediation efforts that mitigate known
security and operational deficiencies.


Total Information Technology Services $1,273,000
3.0




Page 42
Department/Program 2021-22
Total

Law
1. Civil Division $0
In-source Legal Support: Convert contractual services for paralegal support to 2.0
create two Legal Assistant positions. The Law Department utilizes a paralegal
contract for support of civil litigation cases. It was determined that hiring two full-
time employees and reducing the contracted services results in a cost savings and
greater efficiency of services.

Total Law $0
2.0

Library
1. Administration $306,000
Add two information technology positions to support expanded technology 2.0
services. Positions include a Lead Information Technology Systems Specialist to
manage teams that support 60 applications, 1,000 public access computers, and
multiple platforms for 17 libraries; and a User Technology Specialist position to
support new programs to reach customers remotely such as the public laptop
lending program.

2. Administration $93,000
Add an Accountant II position to oversee the daily operation of the Library's 1.0
accounting section. This position will provide support for accounts payables and
receivables, fixed asset accounting, bank account reconciliations, inter-agency
invoices, grant administration support, expenditures review, response to auditors,
and payroll accounting.

Total Library $399,000
3.0

Parks and Recreation
1. Administration $208,000
Parks IT Support: Add a Senior User Technology 2.0 Specialist position and a 2.0
User Technology Specialist to provide IT support for the department. The Parks
and Recreation Department Information Technology staff provides support to 32
community/recreation centers, numerous offsite office locations, over 800 devices
and over 1,500 full and part-time employees. These additional positions are
necessary to support the significant increase in new hardware and IT projects that
have been implemented in the department.


Total Parks and Recreation $208,000
2.0




Page 43
Department/Program 2021-22
Total

Public Works
1. Equipment Maintenance Repair and Related Parts Service Support $137,000
Fleet Maintenance: Restore 10 fleet maintenance positions that support the Fire, 10.0
Parks and Recreation, Public Works Solid Waste, Street Transportation, and
Water Services Departments. Funding for these positions is primarily from Non-GF
departments. Adding these positions will decrease downtime and service delays.
The cost of these positions will be partially offset by a reduction in contract vendor
funding. The ten positions include two Equipment Service Worker II, five Heavy
Equipment Mechanic, one Auto Technician, one Auto Parts Clerk II and one
Support Services Aide.

2. Administration $0
Add one Senior Human Resources Analyst position to provide support to the Solid 1.0
Waste divisions. This position is located in the General Fund but will be funded by
the Solid Waste fund and is needed to increase response time, provide supervisor
support, process corrective actions and recruitments.

Total Public Works $137,000
11.0

TOTAL ADMINISTRATIVE ACCOUNTABILITY $3,074,000
27.0


POSITION CONVERSIONS TO MAINTAIN EXISTING SERVICES

City Manager's Office
1. Youth and Education Coordination $0
Convert 1.5 FTE of temporary part-time Recreation Leader positions in the Youth 0.0
and Education Program to ongoing status to continue to assist with program
implementation, school presentations, developing and planning activities in
specialized program areas, and working with neighborhoods, schools, and
community groups on matters of civic and program interest.

2. Citywide Volunteer Program $0
Convert a temporary Admin Aide U7 position in the Citywide Volunteer program to 0.0
ongoing status to support and coordinate the City's AmeriCorps VISTA program,
the annual Mayor's Day of Recognition for National Service, and the new Service
Learning collaboration with community colleges.




Page 44
Department/Program 2021-22
Total

3. Oversight of and Assistance to Departments; City Council Support; Strategic $0
Planning
Convert a temporary Management Assistant I position to ongoing status. The 0.0
position manages the citywide 311 Call Center and oversees staffing of the
Phoenix City Hall Lobby by-appointment only program.

Total City Manager's Office $0
0.0

Community and Economic Development
1. Community Development $0
Convert one Special Project Administrator position from temporary to regular 0.0
status. This position is currently responsible for the arena renovation project and is
needed to manage citywide major economic development projects. This position
is funded by the Sports Fund until completion of the arena project. Primary funding
will shift to the General Fund once the arena project is complete next fiscal year
and the position will be used for the growing number of economic development
initiatives.

Total Community and Economic Development $0
0.0

Finance
1. Goods & General Services Procurement and Contract Management $0
Convert a temporary Special Projects Administrator position in the Procurement 0.0
Division to ongoing status. The position will manage the Agile technology
procurement process, supervise a team focused on IT procurements, engage and
optimize citywide strategic buying, and direct the citywide policy on contract
management.

2. Administration $0
Convert a temporary Special Projects Administrator position in the Revenue 0.0
Collections Division to ongoing status. The position is responsible for directing and
coordinating the operations of financial projects that requires a high degree of
specialized knowledge, establishing and monitoring fiscal management procedures
related to revenue collections and supervises senior level professional staff.


Total Finance $0
0.0




Page 45
Department/Program 2021-22
Total

Fire
1. Fire Prevention General Inspections $0
Convert a Fire Prevention Specialist II position from temporary to ongoing status. 0.0
This position is assigned to the Public Works Department and performs plan
review activities for City of Phoenix owned properties and building projects. This
ensures City of Phoenix projects conform to applicable Fire Code requirements.


Total Fire $0
0.0

Government Relations
1. Federal, State, Regional and Tribal Programs $0
Convert one Special Project Administrator position from temporary to ongoing to 0.0
support a long term strategy of managing the City's governmental relations efforts.
This critical position coordinates the City's lobbyist team, the Arizona League of
Cities and Towns, and works with City departments to track and respond to
legislation that impacts the City.

Total Government Relations $0
0.0

Human Resources
1. Various $0
Convert 10 temporary positions to ongoing status to continue to support employee 0.0
customer service and ongoing operations in Labor Relations, Safety, Benefits, and
the Employee Relations Divisions.

Total Human Resources $0
0.0

Information Technology Services
1. Administration $0
Convert the Deputy Chief Information Officer for operations from temporary to 0.0
ongoing status. This critical position manages the city's business continuity and
disaster recovery program.

2. Enterprise Business Applications Services $0
Convert Fire Deputy Chief Information Officer from temporary to ongoing status to 0.0
continue to support the Fire Department and the Chief Information Officer with
critical technology needs.




Page 46
Department/Program 2021-22
Total

3. Radio Communications Services $0
Convert a Senior User Technology Specialist position from temporary to ongoing 0.0
status. This position serves as the Regional Wireless Cooperative (RWC)
Emergency Responder Radio Communication System Specialist responsible for
managing critical radio network installation projects.

Total Information Technology Services $0
0.0

Neighborhood Services
1. Code Compliance Program $0
Convert four temporary Neighborhood Inspector positions to ongoing status. These 0.0
positions were originally created for the Structured Sober Living Home (SSLH)
licensing program. There is an ongoing need for the positions.

Total Neighborhood Services $0
0.0

Police
1. Professional Standards Bureau - Inspections Unit $0
Convert one temporary Police Administrator position and two Police Research 0.0
Analyst positions to ongoing positions in the Compliance & Oversight Bureau. The
Police Administrator position serves as the Data Quality Administrator and is
responsible for the Early Identification and Intervention System, provides key
department data, and manages inspections and audits in the Professional
Standards Bureau. The Police Research Analyst positions analyze officer data to
predict possible trends of employee incidents.


2. Administration $0
Convert a temporary Management Assistant II to an ongoing position to continue 0.0
support of the Center for Continuous Improvement Bureau, which focuses on
improving community and internal relationships and identifying process
improvements and efficiencies.

Total Police $0
0.0

TOTAL POSITION CONVERSIONS TO MAINTAIN EXISTING SERVICES $0
0.0




TOTAL PROPOSED GENERAL FUND ADDITIONS $154,794,000
318.2




Page 47
ATTACHMENT B

2021-22

PROPOSED SUPPLEMENTALS
NON-GENERAL FUND

View the Inventory of Programs published online for program details.


Department/Program 2021-22
Total

CLIMATE CHANGE AND HEAT READINESS

Water Services
1. Water Resource Management and Development Planning $724,000
*NEW* Water Conservation: Add staff and equipment to implement Phase II of the 5.0
water conservation plan approved by City Council. The positions are being
requested based on the Water Conservation Ad Hoc Committee recommendation
to expand conservation outreach within the City. Council also adopted the water
conservation metric to reduce the total gallons-per-capita-per-day (GPCD) from
169 to 155 by 2030.

Total Water Services $724,000
5.0

TOTAL CLIMATE CHANGE AND HEAT READINESS $724,000
5.0


AFFORDABLE HOUSING AND HOMELESSNESS

Public Works
1. Education and Enforcement $0
Human Services Campus Cleanup: Add funding to support the coordination and 3.0
expansion of the Human Services Campus Clean-Up service. The request
includes adding one Supervisor and two Solid Waste Equipment Operator
positions, one Rear Loader, one Articulator Loader, and one Trailer positions.
Positions will be in the Solid Waste Division of Public Works.

Total Public Works $0
3.0

TOTAL AFFORDABLE HOUSING AND HOMELESSNESS $0
3.0




Page 48
Department/Program 2021-22
Total

BUILDING COMMUNITY AND RESPONDING TO GROWTH

Planning and Development
1. Residential Plan Review & Inspections $284,000
Add two Construction Permit Specialist II positions and a Plan Review Coordinator 3.0
position to the Residential Plan Review section which has seen a 49% increase in
Single Family Residence plot plan submittals compared to last fiscal year along
with a 90% increase in photovoltaic submittals. Additional staffing resources are
needed to reduce the turnaround times for these reviews and maintain turnaround
times in the future.

2. Commercial Plan Review & Inspections $325,000
Add a Structural Plans Engineer position, a Mechanical Plans Engineer position 3.0
and a Principal Engineering Technician position in the Commercial Plan Review
section due to several large development projects, including the semiconductor
plant project, which is expected to meet strict deadlines to keep the project on
track.

3. Administration $78,000
Add an Accountant I position to support the data reconciliation, analysis and 1.0
reporting of financial data for accounts receivable, accounts payable and
budget/cost recovery. Additional financial analysis support is needed primarily due
to new duties anticipated with the KIVA/SHAPE PHX permitting system
conversion. This position will provide technical/financial expertise and support in
the new SHAPE PHX system to over 50 cash handling staff across various
payment counters and sections within the department.

4. Residential Plan Review & Inspections $116,000
Add a General Inspector II position for the Remote Inspections program. This 1.0
position will be dedicated to the Remote Inspections program but will also be able
to assist with other inspections as needed.

5. Administration $96,000
Add a User Technology Specialist position. IT staff provide day-to-day support for 1.0
more than 500 computer workstations and associated software. This position will
help ensure any service or technical issues are being proactively resolved in order
to minimize customer impact.

6. Administration $60,000
Add a Records Clerk II position to support the scanning of planning, zoning and 1.0
historic preservation files. Increased activity and resulting workloads of planners
supports the need for this position. PDD averages 750 to 1,000 zoning cases
annually. Each of these Zoning adjustment, rezoning and special permit case files
need to be scanned into SIRE database system after the cases are completed.


Total Planning and Development $959,000
10.0




Page 49
Department/Program 2021-22
Total

Public Works
1. Contained Residential Collection $2,012,000
Add funding to support the refuse and recycle collection service growth needed to 4.0
efficiently maintain existing and future service levels. The request is consistent with
the 2019 Solid Waste Rate Advisory Committee and financial plan approved by
Mayor and City Council. Includes adding four Solid Waste Equipment Operator
and four Automated Side Loader positions.

2. Open Landfill $72,000
Add one Equipment Operator IV position to support the citywide growth in solid 1.0
waste tonnage at the SR85 Landfill. This position is needed to reduce overtime,
employee fatigue and operational efficiency.

Total Public Works $2,084,000
5.0

Street Transportation
1. Street Maintenance $0
Add a Senior GIS Technician position in the Geographic Technology Services 1.0
Section to oversee quality control, training, and data research for the GIS land
base information and ensure recorded documents are correctly prepared and
documented for GIS Technicians to map. Position will replace consulting services
resulting in a net zero add.

2. Administration $94,000
Add a Senior GIS Technician position in the Technical Services Section to meet 1.0
the needs of Pavement Management program’s GIS editing and analyses, and the
demand for GIS maps, tools, and services.

3. Various $262,000
Restore two Street Maintenance Foreman III positions and add funding for two 2.0
vehicles. Positions are assigned to the Preventive Maintenance and Street
Cleaning Sections. Six Foreman III positions were eliminated during the recession,
four positions were restored, these are the last two positions. Positions handle day-
to-day operations, provide training on procedures and safe operation of equipment,
and handle administrative responsibilities related to emergency and storm
response.

4. Street Maintenance $77,000
Add an Administrative Aide position in the Field Operations Administration section, 1.0
dispatch function to assist with phone service requests, email, and other
communications from the public, City staff, and other agencies regarding
emergency, non-emergency street maintenance, and non-street related concerns.


Total Street Transportation $433,000
5.0




Page 50
Department/Program 2021-22
Total


TOTAL BUILDING COMMUNITY AND RESPONDING TO GROWTH $3,476,000
20.0


ADMINISTRATIVE ACCOUNTABILITY

Public Works
1. Administration $94,000
Add one Senior Human Resources Analyst position to provide support to the Solid 0.0
Waste divisions. This position is located in the General Fund but will be funded by
the Solid Waste fund and is needed to increase response time, provide supervisor
support, process corrective actions and recruitments.

Total Public Works $94,000
0.0

TOTAL ADMINISTRATIVE ACCOUNTABILITY $94,000
0.0


POSITION CONVERSIONS TO MAINTAIN EXISTING SERVICES

Law
1. Criminal Division - Victim Services Unit $0
Conversion of eleven existing temporary positions to ongoing positions within the 0.0
Law Department's Criminal Division - Victim Services Unit funded by Victims of
Crimes Act (VOCA) Advocacy Services Grant, VOCA Advocate for Victims 50 &
Over Grant and Arizona Governor's Office of Highway Safety (GOHS) Grant.
These positions are of a long-term nature as grants have been awarded
consistently over the past fifteen years.

Total Law $0
0.0

Neighborhood Services
1. Administration $0
Convert a temporary Special Project Administrator position (Grants Compliance 0.0
Administrator) to ongoing status. A continued long term need is due to increased
complexity and reporting requirements per the U.S. Department of Housing and
Urban Development and to perform critical financial and programmatic analysis
and oversight to identify strategic opportunities to maximize CDBG funds. This
addition will provide the City with a dedicated position to perform specialized
CDBG compliance and programmatic research and provide recommendations to
City management and Council on initiatives and projects to best meet the diverse
needs of Phoenix neighborhoods.




Page 51
Department/Program 2021-22
Total

2. Targeted Neighborhood Revitalization Programs $0
Convert a temporary Project Manager position and an Accountant II position to 0.0
ongoing status. These positions were originally funded with Neighborhood
Stabilization Program grant funds and support programs to purchase foreclosed or
abandoned homes and multi-family properties at a discount to rehabilitate, resell,
or redevelop these properties in order to stabilize neighborhoods within the City of
Phoenix. The programs are now funded with program income expected from
outstanding 15-30 year loans which must also comply with the HUD federal
funding regulations including regular grant reporting and program administration
for reuse of available funds.

3. Housing Rehab Programs $0
Convert a temporary Housing Rehabilitation Specialist position and a Project 0.0
Manager position to ongoing status. These positions support weatherization grant
programs that provide energy efficient improvements for low-income residents.
The City has continuously received level or increased funding to assist Phoenix
residents and there is no indication of the City not being a continued recipient of
these grant funds.

Total Neighborhood Services $0
0.0

Public Transit
1. Light Rail $0
Convert a temporary Management Assistant II position (Business Assistance 0.0
Coordinator) to ongoing status. This position is responsible for the creation and
implementation of the Small Business Financial Assistance Program Pilot in
conjunction with Valley Metro and the program administrator. This position is
essential for developing programs that support the business communities that
might be impacted by light rail construction and for working with Valley Metro,
business owners and other stakeholders to assure the quality and standards for
the City of Phoenix and Light Rail Business Assistance program are maintained.


2. Light Rail $0
Convert a temporary Economic Development Program Manager position to 0.0
ongoing status. The position is in the construction oversight and coordination
section of the Light Rail Transit Division and is responsible for the implementation
of a quality assurance program, and serves as a liaison for other internal City
departments as it relates to Light Rail operations and construction. The position is
also responsible for making sound engineering determinations to forward the
progress of light rail projects.

Total Public Transit $0
0.0




Page 52
Department/Program 2021-22
Total

Street Transportation
1. Administration $0
Convert a temporary Special Projects Administrator position in the Horizontal 0.0
Project Management (HPM) section to ongoing status to manage the design and
construction staff and the Materials Testing Lab and Survey sections and oversee
the work of design consultants and construction contractors.

2. Transportation and Drainage Design and Construction $70,000
Convert a temporary Chief Construction Inspector and Senior Construction 0.0
Inspector to ongoing status, and add funding for vehicles. Inspectors are
responsible for project management of multiple projects, project and public safety,
adhering and monitoring Americans with Disabilities Act (ADA) Federal
compliance, and addressing citizen concerns and efficient resolution of citizen
complaints related to projects.

Total Street Transportation $70,000
0.0

TOTAL POSITION CONVERSIONS TO MAINTAIN EXISTING SERVICES $70,000
0.0




TOTAL PROPOSED NON-GENERAL FUND ADDITIONS $4,364,000
28.0




Page 53
2019-20 SCHEDULE 1
RESOURCES AND EXPENDITURES BY FUND
ACTUAL
(In Thousands of Dollars)

Resources Expenditures
Recovery
Beginning and Interfund Interfund Debt Ending Fund
1/
Fund Balance Revenue Proceeds Transfers-In Transfers-Out Total Operating Capital Service Total Balance

General Funds
General Fund 133,580 351,218 5,443 937,469 (109,274) 1,318,436 1,135,541 13,776 - 1,149,317 169,119
Library - 39,624 1,424 - (2,659) 38,389 37,758 631 - 38,389 -
Parks - 15,732 396 76,627 - 92,755 92,755 - - 92,755 -
Cable Television - 10,369 1 - (8,000) 2,370 2,370 - - 2,370 -
Total General Funds 133,580 416,943 7,264 1,014,096 (119,933) 1,451,950 1,268,424 14,407 - 1,282,831 169,119


Special Revenue Funds
Excise Tax - 1,393,827 - - (1,393,827) - - - - - -
Arizona Highway User Revenue 41,347 138,553 11,814 28,000 (31,893) 187,820 75,913 67,422 - 143,336 44,484
Capital Construction 15,992 565 236 8,548 - 25,341 153 4,482 - 4,635 20,705
City Improvement - 19 - 124,980 (1,027) 123,972 - - 123,972 123,972 -
Community Reinvestment 13,274 10,841 1 - (2,065) 22,051 1,104 5,774 - 6,878 15,173
2/
Court Awards (300) 4,873 103 - - 4,676 5,734 - - 5,734 (1,058)
Development Services 70,367 70,424 21 - (4,322) 136,490 60,353 17,416 - 77,768 58,722
Golf 796 6,958 7 - - 7,761 5,630 95 - 5,725 2,036
Neighborhood Protection - Block Watch 4,857 287 - 1,812 (5) 6,950 1,519 - - 1,519 5,431
Neighborhood Protection - Fire 4,636 676 - 9,058 (27) 14,343 9,683 - - 9,683 4,659
Neighborhood Protection - Police 15,459 1,657 - 25,363 (472) 42,008 29,563 - - 29,563 12,445
Parks and Preserves 63,604 3,394 187 38,331 (108) 105,407 5,638 33,677 - 39,315 66,092
Public Safety Enhancement - Fire 10,998 752 - 9,112 - 20,861 9,559 - - 9,559 11,303
Public Safety Enhancement - Police 13,078 866 - 14,866 (356) 28,454 18,191 - - 18,191 10,263
Public Safety Expansion - Fire 6,102 941 - 14,493 (166) 21,370 13,306 - - 13,306 8,064
Public Safety Expansion - Police 30,255 4,690 - 57,971 (926) 91,991 67,186 - - 67,186 24,806
3/
Regional Transit (7,529) 43,148 128 - - 35,748 34,263 6,964 - 41,228 (5,480)
Regional Wireless Cooperative 1,823 4,602 9 188 (188) 6,434 4,636 - - 4,636 1,798
Secondary Property Tax 100 111,103 - 5,107 - 116,310 - - 116,210 116,210 100
Sports Facilities 52,882 5,379 9 18,476 (6,238) 70,509 2,788 6,941 - 9,729 60,780
Transit 2000 4/ (699) 18 447 713 (478) - - - - - -
Transportation 2050 4/ 158,917 44,650 7,522 248,327 (73,197) 386,218 192,013 32,608 - 224,621 161,597
Other Restricted 90,732 37,848 404 31,767 (6,036) 154,717 50,955 2,070 - 53,025 101,692
Grants and Public Housing 29,009 305,608 1,314 1,274 (1,623) 335,582 260,818 46,654 - 307,472 28,110
Total Special Revenue Funds 615,701 2,191,680 22,202 638,386 (1,522,954) 1,945,013 849,006 224,103 240,183 1,313,292 631,721


Enterprise Funds
Aviation 272,617 362,345 1,980 454,260 (337,921) 753,281 259,333 20,366 91,827 371,526 381,755
Convention Center 58,271 21,155 560 62,201 (10,497) 131,690 51,449 3,741 19,952 75,142 56,548
Solid Waste 33,349 155,730 5,719 - (9,385) 185,414 142,140 4,305 14,041 160,486 24,927
Wastewater 85,045 252,665 2,288 77,068 (86,611) 330,455 101,251 26,196 72,806 200,253 130,202
Water 90,191 454,116 4,645 147,266 (171,361) 524,857 217,710 65,435 128,287 411,432 113,425
Total Enterprise Funds 539,474 1,246,010 15,193 740,795 (615,775) 1,925,697 771,884 120,044 326,912 1,218,840 706,857


GRAND TOTAL 1,288,755 3,854,633 44,658 2,393,277 (2,258,662) 5,322,659 2,889,314 358,554 567,095 3,814,963 1,507,696

1/ General fund sales tax revenue is reflected as a transfer-in from the excise tax fund. Total transfer equates to $890.4 million, and is included in the General Funds revenue total of $1,307.4 million
shown on Schedule 2.
2/ The negative balance in Court Awards is due to the timing of reimbursements for the Records Management System (RMS).
3/ The negative balance in Regional Transit is due to the timing of reimbursements for project costs from the regional transportation plan (Proposition 400).
4/ The Transportation 2050 sales tax (Proposition 104) was established by the voters effective January 1, 2016 and increased the Transit 2000 sales tax (proposition 2000) to fund a comprehensive
transportation plan with a 35 year sunset date. The proposition increased the transaction privilege (sales) tax rates by 0.3% for various business activities.




Page 54
2020-21 SCHEDULE 1
RESOURCES AND EXPENDITURES BY FUND
PROPOSED ESTIMATE
(In Thousands of Dollars)

Resources Expenditures
Recovery
Beginning and Interfund Interfund Debt Ending Fund
1/
Fund Balance Revenue Proceeds Transfers-In Transfers-Out Total Operating Capital Service Total Balance

General Funds
General Fund 169,119 405,227 1,000 1,049,574 (145,284) 1,479,635 1,207,319 27,551 - 1,234,870 244,765
Library - 42,314 - 1,287 (2,619) 40,981 40,026 955 - 40,981 -
Parks - 14,489 - 84,212 - 98,701 95,701 3,000 - 98,701 -
Cable Television - 9,600 - - (6,904) 2,696 2,696 - - 2,696 -
Total General Funds 169,119 471,630 1,000 1,135,072 (154,807) 1,622,014 1,345,743 31,506 - 1,377,249 244,765


Special Revenue Funds
Excise Tax - 1,473,964 - - (1,473,964) - - - - - -
Arizona Highway User Revenue 44,484 142,879 691 - (3,793) 184,261 81,714 71,585 - 153,299 30,962
Capital Construction 20,705 45 468 7,992 - 29,210 140 9,253 - 9,393 19,816
City Improvement - - 351 59,384 (1,028) 58,706 - - 58,706 58,706 -
Community Reinvestment 15,173 5,938 75 2,800 (2,064) 21,922 2,181 2,470 - 4,651 17,271
Court Awards (1,058) 5,608 9 - - 4,559 4,393 - - 4,393 167
Development Services 58,722 69,500 160 - (4,440) 123,942 66,475 11,713 - 78,188 45,754
Golf 2,036 8,439 1 - - 10,476 7,364 1,793 - 9,157 1,319
Neighborhood Protection - Block Watch 5,431 236 - 1,913 (10) 7,571 1,749 - - 1,749 5,822
Neighborhood Protection - Fire 4,659 965 - 9,565 (50) 15,140 10,827 - - 10,827 4,313
Neighborhood Protection - Police 12,445 2,232 5 26,780 (701) 40,760 27,125 - - 27,125 13,635
Parks and Preserves 66,092 1,627 - 43,903 (201) 111,421 5,929 28,178 - 34,107 77,314
Public Safety Enhancement - Fire 11,303 1,128 - 9,265 - 21,696 11,723 - - 11,723 9,973
Public Safety Enhancement - Police 10,263 1,299 2 15,116 (416) 26,264 17,173 - - 17,173 9,091
Public Safety Expansion - Fire 8,064 1,337 - 15,304 (225) 24,480 16,309 - - 16,309 8,171
Public Safety Expansion - Police 24,806 6,807 3 61,213 (1,214) 91,615 65,735 - - 65,735 25,880
Regional Transit (5,480) 27,828 14 2,000 - 24,362 15,364 8,997 - 24,362 -
Regional Wireless Cooperative 1,798 5,543 199 - - 7,539 5,947 - - 5,947 1,592
Secondary Property Tax 100 118,215 - 10,631 - 128,946 - - 128,846 128,846 100
Sports Facilities 60,780 4,313 130 11,905 (14,655) 62,474 3,120 7,060 - 10,180 52,294
Transportation 2050 161,597 15,855 1,263 261,183 (5,842) 434,056 120,323 167,201 - 287,524 146,532
Other Restricted 101,692 20,019 378 23,652 (17,136) 128,605 52,701 7,708 - 60,409 68,196
Grants and Public Housing 28,110 541,082 482 - (270) 569,403 491,317 49,135 - 540,453 28,951
Total Special Revenue Funds 631,721 2,454,860 4,231 562,606 (1,526,010) 2,127,408 1,007,609 365,093 187,552 1,560,254 567,154


Enterprise Funds
Aviation 381,755 426,477 5,220 87,566 (12,306) 888,711 353,029 30,820 126,449 510,298 378,413
Convention Center 56,548 3,557 949 50,420 (3,944) 107,530 49,003 5,344 20,639 74,986 32,544
Solid Waste 24,927 182,178 3,077 - (10,114) 200,068 158,968 8,138 14,977 182,084 17,984
Wastewater 130,202 253,208 2,714 28,581 (45,151) 369,555 111,243 32,039 71,783 215,064 154,491
Water 113,425 502,979 4,137 15,079 (51,576) 584,044 229,793 61,496 136,908 428,196 155,847
Total Enterprise Funds 706,857 1,368,400 16,097 181,645 (123,091) 2,149,908 902,037 137,837 370,756 1,410,629 739,279


GRAND TOTAL 1,507,696 4,294,890 21,328 1,879,324 (1,803,908) 5,899,330 3,255,388 534,436 558,308 4,348,132 1,551,198

1/ General fund sales tax revenue is reflected as a transfer-in from the excise tax fund. Total transfer equates to $960.5 million, and is included in the General Funds revenue total of $1,432.1 million
shown on Schedule 2.




Page 55
2021-22 SCHEDULE 1
RESOURCES AND EXPENDITURES BY FUND
PROPOSED BUDGET
(In Thousands of Dollars)

Resources Expenditures
Recovery
Beginning and Interfund Interfund Debt Ending Fund
1/
Fund Balance Revenue Proceeds Transfers-In Transfers-Out Total Operating Capital Service Total Balance

General Funds
General Fund 244,765 314,884 1,000 1,021,545 (131,740) 1,450,454 1,426,402 24,052 - 1,450,454 -
Library - 45,248 - 2,119 (2,546) 44,820 43,865 955 - 44,820 -
Parks - 15,816 - 93,358 - 109,174 109,174 - - 109,174 -
Cable Television - 9,600 - - (6,431) 3,169 3,169 - - 3,169 -
Total General Funds 244,765 385,547 1,000 1,117,023 (140,717) 1,607,618 1,582,611 25,007 - 1,607,618 -


Special Revenue Funds
Excise Tax - 1,516,161 - - (1,516,161) - - - - - -
Arizona Highway User Revenue 30,962 149,715 691 - (892) 180,475 89,856 85,482 - 175,338 5,138
Capital Construction 19,816 222 236 7,370 - 27,644 140 20,380 - 20,520 7,124
City Improvement - - - 71,447 (1,026) 70,421 - - 70,421 70,421 -
Community Reinvestment 17,271 5,863 1 4,845 (2,221) 25,759 2,128 7,734 - 9,862 15,897
Court Awards 167 5,296 2 - - 5,464 5,464 - - 5,464 1
Development Services 45,754 71,428 14 - (4,440) 112,756 81,906 4,451 - 86,357 26,399
Golf 1,319 6,794 - - - 8,112 6,224 - - 6,224 1,889
Neighborhood Protection - Block Watch 5,822 236 - 2,011 (9) 8,060 2,114 - - 2,114 5,946
Neighborhood Protection - Fire 4,313 37 - 10,053 (48) 14,355 11,063 - - 11,063 3,292
Neighborhood Protection - Police 13,635 132 - 28,150 (696) 41,222 32,494 - - 32,494 8,728
Parks and Preserves 77,314 1,852 - 40,369 (193) 119,343 6,479 66,212 - 72,691 46,652
Public Safety Enhancement - Fire 9,973 - - 9,388 - 19,361 11,104 - - 11,104 8,257
Public Safety Enhancement - Police 9,091 - - 15,318 (416) 23,993 19,378 - - 19,378 4,615
Public Safety Expansion - Fire 8,171 82 - 16,086 (222) 24,117 17,613 - - 17,613 6,504
Public Safety Expansion - Police 25,880 239 - 64,342 (1,201) 89,260 79,093 - - 79,093 10,167
Regional Transit - 38,945 14 - - 38,959 24,998 13,961 - 38,959 -
Regional Wireless Cooperative 1,592 5,515 9 - - 7,116 5,485 - - 5,485 1,632
Secondary Property Tax 100 123,686 650 5,379 - 129,814 - - 129,714 129,714 100
Sports Facilities 52,294 4,240 1 16,604 (15,415) 57,724 22,690 2,393 - 25,083 32,641
Transportation 2050 146,532 27,973 - 274,396 (21,192) 427,709 91,311 308,724 - 400,036 27,673
Other Restricted 68,196 31,622 32 34,824 (7,541) 127,133 66,468 12,718 - 79,186 47,947
Grants and Public Housing 28,951 1,031,004 74 - (274) 1,059,755 912,952 125,058 - 1,038,010 21,745
Total Special Revenue Funds 567,154 3,021,042 1,724 600,583 (1,571,948) 2,618,554 1,488,959 647,114 200,135 2,336,209 282,346


Enterprise Funds
Aviation 378,413 412,546 1,781 32,747 (10,290) 815,197 372,968 126,993 87,281 587,242 227,955
Convention Center 32,544 18,800 61 57,196 (3,801) 104,801 48,880 15,480 20,763 85,123 19,677
Solid Waste 17,984 189,870 268 - (9,802) 198,320 171,647 11,278 15,227 198,151 169
Wastewater 154,491 254,696 1,222 30,004 (47,712) 392,701 128,461 71,659 71,389 271,510 121,191
Water 155,847 487,697 2,099 17,737 (46,103) 617,277 261,694 125,355 153,620 540,668 76,609
Total Enterprise Funds 739,279 1,363,609 5,431 137,685 (117,708) 2,128,296 983,649 350,766 348,280 1,682,695 445,601


GRAND TOTAL 1,551,198 4,770,197 8,155 1,855,290 (1,830,372) 6,354,468 4,055,219 1,022,887 548,415 5,626,521 727,947

1/ General fund sales tax revenue is reflected as a transfer-in from the excise tax fund. Total transfer equates to $970.2 million, and is included in the General Funds revenue total of $1,355.8 million
shown on Schedule 2.




Page 56
SCHEDULE 2
PROPOSED REVENUES BY MAJOR SOURCE
(In Thousands of Dollars)


Percent Increase/ Percent Increase/
2019-20 2020-21 Decrease from 2021-22 Decrease from
Revenue Source Actuals Estimate 2019-20 Actuals Budget 2020-21 Estimate


GENERAL FUND


Local Taxes and Related Fees
Local Sales Tax 479,705 505,957 5.5% 528,111 4.4%
Privilege License Fees 2,436 2,800 14.9% 2,800 0.0%
Other General Fund Excise Taxes 18,837 19,106 1.4% 19,286 0.9%
Subtotal 500,978 527,863 5.4% 550,197 4.2%


State Shared Revenues
Sales Tax 171,927 189,898 10.5% 197,945 4.2%
State Income Tax 214,697 240,237 11.9% 219,316 -8.7%
Vehicle License Tax 70,484 75,200 6.7% 79,100 5.2%
Subtotal 457,108 505,335 10.6% 496,361 -1.8%


Primary Property Tax 170,210 179,950 5.7% 191,294 6.3%


User Fees/Other Revenue
Licenses & Permits 2,812 2,502 -11.0% 2,771 10.8%
Cable Communications 10,369 9,600 -7.4% 9,600 0.0%
Fines and Forfeitures 10,734 8,918 -16.9% 8,956 0.4%
Court Default Fee 1,310 1,216 -7.2% 1,451 19.3%
Fire 49,893 45,686 -8.4% 50,098 9.7%
Hazardous Materials Inspection Fee 1,408 1,400 -0.6% 1,500 7.1%
Library Fees 371 204 -45.0% 483 +100%
Parks and Recreation 5,453 3,461 -36.5% 4,093 18.3%
Planning 1,589 1,387 -12.7% 1,497 7.9%
Police 14,848 12,975 -12.6% 13,108 1.0%
Street Transportation 6,155 6,145 -0.2% 6,481 5.5%
Other Service Charges 22,519 13,589 -39.7% 15,306 12.6%
Other 3,067 2,674 -12.8% 2,579 -3.6%
Subtotal 130,528 109,757 -15.9% 117,923 7.4%

Coronavirus Relief Fund 1/ 48,533 109,225 +100% - -100.0%

TOTAL GENERAL FUNDS 1,307,357 1,432,130 9.5% 1,355,775 -5.3%




Page 57
SCHEDULE 2
PROPOSED REVENUES BY MAJOR SOURCE (Continued)
(In Thousands of Dollars)


Percent Increase/ Percent Increase/
2019-20 2020-21 Decrease from 2021-22 Decrease from
Revenue Source Actuals Estimate 2019-20 Actuals Budget 2020-21 Estimate


SPECIAL REVENUE FUNDS
Neighborhood Protection 38,853 41,691 7.3% 40,619 -2.6%
2007 Public Safety Expansion 78,096 84,663 8.4% 80,749 -4.6%
Public Safety Enhancement 25,596 26,808 4.7% 24,706 -7.8%
Parks and Preserves 39,627 39,886 0.7% 42,066 5.5%
Transit 2000 2/ 18 - -100.0% - NA
2/
Transportation 2050 292,242 277,038 -5.2% 302,368 9.1%
Court Awards 4,872 5,608 15.1% 5,296 -5.6%
Development Services 70,425 69,500 -1.3% 71,428 2.8%
Capital Construction 9,113 7,835 -14.0% 7,592 -3.1%
Sports Facilities 22,829 15,190 -33.5% 19,818 30.5%
Arizona Highway User Revenue 138,553 142,879 3.1% 149,715 4.8%
Regional Transit Revenues 43,148 27,828 -35.5% 38,945 39.9%
Community Reinvestment 10,841 5,938 -45.2% 5,863 -1.3%
Secondary Property Tax 111,103 118,215 6.4% 123,686 4.6%
Impact Fee Program Administration 524 515 -1.7% 525 1.9%
Regional Wireless Cooperative 4,602 5,543 20.4% 5,515 -0.5%
Golf Courses 6,958 8,439 21.3% 6,794 -19.5%
City Improvement Fund 19 - -100.0% - NA
Other Restricted Revenues 42,976 25,283 -41.2% 36,929 46.1%
Grants
Public Housing Grants 93,470 109,733 17.4% 105,745 -3.6%
Human Services Grants 56,629 96,447 70.3% 86,581 -10.2%
Community Development 15,289 41,795 +100% 70,581 68.9%
Criminal Justice 7,921 14,769 86.5% 18,876 27.8%
Public Transit Grants 64,026 142,349 +100% 240,756 69.1%
Other Grants 68,270 135,989 99.2% 508,465 +100%
Subtotal - Grants 305,605 541,082 77.1% 1,031,004 90.5%


SUBTOTAL SPECIAL REVENUE FUNDS 1,246,000 1,443,941 15.9% 1,993,618 38.1%


ENTERPRISE FUNDS
Aviation 362,346 426,477 17.7% 412,547 -3.3%
Water System 454,115 502,979 10.8% 487,696 -3.0%
Wastewater System 252,664 253,208 0.2% 254,696 0.6%
Solid Waste 155,730 182,178 17.0% 189,869 4.2%
Convention Center 76,421 53,977 -29.4% 75,996 40.8%


SUBTOTAL ENTERPRISE FUNDS 1,301,276 1,418,819 9.0% 1,420,804 0.1%
TOTAL ALL OPERATING FUNDS 3,854,633 4,294,890 11.4% 4,770,197 11.1%

1/
Coronavirus Relief Fund (CRF) is a one-time resource received from the federal government. It is approved by the City Council to offset
public safety salaries as permitted by the Federal guidelines.
2/
The Transportation 2050 sales tax (Proposition 104) was established by the voters effective January 1, 2016 and increased the Transit
2000 sales tax (Proposition 2000) to fund a comprehensive transportation plan with a 35 year sunset date. The Proposition increased the
transaction privilege (sales) tax rates by 0.3% for various business activities.


Page 58
SCHEDULE 3
PROPOSED OPERATING EXPENDITURES BY DEPARTMENT1/
(In Thousands of Dollars)



Percent Change from
2019-20 2020-21 2021-22 2020-21
Actuals Budget Estimate Budget Budget Estimate

General Government
Mayor's Office 1,624 2,244 2,258 2,323 3.5% 2.9%
City Manager's Office 2,433 6,307 13,741 8,826 39.9% -35.8%
City Auditor 2,523 3,205 2,912 3,174 -1.0% 9.0%
Information Technology Services 46,980 53,181 68,804 60,974 14.7% -11.4%
Equal Opportunity 2,308 3,341 2,968 3,453 3.4% 16.3%
City Clerk 4,528 7,285 6,336 7,475 2.6% 18.0%
Human Resources 12,258 13,528 22,650 19,762 46.1% -12.7%
Retirement Systems - - - - 0.0% 0.0%

Phoenix Employment Relations Board 104 107 140 124 15.9% -11.4%

Law 5,802 6,390 6,074 6,737 5.4% 10.9%

Budget and Research 3,333 3,975 3,823 4,311 8.5% 12.8%

Regional Wireless Cooperative 4,636 5,118 5,947 5,485 7.2% -7.8%
Finance 28,749 30,158 41,131 33,541 11.2% -18.5%
Communications Office 2,446 2,780 2,740 3,159 13.7% 15.3%
Government Relations 4,291 1,541 1,514 1,259 -18.3% -16.8%

Total General Government 126,039 144,603 186,437 166,180 14.9% -10.9%


Public Safety
Police 708,888 743,792 719,962 786,708 5.8% 9.3%
Fire 393,757 413,812 416,986 462,262 11.7% 10.9%
Homeland Security & Emergency Management 980 1,287 708 690 -46.4% -2.5%

Total Public Safety 1,103,625 1,158,891 1,137,656 1,249,660 7.8% 9.8%


Criminal Justice
City Prosecutor 17,283 21,416 20,578 19,210 -10.3% -6.6%
Municipal Court 32,376 35,136 34,376 37,489 6.7% 9.1%
Public Defender 5,327 5,380 5,373 5,634 4.7% 4.9%

Total Criminal Justice 54,986 61,932 60,327 62,334 0.6% 3.3%


Transportation
Street Transportation 98,378 104,841 104,914 115,853 10.5% 10.4%
Aviation 258,733 468,150 352,359 352,246 -24.8% 0.0%
Public Transit 253,972 280,022 241,369 277,014 -1.1% 14.8%

Total Transportation 611,082 853,013 698,643 745,113 -12.6% 6.7%




Page 59
SCHEDULE 3 (Continued)
PROPOSED OPERATING EXPENDITURES BY DEPARTMENT1/
(In Thousands of Dollars)



Percent Change from
2019-20 2020-21 2021-22 2020-21
Actuals Budget Estimate Budget Budget Estimate

Community Development
Planning and Development 64,824 72,794 71,815 81,254 11.6% 13.1%
Housing 96,702 117,938 111,780 113,507 -3.8% 1.5%
Community and Economic Development 15,848 13,183 21,821 13,882 5.3% -36.4%
Neighborhood Services 45,778 63,556 75,640 82,998 30.6% 9.7%

Total Community Development 223,152 267,471 281,055 291,641 9.0% 3.8%


Community Enrichment
Office of Arts and Culture 3,871 4,661 6,951 4,773 2.4% -31.3%
Parks and Recreation 107,259 117,482 112,702 124,443 5.9% 10.4%
Library 38,565 41,958 41,504 44,860 6.9% 8.1%
Phoenix Convention Center 53,680 60,860 51,413 48,223 -20.8% -6.2%
Human Services 85,644 100,447 160,315 147,633 47.0% -7.9%

Total Community Enrichment 289,018 325,408 372,885 369,932 13.7% -0.8%


Environmental Services
Office of Sustainability 425 656 680 910 38.7% 33.9%
Environmental Programs 1,300 1,449 3,756 1,997 37.8% -46.8%
Public Works 19,006 18,598 23,222 23,368 25.6% 0.6%
Solid Waste Disposal 141,943 158,908 158,768 170,439 7.3% 7.4%
Water Services 318,738 341,893 340,636 364,980 6.8% 7.1%

Total Environmental Services 481,411 521,505 527,062 561,694 7.7% 6.6%


Non-Departmental Operating
Contingencies - 124,096 - 203,664 64.1% +100%
Other Non-Departmental2/ - 256,400 (8,677) 405,000 58.0% +100%

Total Non-Departmental Operating - 380,496 (8,677) 608,664 60.0% +100%


Total 2,889,314 3,713,320 3,255,388 4,055,219 9.2% 24.6%

1 / For purposes of this schedule, department budget allocations include Grants.

2/ Other Non-Departmental consists of the Coronavirus Aid, Relief, and Economic Security Act (CARES) Coronavirus Relief Fund, the American


Rescue Plan Act (ARPA) Fund and Unassigned Vacancy Savings.




Page 60
SCHEDULE 4
2021-22 PROPOSED OPERATING EXPENDITURES BY DEPARTMENT1/
BY SOURCE OF FUNDS
(In Thousands of Dollars)

Special
General
Total Revenue Enterprise
Funds
Funds Funds

General Government
Mayor's Office 2,323 2,323 - -
City Manager's Office 8,826 8,111 494 222
City Auditor 3,174 3,174 - -
Information Technology Services 60,974 60,150 87 737
Equal Opportunity 3,453 2,875 579 -
City Clerk 7,475 7,475 - -
Human Resources 19,762 19,275 487 -
Retirement Systems - - - -
Phoenix Employment Relations Board 124 124 - -
Law 6,737 6,737 - -
Budget and Research 4,311 4,311 - -
Regional Wireless Cooperative 5,485 - 5,485 -
Finance 33,541 29,715 1,733 2,093
Communications Office 3,159 3,159 - -
Government Relations 1,259 1,259 - -

Total General Government 166,180 154,264 8,864 3,052


Public Safety
Police 786,708 611,239 175,469 -
Fire 462,262 388,358 73,904 -
Homeland Security & Emergency Management 690 133 557 -

Total Public Safety 1,249,660 999,730 249,930 -


Criminal Justice
City Prosecutor 19,210 17,127 2,083 -
Municipal Court 37,489 34,224 3,265 -
Public Defender 5,634 5,634 - -

Total Criminal Justice 62,334 56,986 5,348 -


Transportation
Street Transportation 115,853 21,639 94,215 -
Aviation 352,246 - - 352,246
Public Transit 277,014 1,838 275,176 -

Total Transportation 745,113 23,476 369,391 352,246




Page 61
SCHEDULE 4 (Continued)
2021-22 PROPOSED OPERATING EXPENDITURES BY DEPARTMENT1/
BY SOURCE OF FUNDS
(In Thousands of Dollars)

Special
General
Total Revenue Enterprise
Funds
Funds Funds

Community Development
Planning and Development 81,254 5,173 76,081 -
Housing 113,507 1,772 111,734 -
Community and Economic Development 13,882 6,884 6,388 610
Neighborhood Services 82,998 15,515 67,483 -

Total Community Development 291,641 29,344 261,686 610


Community Enrichment
Office of Arts and Culture 4,773 4,726 47 -
Parks and Recreation 124,443 108,229 16,214 -
Library 44,860 43,865 995 -
Phoenix Convention Center 48,223 2,292 555 45,376
Human Services 147,633 22,051 125,202 380

Total Community Enrichment 369,932 181,164 143,012 45,756


Environmental Services
Office of Sustainability 910 474 436 -
Environmental Programs 1,997 1,280 285 431
Public Works 23,368 22,728 641 -
Solid Waste Disposal 170,439 - - 170,439
Water Services 364,980 - 2,366 362,615

Total Environmental Services 561,694 24,482 3,727 533,485


Non-Departmental Operating
Contingencies 203,664 124,164 31,000 48,500
Other Non-Departmental2/ 405,000 (11,000) 416,000 -

Total Non-Departmental Operating 608,664 113,164 447,000 48,500


Total 4,055,219 1,582,611 1,488,959 983,649



1/ For purposes of this schedule, department budget allocations include Grants.
2/ Other Non-Departmental consists of the American Rescue Plan Act (ARPA) Fund and Unassigned Vacancy

Savings.




Page 62
SCHEDULE 5
PROPOSED DEBT SERVICE EXPENDITURES
BY SOURCE AND USE OF FUNDS AND TYPE OF EXPENDITURE
(In Thousands of Dollars)

2019-20 2020-21 2021-22
Actual Estimate Proposed
Budget


Operating Funds
City Improvement
Economic Development 6,570 4,199 3,911
Finance and General Government 912 11,894 19,686
Fire 4,231 381 253
Housing 71 70 74
Human Resources 816 648 363
Human Services 78 47 4
Information Technology 12,150 10,300 1,840
Issuance Costs - 351 -
Municipal Court 6,722 5,870 5,076
Parks and Recreation 390 176 24
Police 2,601 393 339
Public Transit 70,656 571 17,993
Public Works 7,179 6,978 6,379
Sports Facilities 7,242 12,169 12,708
Street Transportation 4,355 4,658 1,770
Sub-Total City Improvement 123,972 58,706 70,421

Secondary Property Tax
Cultural Facilities 11,404 16,925 20,260
Education & Econ Development 6,784 5,034 4,164
Environmental Improvement 1,899 1,567 268
Fire Protection 7,086 7,825 8,039
Freeway Mitigation 610 539 541
Historic Preservation 616 1,490 1,474
Housing 4,952 5,131 4,348
Human Services & Senior Centers 2,176 2,472 2,225
Information Systems 3,221 3,491 3,037
Issuance Costs - - 650
Library 7,229 7,051 7,206
Maintenance Service Centers 3,507 761 654
Municipal Facilities 10 - -
Neighborhood Services 9,776 5,142 1,362
Parks & Mountain Preserves 16,270 18,356 19,862
Police 6,784 9,634 10,676
Police, Fire & Computer Tech 10,366 12,034 12,088
Storm Sewers 16,044 20,417 20,796
Street Improvements 7,475 10,979 12,065
Sub-Total Secondary Property Tax 116,210 128,846 129,714

Aviation 91,827 126,449 87,281
Convention Center 19,952 20,639 20,763
Solid Waste 14,041 14,977 15,227
Wastewater 72,806 71,783 71,389
Water 128,287 136,908 153,620


Total Operating Funds 567,095 558,308 548,415




Page 63
SCHEDULE 5 (Continued)
PROPOSED DEBT SERVICE EXPENDITURES
BY SOURCE AND USE OF FUNDS AND TYPE OF EXPENDITURE
(In Thousands of Dollars)

2019-20 2020-21 2021-22
Actual Estimate Proposed
Budget


Bond Funds
Aviation 1,722 - -
Convention Center - 259 -
Transportation 2050 - - 800
Water 770 302 498
Other - 164 -
Total Bond Funds 2,492 725 1,298


Other Capital Funds
Capital Reserves - 800 -
Customer Facility Charges 14,024 15,557 20,558
Federal, State and Other Participation 23,500 23,998 24,498
Passenger Facility Charges 49,945 22,598 56,763
Total Other Capital Funds 87,469 62,953 101,820


Total Debt Service 657,055 621,986 651,533



Type of Expenditure

Principal 361,917 306,895 314,169
Interest and Other 295,138 315,090 337,363

Total Debt Service Expenditures 657,055 621,986 651,533




Page 64
SCHEDULE 6
SUMMARY OF 2021-22 CAPITAL IMPROVEMENT PROGRAM
FINANCED BY OPERATING FUNDS
(In Thousands of Dollars)

2021-22
2019-20 2020-21 Proposed
Actuals Estimate Budget

Use of Funds

Aviation 20,335 30,577 126,448
Economic Development 8,167 5,766 9,450
Environmental Programs 333 250 250
Facilities Management 12,573 15,728 16,491
Fire Protection - 4,007 11,263
Historic Preservation & Planning 17,301 10,850 3,648
Housing 4,146 16,098 34,064
Information Technology 2,342 5,247 9,680
Libraries 631 955 955
Neighborhood Services 2,026 1,377 12,306
Parks, Recreation & Mountain Preserves 38,698 36,271 68,126
Phoenix Convention Center 6,428 8,267 15,638
Public Art Program 137 1,970 1,584
Public Transit 55,433 195,898 337,340
Solid Waste Disposal 4,243 7,790 9,344
Street Transportation & Drainage 94,466 100,762 168,966
Wastewater 26,050 31,660 69,595
Water 65,245 60,964 127,740
Total Operating Funds 358,554 534,436 1,022,887

Source of Funds

General Funds
General Fund 13,776 27,551 24,052
Library 631 955 955
Parks - 3,000 -
Total General Funds 14,407 31,506 25,007

Special Revenue Funds
Arizona Highway User Revenue 67,422 71,585 85,482
Capital Construction 4,482 9,253 20,380
Community Reinvestment 5,774 2,470 7,734
Development Services 17,416 11,713 4,451
Golf 95 1,793 -
Grants and Public Housing 46,654 49,135 125,058
Other Restricted 2,070 7,708 12,718
Parks and Preserves 33,677 28,178 66,212
Regional Transit 6,964 8,997 13,961
Sports Facilities 6,941 7,060 2,393
Transportation 2050 32,608 167,201 308,724
Total Special Revenue Funds 224,103 365,093 647,114

Enterprise Funds
Aviation 20,366 30,820 126,993
Convention Center 3,741 5,344 15,480
Solid Waste 4,305 8,138 11,278
Wastewater 26,196 32,039 71,659
Water 65,435 61,496 125,355
Total Enterprise Funds 120,044 137,837 350,766

Total Operating Funds 358,554 534,436 1,022,887




Page 65
SCHEDULE 7
PROPOSED INTERFUND TRANSFERS TO THE GENERAL FUND
(In Thousands of Dollars)

2021-22
2019-20 2020-21 Increase/
Actuals Estimate Budget (Decrease)
Transfers to the General Fund

Enterprise Funds
Aviation
Central Service Cost Allocation 9,736 10,117 10,117 -

Water Funds
Central Service Cost Allocation 8,511 10,014 10,014 -
In-Lieu Property Taxes 15,585 16,367 18,650 2,283
Total 24,096 26,381 28,664 2,283

Wastewater Funds
Central Service Cost Allocation 5,674 6,676 6,676 -
In-Lieu Property Taxes 9,579 9,834 10,962 1,128
Total 15,253 16,510 17,638 1,128

Solid Waste
Central Service Cost Allocation 6,153 6,952 6,952 -
In-Lieu Property Taxes 1,311 1,256 1,424 168
Total 7,464 8,208 8,376 168

Convention Center
Central Service Cost Allocation 2,944 3,044 3,044 -



Total From Enterprise Funds 59,493 64,260 67,839 3,579




Page 66
SCHEDULE 7
PROPOSED INTERFUND TRANSFERS TO THE GENERAL FUND (Continued)
(In Thousands of Dollars)
2021-22
2019-20 2020-21 Increase/
Actuals Estimate Budget (Decrease)
Special Revenue Funds
Excise
Transfer to General Fund 890,414 960,500 970,229 9,729

Development Services
Central Service Cost Allocation 4,322 4,440 4,440 -

Sports Facilities
Central Service Cost Allocation 174 148 148 -
Phoenix Union Parking Maintenance 79 79 79 -
Total 253 227 227 -

Public Housing In-Lieu Property Taxes 279 200 200 -
ASU Facilities Operations Fund 781 169 128 (41)
Downtown Community Reinvestment Fund 2,065 2,064 2,065 1
Human Trafficking Prevention Fund 2 - - -
T2050 Central Service Costs 985 1,063 1,063 -
Neighborhood Protection Central Service Costs 396 561 561 -
Public Safety Enhancement Central Service Costs 356 416 416 -
Public Safety Expansion Central Service Costs 871 1,037 1,037 -
Housing Central Office Central Service Costs 310 371 371 -
Other Restricted - Sale of Land 1,000 6,865 - (6,865)
Library Reserve Fund - 1,286 1,753 467

Total From Special Revenue Funds 902,034 979,199 982,490 3,291

Total Transfers to the General Fund 961,527 1,043,459 1,050,329 6,870

Transfers from the General Fund

Strategic Economic Development Fund (1,000) (1,000) (1,200) (200)
Public Safety Other Restricted Fund (16,000) (16,000) (17,000) (1,000)
Public Safety Pension Reserve Fund (5,500) (1,000) (1,000) -
Other Restricted (509) - - -
Aviation-Emergency Transportation Services (248) - (125) (125)
Community Facilities Districts-Restricted Fund (207) (279) (262) 17
Enhanced Municipal Services District Fund (454) - - -
Aerial Fleet Capital Reserve Fund - (5,000) (7,000) (2,000)
Fire SCBA Sinking Fund - - (10,000) (10,000)
Library Reserve Fund (248) - - -
Retiree Rate Stabilization Fund (1,027) (1,028) (1,026) 2
Infrastructure Repayment Agreements (574) (1,369) (1,427) (58)
City Improvement - Library (115) (112) (39) 73
City Improvement (41,482) (37,407) (34,943) 2,464

Total Transfers from the General Fund (67,364) (63,195) (74,022) (10,827)

Net Transfers to the General Fund 894,163 980,264 976,307 (3,957)




Page 67
SCHEDULE 8
PROPOSED POSITIONS BY DEPARTMENT
Number of Full Time Equivalent Positions


Estimate Budget
2019-20 2020-21 2020-21 2021-22
less less
Actual Adopted Estimate Budget
Adopted Estimate

General Government
Mayor's Office 13.0 13.0 15.3 2.3 14.3 (1.0)
City Manager's Office 20.5 21.5 27.9 6.4 33.9 6.0
City Auditor 25.4 25.4 25.4 0.0 25.4 0.0
Information Technology Services 200.0 201.0 206.0 5.0 209.0 3.0
Equal Opportunity 27.0 27.0 27.0 0.0 27.0 0.0
City Clerk 51.5 51.5 51.5 0.0 51.5 0.0
Human Resources 112.7 112.7 117.7 5.0 118.7 1.0
Retirement Systems 16.0 16.0 16.0 0.0 16.0 0.0
Phoenix Employment Relations Board 1.0 1.0 1.0 0.0 1.0 0.0
Law 65.0 65.0 66.0 1.0 67.0 1.0
Budget and Research 24.0 24.0 25.0 1.0 25.0 0.0
Regional Wireless Cooperative 4.0 4.0 4.0 0.0 4.0 0.0
Finance 213.0 213.0 215.0 2.0 214.0 (1.0)
Communications Office 19.1 19.1 19.1 0.0 20.1 1.0
Government Relations 7.0 7.0 5.0 (2.0) 5.0 0.0

Total General Government 832.2 834.2 853.9 19.7 863.9 10.0


Public Safety
Police 4,363.6 4,360.6 4,363.6 3.0 4,436.6 73.0
Fire 2,089.8 2,091.8 2,127.8 36.0 2,277.7 149.9
Homeland Security & Emergency Management 9.0 9.0 7.0 (2.0) 7.0 0.0

Total Public Safety 6,462.4 6,461.4 6,498.4 37.0 6,721.3 222.9


Criminal Justice
City Prosecutor 147.0 147.0 148.0 1.0 148.0 0.0
Municipal Court 274.0 274.0 274.0 0.0 279.0 5.0
Public Defender 11.0 11.0 11.0 0.0 11.0 0.0

Total Criminal Justice 432.0 432.0 433.0 1.0 438.0 5.0


Transportation
Street Transportation 721.0 721.0 728.0 7.0 734.0 6.0
Aviation 890.0 890.0 889.0 (1.0) 889.0 0.0
Public Transit 120.0 120.0 121.0 1.0 121.0 0.0

Total Transportation 1,731.0 1,731.0 1,738.0 7.0 1,744.0 6.0




Page 68
SCHEDULE 8 (Continued)
PROPOSED POSITIONS BY DEPARTMENT
Number of Full Time Equivalent Positions


Estimate Budget
2019-20 2020-21 2020-21 2021-22
less less
Actual Adopted Estimate Budget
Adopted Estimate

Community Development
Planning and Development 444.8 444.8 467.8 23.0 480.8 13.0
Housing 129.0 134.0 126.0 (8.0) 126.0 0.0
Community and Economic Development 57.0 57.0 57.0 0.0 59.0 2.0
Neighborhood Services 190.0 189.0 190.0 1.0 191.0 1.0

Total Community Development 820.8 824.8 840.8 16.0 856.8 16.0


Community Enrichment
Office of Arts and Culture 11.0 11.0 11.0 0.0 11.0 0.0
Parks and Recreation 1,013.1 1,014.1 1,017.0 2.9 1,050.0 33.0
Library 401.3 401.3 397.8 (3.5) 402.8 5.0
Phoenix Convention Center 220.0 220.0 219.0 (1.0) 219.0 0.0
Human Services 391.0 391.0 392.0 1.0 395.0 3.0

Total Community Enrichment 2,036.4 2,037.4 2,036.8 (0.6) 2,077.8 41.0


Environmental Services
Office of Sustainability 5.0 5.0 5.0 0.0 4.0 (1.0)
Environmental Programs 10.0 10.0 10.0 0.0 11.0 1.0
Public Works 426.0 426.0 431.0 5.0 443.0 12.0
Solid Waste Disposal 603.0 609.0 625.5 16.5 633.5 8.0
Water Services 1,485.0 1,487.0 1,480.0 (7.0) 1,485.0 5.0

Total Environmental Services 2,529.0 2,537.0 2,551.5 14.5 2,576.5 25.0


Total 14,843.8 14,857.8 14,952.4 94.6 15,278.3 325.9




Page 69
SCHEDULE 9
2021-22 CAPITAL FUNDS
RESOURCES AND EXPENDITURES PROPOSED BUDGET
(In Thousands of Dollars)

Budgeted Revenues Projected Funds
Beginning and Other Resources Available
Fund Sources/ Ending Beyond Beyond
Balance (Uses) Expenditures Balance 2021-22 2021-22


1988 General Obligation Bonds
1988 Freeway Mitigation Bonds 849 - - 849 1,000 1,849
1988 Parks Bonds 419 - - 419 - 419
1988 Police Bonds 27 - - 27 - 27
1,295 - - 1,295 1,000 2,295
1989 General Obligation Bonds
1989 Historic Preservation Bonds 2 - - 2 - 2
2 - - 2 - 2
2001 General Obligation Bonds
2001 Affordable Housing and Homeless Shelter Bonds 1,053 - - 1,053 - 1,053
2001 Education, Youth and Cultural Facilities Bonds (275) - 902 (1,177) 1,700 523
2001 Environmental Improvement and Cleanup Bonds 261 - - 261 630 891
2001 Fire Protection Bonds (788) - - (788) 800 12
2001 Neighborhood Protection and Senior Centers Bonds 631 - - 631 2,355 2,986
2001 New & Improved Libraries Bonds 3,450 - - 3,450 900 4,350
2001 Parks, Open Space and Recreation Facilities Bonds (332) - - (332) 4,425 4,093
2001 Police, Fire and Computer Technology Bonds (51) - - (51) 615 564
2001 Police Protection Facilities and Equipment Bonds (524) - - (524) 1,115 591
2001 Preserving Phoenix Heritage Bonds (173) - - (173) 795 622
2001 Storm Sewer Bonds - - - - 50 50
2001 Street Improvement Bonds (457) - - (457) 2,225 1,768
2,795 - 902 1,893 15,610 17,503
2006 General Obligation Bonds
2006 Affordable Housing and Neighborhoods Bonds 3,539 - - 3,539 17,795 21,334
2006 Education Bonds (4,549) - - (4,549) 8,090 3,541
2006 Libraries, Senior and Cultural Centers Bonds (3,127) - 600 (3,727) 27,190 23,463
2006 Parks and Open Spaces Bonds 2,049 - - 2,049 13,685 15,734
2006 Police, Fire and City Technology Bonds 621 - - 621 4,790 5,411
2006 Police, Fire and Homeland Security Bonds (4,051) - 3,500 (7,551) 36,700 29,149
2006 Street and Storm Sewer Improvements Bonds 5,939 - 270 5,669 27,495 33,164
421 - 4,370 (3,949) 135,745 131,796
Nonprofit Corporation Bond Funds
Aviation Bonds 325,805 (14,975) 92,487 218,343 546,210 764,553
Convention Center Bonds (101) - - (101) 4,000 3,899
Other Bonds 71,871 - 40,590 31,281 70,095 101,376
Parks and Preserves Bonds - - - - 66,000 66,000
Solid Waste Bonds 39,542 - 19,145 20,397 145,000 165,397
Transit 2000 Bonds 66 - - 66 - 66
Transportation 2050 Bonds 37,666 500,000 39,898 497,768 600,000 1,097,768
Wastewater Bonds (109,207) - 112,016 (221,223) 271,730 50,507
Water Bonds (236,863) 200,000 219,648 (256,511) 331,870 75,359
128,780 685,025 523,784 290,021 2,034,905 2,324,926


Total Bond Funds 133,292 685,025 529,057 289,260 2,187,260 2,476,520




Page 70
SCHEDULE 9 (Continued)
2021-22 CAPITAL FUNDS
RESOURCES AND EXPENDITURES PROPOSED BUDGET
(In Thousands of Dollars)

Budgeted Revenues Projected Funds
Beginning and Other Resources Available
Fund Sources/ Ending Beyond Beyond
Balance (Uses) Expenditures Balance 2021-22 2021-22


Other Capital Funds
Capital Gifts 35 - - 35 - 35
Capital Grants - 189,542 189,542 - 689,554 689,554
Capital Reserves 242,187 19,250 15,151 246,286 - 246,286
Customer Facility Charges 6,669 17,645 20,558 3,756 220,851 224,607
Federal, State and Other Participation - 118,761 118,761 - 209,465 209,465
Impact Fees 206,409 - 166,111 40,298 - 40,298
Other Capital 1,374 - 835 539 - 539
Other Cities' Share in Joint Ventures - 34,721 34,721 - 197,884 197,884
Passenger Facility Charges 37,606 77,959 81,365 34,200 372,302 406,502
Solid Waste Remediation 5,992 - 1,465 4,527 - 4,527

Total Other Capital Funds 500,273 457,878 628,509 329,642 1,690,057 2,019,699


Total 633,566 1,142,903 1,157,566 618,903 3,877,317 4,496,220




Page 71
SCHEDULE 10
SUMMARY OF 2021-22 CAPITAL IMPROVEMENT PROGRAM
BY PROGRAM AND SOURCE OF FUNDS
(In Thousands of Dollars)

Total
2021-22 General Nonprofit
Proposed Operating Obligation Corporation Other Capital
Program
Budget Funds Bond Funds Bond Funds Funds
Arts and Cultural Facilities 902 - 902 - -
Aviation 349,354 126,448 - 90,102 132,804
Economic Development 9,450 9,450 - - -
Environmental Programs 250 250 - - -
Facilities Management 25,688 16,491 - 8,362 835
Finance 8,000 - - 8,000 -
Fire Protection 37,133 11,263 - 14,576 11,294
Historic Preservation & Planning 3,648 3,648 - - -
Housing 46,013 34,064 - - 11,949
Human Services 600 - 600 - -
Information Technology 19,331 9,680 - 9,651 -
Libraries 5,621 955 - - 4,666
Neighborhood Services 12,306 12,306 - - -
Non-Departmental Capital 103,118 - - 1,298 101,820
Parks, Recreation & Mountain Preserves 83,802 68,126 - - 15,676
Phoenix Convention Center 15,638 15,638 - - -
Police Protection 24,412 - 3,500 - 20,912
Public Art Program 6,039 1,584 - 4,453 2
Public Transit 407,919 337,340 - 1,360 69,219
Regional Wireless Cooperative 6,001 - - - 6,001
Solid Waste Disposal 30,954 9,344 - 18,995 2,616
Street Transportation & Drainage 332,786 168,966 270 37,738 125,812
Wastewater 248,640 69,595 - 111,732 67,312
Water 402,848 127,740 - 217,517 57,591
Total 2,180,453 1,022,887 5,272 523,784 628,509




Page 72
SCHEDULE 11
Tax Levy and Tax Rate Information
Fiscal Year 2021-22
(In Thousands)
2020-21 2021-22
1. Maximum allowable primary property tax levy.
A.R.S. §42-17051(A) $ 185,429 $ 193,314

2. Amount received from primary property taxation in
the current year in excess of the sum of that
year's maximum allowable primary property tax
levy. A.R.S. §42-17102(A)(18) $

3. Property tax levy amounts
A. Primary property taxes $ 181,767 $ 193,225
B. Secondary property taxes 114,741 120,494
C. Total property tax levy amounts $ 296,508 $ 313,719

4. Property taxes collected*
A. Primary property taxes
(1) Current year's levy $ 179,950
(2) Prior years’ levies 1,261
(3) Total primary property taxes $ 181,211
B. Secondary property taxes
(1) Current year's levy $ 113,594
(2) Prior years’ levies 868
(3) Total secondary property taxes $ 114,462
C. Total property taxes collected $ 295,673

5. Property tax rates
A. City/Town tax rate
(1) Primary property tax rate 1.3055 1.3055
(2) Secondary property tax rate 0.8241 0.8141
(3) Total city/town tax rate 2.1296 2.1196
B. Special assessment district tax rates
Secondary property tax rates - As of the date the proposed budget was prepared, the
city/town was operating zero special assessment districts for which secondary
property taxes are levied. For information pertaining to these special assessment districts
and their tax rates, please contact the city/town.

* The 2021-22 planned primary and secondary levies are $193,225,455 and $120,493,943,
respectively. Historically, actual property tax collections have been slightly lower than the amount
levied. For 2021-22, actual collections for primary and secondary property taxes are estimated to
be $191,294,000 and $119,289,000, or 99% of the levy amount.
** Includes actual property taxes collected as of the date the proposed budget was prepared, plus
estimated property tax collections for the remainder of the fiscal year.




Page 73
Page 74
Page 75



Report

American Rescue Plan Proposed Strategic Plan - Update

This report serves as a follow up to the April 27, 2021 report that provided City Council
with information to begin discussing a framework for the use of federal American
Rescue Plan Act (ARPA) funds. At the time of that report, guidance from the federal
government was very limited and the City expected to be awarded approximately $416
million. On May 10, 2021, the Department of Treasury released "The State and Local
Fiscal Recovery Fund Fact Sheet" (Attachment A) and the "Interim Final Rule" (
Attachment B) which provided staff with the information needed to develop a more
detailed and robust list of programs (Attachment C) for City Council consideration.
Treasury also revised the City's anticipated allocation down from earlier estimates to
approximately $396 million. This report presents City Council with a strategic plan
based on the recently released guidance and the discussion from the April 27, 2021

THIS ITEM IS FOR INFORMATION AND DISCUSSION.

Summary
Based on information released earlier this week, the federal government is expected to
award the City of Phoenix approximately $396 million in State and Local Fiscal
Recovery Funds under the umbrella of the previously approved American Rescue Plan
Act which was signed by President Biden in March. Funding is anticipated to be
received in two equal distributions 12 months apart. The City expects the first
allocation of approximately $198 million within the next few weeks. The second
allocation of $198 million will be awarded one year after the first allocation and is not
expected to be available to spend until FY 2022-23. Based on this and the discussion
with Council last month, this report focuses on only the first allocation of funds.

According to federal guidance, these funds may only be used to cover costs that are
necessary expenditures caused by COVID-19 incurred between March 3, 2021 and
Dec. 31, 2024. Per the revised guidance and language currently available, funds can
only be used:

· to respond to the public health emergency with respect to the Coronavirus Disease
2019 (COVID-19) or its negative economic impacts, including assistance to


Page 76

households, small businesses, and nonprofits, or aid to impacted industries such as
tourism, travel, and hospitality;

· to respond to workers performing essential work during the COVID-19 public health
emergency by providing premium pay to eligible workers of the state, territory, or
tribal government that are performing such essential work, or by providing grants to
eligible employers that have eligible workers who perform essential work;

· for the provision of government services to the extent of the reduction in revenue of
such state, territory, or tribal government due to the COVID-19 public health
emergency relative to revenues collected in the most recent full fiscal year of the
state, territory, or tribal government prior to the emergency; or

· to make necessary investments in water, sewer, or broadband infrastructure.

The proposed strategic options included in this report are based on input from
councilmembers and designed to fit within the parameters set forth in the recently
released federal guidance. Some of the proposals are continuations of programs that
were successfully implemented under the $293 million Coronavirus Relief Fund (CRF)
Strategic Plan and others are new initiatives which will require additional time and
resources to fully develop and deploy.

Allocation 1 ($198 million)
Like the CRF strategic plan, this proposed strategic plan includes three areas of
emphasis: Community Investment ($118 million), City Operations ($70 million) and a
Contingency for Future Operational Needs ($10 million). Attachment C provides the
Council with a detailed summary of the programs that staff have developed to address
important community and operational initiatives. Guidance from the federal
government will likely continue to evolve and the City will need to be nimble to adjust
programs to ensure compliance with the ever-changing federal guidance. The
following is a high level summary of the information contained in Attachment C.

Community Investment - $118 million
The community investment category, the largest proposed allocation in this plan, is
strategically focused on providing assistance to vulnerable populations, businesses
and those hardest hit by the COVID-19 pandemic. This portion of the plan includes six
distinct focus areas consisting of multiple programs. The six focus areas include the
following:




Page 77

Phoenix Arts, Business and Employee Assistance - $36,000,000
Small business is the heart and soul of the local economy. Many of our small
businesses are still struggling to stay open due to COVID-19. These funds will provide
resources that Phoenix businesses, including our vibrant arts community, need to stay
open, pay employees and to cover other operational costs due to the downturn in
business. Funds are also proposed provide robust job training opportunities for those
that lost their jobs during the downturn. Additionally, as the local economy recovers,
staff is proposing a robust arts program that provides the arts community with a lifeline
that will ultimately provide working capital to the struggling arts industry.

Mitigation and Care of Vulnerable Populations - $30,500,000
Research shows that the pandemic has been extremely hard on underserved
populations. This focus area proposes funding that provides resources to address
homelessness, mental and behavioral health, veterans issues and community and
senior center needs. Some of the funding in this category also lends itself to a larger
regional approach to address the issues of homelessness and mental and behavioral
health. Attachment C provides a summary of proposed programs included in this
focus area.

Household and Residential Assistance - $24,000,000
Funding in this category is intended to provide families with the resources needed to
address rent, mortgage and utility shortages. More specifically these funds are
intended to provide resources for residents who don't qualify for the Emergency Rental
Assistance Programs (ERA 1 or 2). Funding is also proposed to provide families with
young children financial assistance to cover childcare costs and grocery expenses.
Staff will need Council discussion and direction on the scope of any such program.
Additionally funding is proposed to provide public transportation subsidies to those in
need of financial assistance due to loss of wages or employment because of COVID-
19.

Youth Sports, Recreation, Education and After-School - $15,500,000
As parents return back to the workplace and others struggle with having the resources
needed to have recreation and educational opportunities for their children, staff is
proposing to use ARPA funds to provide resources that could be used to restore after-
school programs, provide financial assistance to youth sports leagues and to enhance
library programs. As well, funding will be used to continue the development of the large
broadband project that staff has been working on with regional partners and to further
enhance free broadband access for Phoenix residents in public housing and for
customers in City facilities. Attachment C provides a robust list of proposals for
Council to consider that addresses this area of concern.



Page 78

Phoenix Resilient Food System - $9,000,000
One of our most successful CRF funded programs was our Feed Phoenix Food
Program. This allocation of funding builds off of that success and provides additional
resources to encourage and develop more sustainable food options for Phoenix
residents. Based on conversation and discussion with Council on April 27, this
program also includes funding to provide resources to local and neighborhood food
banks and food kitchens.

Better Health and Community Outcomes - $3,000,000
This funding would be used to extend the use of the mobile testing vans that the City
has deployed to assist underserved communities with COVID-19 testing. If necessary,
these funds could also be used to offset any unexpected costs associated with the City
taking on a more active role in vaccine distribution.

City Operations - $70 million
The city operations category, the second largest of the three plan areas is strategically
focused on General Fund (GF) resiliency and capitalizing on the one-time nature of
this funding source to address issues that will free up future GF resources and support
transformational investments. This area includes the following areas of focus:

Infrastructure, Technology and Capital Needs - $40,000,000
This funding would be used to provide resources needed to address key infrastructure,
technology and capital projects that have been deferred or exacerbated as a result of
the pandemic. One example is to provide resources to upgrade the 27th Avenue
Recycling Facility. This facility was deferred due to economic pressures, however, the
need to replace this facility has intensified due to the increase in residential tonnage
due to COVID-19. Funding can also be used for technology projects that address
enhanced cyber security. Attachment C provides other examples of projects that staff
has identified. Additional projects will be vetted and brought back to Council.

Revenue Replacement - $25,000,000
Unlike the CRF fund, the ARPA funds are allowed to be used for revenue replacement.
Because of the pandemic, the Phoenix Convention Center has been severely
impacted due the downturn in the travel, tourism and hospitality industry. As a result,
there are significant concerns about how long that industry will take to recover and
how deep of an impact that recovery will have on the convention center's fund
balance. It is important to note that the convention center is ultimately backed by GF
revenues. If the tourism and convention downturn lags as long as some economists
suggest, this could impair convention center revenues enough that the GF would be
forced to make reductions to provide working capital. Allocating ARPA funds to replace
a portion of the revenue lost by the convention center over the last 15 months would


Page 79

be a sound financial decision that would be viewed favorably by the City's rating
agencies. Additionally, ARPA allows for the City to offset costs for trust fund expenses
that are directly tied to COVID-19 expenses. For example, the City has seen over $2.4
million in worker's compensation related claims due to COVID-19. It is the City's
opinion that these claims are eligible to be replaced with ARPA funds and would
reduce the actuarial impact to future City resources.

Administrative Oversight and Staff Augmentation to Support New ARPA Funded
Initiatives - $3,000,000
In order to successfully deploy the wide range of programs that the ARPA funds will
provide requires enhancing service levels in key areas of the organization. These
staffing enhancements will also be instrumental in providing the oversight and
compliance functions that will be critical to ensuring a clean audit at the end of funding
cycle.

PPE, Cleaning, Sanitizing/Testing and Vaccine Distribution - $2,000,000
One thing the City learned during the first few months of the pandemic was that the
City did not possess an adequate supply of PPE and sanitizing agents needed to
ensure that employees were adequately protected. We also realized like many other
cities across the country that the impact of not being fully prepared led to significant
supply chain disruption. This allocation of funds will be used to stockpile equipment
and supplies needed to ensure that our staff is adequately protected against the
spread of COVID-19 and to ensure that the City is not a victim to future disruptions in
the supply chain for these necessary items. Funding could also be used to address
additional employee testing and vaccination related costs as needed.

Contingency - $10 million
A $10 million Reserve is proposed to preserve resources in case the federal
government changes guidance to allow the funds to be used in new areas of concern
for the Council or to supplement funding for an approved program that exhausts its
allocation of funds before more funding becomes available. The Reserve would also
be available to cover other unexpected COVID-19 expenses that could occur later in
the year. The reserve is not a requirement and Council could allocate this funding
immediately or at any other point in the fiscal year as necessary.

Staff is seeking Council feedback and direction on a draft strategic plan with priorities
for implementation. Based on the Council’s strategic direction and feedback, staff will
return to a future meeting with refined recommendations reflecting the feedback
received from Council and the community.




Page 80

Responsible Department
This item is submitted by City Manager Ed Zuercher and Assistant City Manager Jeff
Barton.




Page 81
Attachment A

FACT SHEET: The Coronavirus State and Local Fiscal Recovery Funds Will Deliver
$350 Billion for State, Local, Territorial, and Tribal Governments to Respond to the
COVID-19 Emergency and Bring Back Jobs

May 10, 2021

Aid to state, local, territorial, and Tribal governments will help turn the tide on the pandemic, address its
economic fallout, and lay the foundation for a strong and equitable recovery

Today, the U.S. Department of the Treasury announced the launch of the Coronavirus State and Local
Fiscal Recovery Funds, established by the American Rescue Plan Act of 2021, to provide $350 billion in
emergency funding for eligible state, local, territorial, and Tribal governments. Treasury also released
details on 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. With the launch of the Coronavirus State and Local Fiscal Recovery Funds, eligible
jurisdictions will be able to access this funding in the coming days to address these needs.

State, local, territorial, and Tribal governments have been on the frontlines of responding to the
immense public health and economic needs created by this crisis – from standing up vaccination sites to
supporting small businesses – even as these governments confronted revenue shortfalls during the
downturn. As a result, these governments have endured unprecedented strains, forcing many to make
untenable choices between laying off educators, firefighters, and other frontline workers or failing to
provide other services that communities rely on. Faced with these challenges, state and local
governments have cut over 1 million jobs since the beginning of the crisis. The experience of prior
economic downturns has shown that budget pressures like these often result in prolonged fiscal
austerity that can slow an economic recovery.

To support the immediate pandemic response, bring back jobs, and lay the groundwork for a strong and
equitable recovery, the American Rescue Plan Act of 2021 established the Coronavirus State and Local
Fiscal Recovery Funds, designed to deliver $350 billion to state, local, territorial, and Tribal governments
to bolster their response to the COVID-19 emergency and its economic impacts. Today, Treasury is
launching this much-needed relief to:

• Support urgent COVID-19 response efforts to continue to decrease spread of the virus and bring
the pandemic under control;

• Replace lost public sector revenue to strengthen support for vital public services and help retain
jobs;

• Support immediate economic stabilization for households and businesses; and,

• Address systemic public health and economic challenges that have contributed to the inequal
impact of the pandemic on certain populations.

The Coronavirus State and Local Fiscal Recovery Funds provide substantial flexibility for each jurisdiction
to meet local needs—including support for households, small businesses, impacted industries, essential
workers, and the communities hardest-hit by the crisis. These funds also deliver resources that
recipients can invest in building, maintaining, or upgrading their water, sewer, and broadband
infrastructure.


Page 82
Starting today, eligible state, territorial, metropolitan city, county, and Tribal governments may request
Coronavirus State and Local Fiscal Recovery Funds through the Treasury Submission Portal. Concurrent
with this program launch, Treasury has published an Interim Final Rule that implements the provisions
of this program.

FUNDING AMOUNTS

The American Rescue Plan provides a total of $350 billion in Coronavirus State and Local Fiscal Recovery
Funds to help eligible state, local, territorial, and Tribal governments meet their present needs and build
the foundation for a strong recovery. Congress has allocated this funding to tens of thousands of
jurisdictions. These allocations include:

Amount
Type ($ billions)

States & District of Columbia $195.3

Counties $65.1

Metropolitan Cites $45.6

Tribal Governments $20.0

Territories $4.5

Non-Entitlement Units of $19.5
Local Government

Treasury expects to distribute these funds directly to each state, territorial, metropolitan city, county,
and Tribal government. Local governments that are classified as non-entitlement units will receive this
funding through their applicable state government. Treasury expects to provide further guidance on
distributions to non-entitlement units next week.

Local governments should expect to receive funds in two tranches, with 50% provided beginning in May
2021 and the balance delivered 12 months later. States that have experienced a net increase in the
unemployment rate of more than 2 percentage points from February 2020 to the latest available data as
of the date of certification will receive their full allocation of funds in a single payment; other states will
receive funds in two equal tranches. Governments of U.S. territories will receive a single payment.
Tribal governments will receive two payments, with the first payment available in May and the second
payment, based on employment data, to be delivered in June 2021.

USES OF FUNDING

Coronavirus State and Local Fiscal Recovery Funds provide eligible state, local, territorial, and Tribal
governments with a substantial infusion of resources to meet pandemic response needs and rebuild a
stronger, more equitable economy as the country recovers. 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. Recipients may use Coronavirus State and Local Fiscal Recovery Funds to:






Page 83
• 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 these overall categories, Treasury’s Interim Final Rule provides guidelines and principles for
determining the types of programs and services that this funding can support, together with examples
of allowable uses that recipients may consider. As described below, Treasury has also designed these
provisions to take into consideration the disproportionate impacts of the COVID-19 public health
emergency on those hardest-hit by the pandemic.

1. Supporting the public health response

Mitigating the impact of COVID-19 continues to require an unprecedented public health response from
state, local, territorial, and Tribal governments. Coronavirus State and Local Fiscal Recovery Funds
provide resources to meet these needs through the provision of care for those impacted by the virus
and through services that address disparities in public health that have been exacerbated by the
pandemic. Recipients may use this funding to address a broad range of public health needs across
COVID-19 mitigation, medical expenses, behavioral healthcare, and public health resources. Among
other services, these funds can help support:

• Services and programs to contain and mitigate the spread of COVID-19, including:

 Vaccination programs  Enhancement of healthcare capacity,
 Medical expenses including alternative care facilities
 Testing  Support for prevention, mitigation, or
 Contact tracing other services in congregate living
 Isolation or quarantine facilities and schools
 PPE purchases  Enhancement of public health data
 Support for vulnerable populations to systems
access medical or public health services  Capital investments in public facilities to
 Public health surveillance (e.g., meet pandemic operational needs
monitoring for variants)  Ventilation improvements in key settings
 Enforcement of public health orders like healthcare facilities
 Public communication efforts






Page 84
• Services to address behavioral healthcare needs exacerbated by the pandemic, including:

 Mental health treatment  Crisis intervention
 Substance misuse treatment  Services or outreach to promote access
 Other behavioral health services to health and social services
 Hotlines or warmlines

• Payroll and covered benefits expenses for public health, healthcare, human services, public
safety and similar employees, to the extent that they work on the COVID-19 response. For
public health and safety workers, recipients can use these funds to cover the full payroll and
covered benefits costs for employees or operating units or divisions primarily dedicated to the
COVID-19 response.

2. Addressing the negative economic impacts caused by the public health emergency

The COVID-19 public health emergency resulted in significant economic hardship for many Americans.
As businesses closed, consumers stayed home, schools shifted to remote education, and travel declined
precipitously, over 20 million jobs were lost between February and April 2020. Although many have
since returned to work, as of April 2021, the economy remains more than 8 million jobs below its pre-
pandemic peak, and more than 3 million workers have dropped out of the labor market altogether since
February 2020.

To help alleviate the economic hardships caused by the pandemic, Coronavirus State and Local Fiscal
Recovery Funds enable eligible state, local, territorial, and Tribal governments to provide a wide range
of assistance to individuals and households, small businesses, and impacted industries, in addition to
enabling governments to rehire public sector staff and rebuild capacity. Among these uses include:

• Delivering assistance to workers and families, including aid to unemployed workers and job
training, as well as aid to households facing food, housing, or other financial insecurity. In
addition, these funds can support survivor’s benefits for family members of COVID-19 victims.

• Supporting small businesses, helping them to address financial challenges caused by the
pandemic and to make investments in COVID-19 prevention and mitigation tactics, as well as to
provide technical assistance. To achieve these goals, recipients may employ this funding to
execute a broad array of loan, grant, in-kind assistance, and counseling programs to enable
small businesses to rebound from the downturn.

• Speeding the recovery of the tourism, travel, and hospitality sectors, supporting industries that
were particularly hard-hit by the COVID-19 emergency and are just now beginning to mend.
Similarly impacted sectors within a local area are also eligible for support.

• Rebuilding public sector capacity, by rehiring public sector staff and replenishing
unemployment insurance (UI) trust funds, in each case up to pre-pandemic levels. Recipients
may also use this funding to build their internal capacity to successfully implement economic
relief programs, with investments in data analysis, targeted outreach, technology infrastructure,
and impact evaluations.






Page 85
3. Serving the hardest-hit communities and families

While the pandemic has affected communities across the country, it has disproportionately impacted
low-income families and communities of color and has exacerbated systemic health and economic
inequities. Low-income and socially vulnerable communities have experienced the most severe health
impacts. For example, counties with high poverty rates also have the highest rates of infections and
deaths, with 223 deaths per 100,000 compared to the U.S. average of 175 deaths per 100,000.

Coronavirus State and Local Fiscal Recovery Funds allow for a broad range of uses to address the
disproportionate public health and economic impacts of the crisis on the hardest-hit communities,
populations, and households. Eligible services include:

• Addressing health disparities and the social determinants of health, through funding for
community health workers, public benefits navigators, remediation of lead hazards, and
community violence intervention programs;

• Investments in housing and neighborhoods, such as services to address individuals
experiencing homelessness, affordable housing development, housing vouchers, and residential
counseling and housing navigation assistance to facilitate moves to neighborhoods with high
economic opportunity;

• Addressing educational disparities through new or expanded early learning services, providing
additional resources to high-poverty school districts, and offering educational services like
tutoring or afterschool programs as well as services to address social, emotional, and mental
health needs; and,

• Promoting healthy childhood environments, including new or expanded high quality childcare,
home visiting programs for families with young children, and enhanced services for child
welfare-involved families and foster youth.

Governments may use Coronavirus State and Local Fiscal Recovery Funds to support these additional
services if they are provided:

• within a Qualified Census Tract (a low-income area as designated by the Department of Housing
and Urban Development);

• to families living in Qualified Census Tracts;

• by a Tribal government; or,

• to other populations, households, or geographic areas disproportionately impacted by the
pandemic.

4. Replacing lost public sector revenue

State, local, territorial, and Tribal governments that are facing budget shortfalls may use Coronavirus
State and Local Fiscal Recovery Funds to avoid cuts to government services. With these additional
resources, recipients can continue to provide valuable public services and ensure that fiscal austerity
measures do not hamper the broader economic recovery.





Page 86
Many state, local, territorial, and Tribal governments have experienced significant budget shortfalls,
which can yield a devastating impact on their respective communities. Faced with budget shortfalls and
pandemic-related uncertainty, state and local governments cut staff in all 50 states. These budget
shortfalls and staff cuts are particularly problematic at present, as these entities are on the front lines of
battling the COVID-19 pandemic and helping citizens weather the economic downturn.

Recipients may use these funds to replace lost revenue. Treasury’s Interim Final Rule establishes a
methodology that each recipient can use to calculate its reduction in revenue. Specifically, recipients
will compute the extent of their reduction in revenue by comparing their actual revenue to an
alternative representing what could have been expected to occur in the absence of the pandemic.
Analysis of this expected trend begins with the last full fiscal year prior to the public health emergency
and projects forward at either (a) the recipient’s average annual revenue growth over the three full
fiscal years prior to the public health emergency or (b) 4.1%, the national average state and local
revenue growth rate from 2015-18 (the latest available data).

For administrative convenience, Treasury’s Interim Final Rule allows recipients to presume that any
diminution in actual revenue relative to the expected trend is due to the COVID-19 public health
emergency. Upon receiving Coronavirus State and Local Fiscal Recovery Funds, recipients may
immediately calculate the reduction in revenue that occurred in 2020 and deploy funds to address any
shortfall. Recipients will have the opportunity to re-calculate revenue loss at several points through the
program, supporting those entities that experience a lagged impact of the crisis on revenues.

Importantly, once a shortfall in revenue is identified, recipients will have broad latitude to use this
funding to support government services, up to this amount of lost revenue.

5. Providing premium pay for essential workers

Coronavirus State and Local Fiscal Recovery Funds provide resources for eligible state, local, territorial,
and Tribal governments to recognize the heroic contributions of essential workers. Since the start of the
public health emergency, essential workers have put their physical well-being at risk to meet the daily
needs of their communities and to provide care for others.

Many of these essential workers have not received compensation for the heightened risks they have
faced and continue to face. Recipients may use this funding to provide premium pay directly, or through
grants to private employers, to a broad range of essential workers who must be physically present at
their jobs including, among others:

 Staff at nursing homes, hospitals,  Truck drivers, transit staff, and
and home-care settings warehouse workers
 Workers at farms, food production  Childcare workers, educators, and school
facilities, grocery stores, and restaurants staff
 Janitors and sanitation workers  Social service and human services staff
 Public health and safety staff

Treasury’s Interim Final Rule emphasizes the need for recipients to prioritize premium pay for lower
income workers. Premium pay that would increase a worker’s total pay above 150% of the greater of
the state or county average annual wage requires specific justification for how it responds to the needs
of these workers.





Page 87
In addition, employers are both permitted and encouraged to use Coronavirus State and Local Fiscal
Recovery Funds to offer retrospective premium pay, recognizing that many essential workers have not
yet received additional compensation for work performed. Staff working for third-party contractors in
eligible sectors are also eligible for premium pay.

6. Investing in water and sewer infrastructure

Recipients may use Coronavirus State and Local Fiscal Recovery Funds to invest in necessary
improvements to their water and sewer infrastructures, including projects that address the impacts of
climate change.

Recipients may use this funding to invest in an array of drinking water infrastructure projects, such as
building or upgrading facilities and transmission, distribution, and storage systems, including the
replacement of lead service lines.

Recipients may also use this funding to invest in wastewater infrastructure projects, including
constructing publicly-owned treatment infrastructure, managing and treating stormwater or subsurface
drainage water, facilitating water reuse, and securing publicly-owned treatment works.

To help jurisdictions expedite their execution of these essential investments, Treasury’s Interim Final
Rule aligns types of eligible projects with the wide range of projects that can be supported by the
Environmental Protection Agency’s Clean Water State Revolving Fund and Drinking Water State
Revolving Fund. Recipients retain substantial flexibility to identify those water and sewer infrastructure
investments that are of the highest priority for their own communities.

Treasury’s Interim Final Rule also encourages recipients to ensure that water, sewer, and broadband
projects use strong labor standards, including project labor agreements and community benefits
agreements that offer wages at or above the prevailing rate and include local hire provisions.

7. Investing in broadband infrastructure

The pandemic has underscored the importance of access to universal, high-speed, reliable, and
affordable broadband coverage. Over the past year, millions of Americans relied on the internet to
participate in remote school, healthcare, and work.

Yet, by at least one measure, 30 million Americans live in areas where there is no broadband service or
where existing services do not deliver minimally acceptable speeds. For millions of other Americans, the
high cost of broadband access may place it out of reach. The American Rescue Plan aims to help remedy
these shortfalls, providing recipients with flexibility to use Coronavirus State and Local Fiscal Recovery
Funds to invest in broadband infrastructure.

Recognizing the acute need in certain communities, Treasury’s Interim Final Rule provides that
investments in broadband be made in areas that are currently unserved or underserved—in other
words, lacking a wireline connection that reliably delivers minimum speeds of 25 Mbps download and 3
Mbps upload. Recipients are also encouraged to prioritize projects that achieve last-mile connections to
households and businesses.

Using these funds, recipients generally should build broadband infrastructure with modern technologies
in mind, specifically those projects that deliver services offering reliable 100 Mbps download and 100





Page 88
Mbps upload speeds, unless impracticable due to topography, geography, or financial cost. In addition,
recipients are encouraged to pursue fiber optic investments.

In view of the wide disparities in broadband access, assistance to households to support internet access
or digital literacy is an eligible use to respond to the public health and negative economic impacts of the
pandemic, as detailed above.

8. Ineligible Uses

Coronavirus State and Local Fiscal Recovery Funds provide substantial resources to help eligible state,
local, territorial, and Tribal governments manage the public health and economic consequences of
COVID-19. Recipients have considerable flexibility to use these funds to address the diverse needs of
their communities.

To ensure that these funds are used for their intended purposes, the American Rescue Plan Act also
specifies two ineligible uses of funds:

• States and territories may not use this funding to directly or indirectly offset a reduction in net
tax revenue due to a change in law from March 3, 2021 through the last day of the fiscal year
in which the funds provided have been spent. The American Rescue Plan ensures that funds
needed to provide vital services and support public employees, small businesses, and families
struggling to make it through the pandemic are not used to fund reductions in net tax revenue.
Treasury’s Interim Final Rule implements this requirement. If a state or territory cuts taxes, they
must demonstrate how they paid for the tax cuts from sources other than Coronavirus State
Fiscal Recovery Funds—by enacting policies to raise other sources of revenue, by cutting
spending, or through higher revenue due to economic growth. If the funds provided have been
used to offset tax cuts, the amount used for this purpose must be paid back to the Treasury.

• No recipient may use this funding to make a deposit to a pension fund. Treasury’s Interim
Final Rule defines a “deposit” as an extraordinary contribution to a pension fund for the purpose
of reducing an accrued, unfunded liability. While pension deposits are prohibited, recipients
may use funds for routine payroll contributions for employees whose wages and salaries are an
eligible use of funds.

Treasury’s Interim Final Rule identifies several other ineligible uses, including funding debt service, legal
settlements or judgments, and deposits to rainy day funds or financial reserves. Further, general
infrastructure spending is not covered as an eligible use outside of water, sewer, and broadband
investments or above the amount allocated under the revenue loss provision. While the program offers
broad flexibility to recipients to address local conditions, these restrictions will help ensure that funds
are used to augment existing activities and address pressing needs.






Page 89
Attachment B


DEPARTMENT OF THE TREASURY

31 CFR Part 35

RIN 1505-AC77

Coronavirus State and Local Fiscal Recovery Funds

AGENCY: Department of the Treasury

ACTION: Interim Final Rule

SUMMARY: The Secretary of the Treasury (Treasury) is issuing this Interim Final Rule to

implement the Coronavirus State Fiscal Recovery Fund and the Coronavirus Local Fiscal

Recovery Fund established under the American Rescue Plan Act.

DATES: Effective date: The provisions in this Interim Final Rule are effective [____], 2021.

Comment date: Comments must be received on or before [____], 2021.

ADDRESSES: Please submit comments electronically through the Federal eRulemaking Portal:

http://www.regulations.gov [(if hard copy, preferably an original and two copies to the [Office of

the Undersecretary for Domestic Finance], Attention: [Name], Room [####] MT, Department of

the Treasury, 1500 Pennsylvania Avenue, NW, Washington, DC 20220. Because postal mail

may be subject to processing delay, it is recommended that comments be submitted

electronically.] All comments should be captions with “Coronavirus State and Local Fiscal

Recovery Funds Interim Final Rule Comments.” Please include your name, organization

affiliation, address, email address and telephone number in your comment. Where appropriate, a

comment should include a short executive summary (no more than [#] single-spaced pages).]

In general, comments received will be posted on http://www.regulations.gov without change,

including any business or personal information provided. Comments received, including

attachments and other supporting materials, will be part of the public record and subject to public





Page 90
disclosure. Do not enclose any information in your comment or supporting materials that you

consider confidential or inappropriate for public disclosure.

FOR FURTHER INFORMATION CONTACT:

[Name], [Title], [Office], 202-622-[####], or [Name], [Title], [Office], 202-622-[####].

SUPPLEMENTARY INFORMATION:

I. Background Information

A. Overview

Since the first case of coronavirus disease 2019 (COVID-19) was discovered in the

United States in January 2020, the disease has infected over 32 million and killed over 575,000

Americans. 1 The disease has impacted every part of life: as social distancing became a

necessity, businesses closed, schools transitioned to remote education, travel was sharply

reduced, and millions of Americans lost their jobs. In April 2020, the national unemployment

rate reached its highest level in over seventy years following the most severe month-over-month

decline in employment on record. 2 As of April 2021, there were still 8.2 million fewer jobs than

before the pandemic. 3 During this time, a significant share of households have faced food and

housing insecurity. 4 Economic disruptions impaired the flow of credit to households, State and



Centers for Disease Control and Prevention, COVID Data Tracker, http://www.covid.cdc.gov/covid-
data-tracker/#datatracker-home (last visited May 8, 2021).
U.S. Bureau of Labor Statistics, Unemployment Rate [UNRATE], retrieved from FRED, Federal
Reserve Bank of St. Louis; https://fred.stlouisfed.org/series/UNRATE, May 3, 2021. U.S. Bureau of
Labor Statistics, Employment Level [LNU02000000], retrieved from FRED, Federal Reserve Bank of St.
Louis; https://fred.stlouisfed.org/series/LNU02000000, May 3, 2021.
U.S. Bureau of Labor Statistics, All Employees, Total Nonfarm [PAYEMS], retrieved from FRED,
Federal Reserve Bank of St. Louis; https://fred.stlouisfed.org/series/PAYEMS, May 7, 2021.
Nirmita Panchal et al., The Implications of COVID-19 for Mental Health and Substance Abuse (Feb. 10,
2021), https://www.kff.org/coronavirus-covid-19/issue-brief/the-implications-of-covid-19-for-mental-





Page 91
local governments, and businesses of all sizes. 5 As businesses weathered closures and sharp

declines in revenue, many were forced to shut down, especially small businesses. 6

Amid this once-in-a-century crisis, State, territorial, Tribal, and local governments (State,

local, and Tribal governments) have been called on to respond at an immense scale.

Governments have faced myriad needs to prevent and address the spread of COVID-19,

including testing, contact tracing, isolation and quarantine, public communications, issuance and

enforcement of health orders, expansions to health system capacity like alternative care facilities,

and in recent months, a massive nationwide mobilization around vaccinations. Governments

also have supported major efforts to prevent COVID-19 spread through safety measures in

settings like nursing homes, schools, congregate living settings, dense worksites, incarceration

settings, and public facilities. The pandemic’s impacts on behavioral health, including the toll of

pandemic-related stress, have increased the need for behavioral health resources.

At the same time, State, local and Tribal governments launched major efforts to address

the economic impacts of the pandemic. These efforts have been tailored to the needs of their

communities and have included expanded assistance to unemployed workers; food assistance;




health-and-substance-
use/#:~:text=Older%20adults%20are%20also%20more,prior%20to%20the%20current%20crisis; U.S.
Census Bureau, Household Pulse Survey: Measuring Social and Economic Impacts during the
Coronavirus Pandemic, https://www.census.gov/programs-surveys/household-pulse-survey.html (last
visited Apr. 26, 2021); Rebecca T. Leeb et al., Mental Health-Related Emergency Department Visits
Among Children Aged <18 Years During the COVID Pandemic – United States, January 1 – October 17,
2020, Morb. Mortal. Wkly. Rep. 69(45):1675-80 (Nov. 13, 2020),
https://www.cdc.gov/mmwr/volumes/69/wr/mm6945a3.htm.
Board of Governors of the Federal Reserve System, Monetary Policy Report (June 12, 2020),
https://www.federalreserve.gov/monetarypolicy/2020-06-mpr-summary.htm.
Joseph R. Biden, Remarks by President Biden on Helping Small Businesses (Feb. 22, 2021),
https://www.whitehouse.gov/briefing-room/speeches-remarks/2021/02/22/remarks-by-president-biden-
on-helping-small-businesses/.



Page 92
rent, mortgage, and utility support; cash assistance; internet access programs; expanded services

to support individuals experiencing homelessness; support for individuals with disabilities and

older adults; and assistance to small businesses facing closures or revenue loss or implementing

new safety measures.

In responding to the public health emergency and its negative economic impacts, State,

local, and Tribal governments have seen substantial increases in costs to provide these services,

often amid substantial declines in revenue due to the economic downturn and changing economic

patterns during the pandemic. 7 Facing these budget challenges, many State, local, and Tribal

governments have been forced to make cuts to services or their workforces, or delay critical

investments. From February to May of 2020, State, local, and Tribal governments reduced their

workforces by more than 1.5 million jobs and, in April of 2021, State, local, and Tribal

government employment remained nearly1.3 million jobs below pre-pandemic levels. 8 These

cuts to State, local, and Tribal government workforces come at a time when demand for

government services is high, with State, local, and Tribal governments on the frontlines of

fighting the pandemic. Furthermore, State, local, and Tribal government austerity measures can

hamper overall economic growth, as occurred in the recovery from the Great Recession. 9




Michael Leachman, House Budget Bill Provides Needed Fiscal Aid for States, Localities, Tribal
Nations, and Territories (Feb. 10, 2021), https://www.cbpp.org/research/state-budget-and-tax/house-
budget-bill-provides-needed-fiscal-aid-for-states-localities.
U.S. Bureau of Labor Statistics, All Employees, State Government [CES9092000001] and All
Employees, Local Government [CES9093000001], retrieved from FRED, Federal Reserve Bank of St.
Louis, https://fred.stlouisfed.org/series/CES9092000001 and
https://fred.stlouisfed.org/series/CES9093000001 (last visited May 8, 2021).
Tracy Gordon, State and Local Budgets and the Great Recession, Brookings Institution (Dec. 31, 2012),
http://www.brookings.edu/articles/state-and-local-budgets-and-the-great-recession.



Page 93
Finally, although the pandemic’s impacts have been widespread, both the public health

and economic impacts of the pandemic have fallen most severely on communities and

populations disadvantaged before it began. Low-income communities, people of color, and

Tribal communities have faced higher rates of infection, hospitalization, and death, 10 as well as

higher rates of unemployment and lack of basic necessities like food and housing. 11 Pre-existing

social vulnerabilities magnified the pandemic in these communities, where a reduced ability to

work from home and, frequently, denser housing amplified the risk of infection. Higher rates of

pre-existing health conditions also may have contributed to more severe COVID-19 health

outcomes. 12 Similarly, communities or households facing economic insecurity before the

pandemic were less able to weather business closures, job losses, or declines in earnings and

were less able to participate in remote work or education due to the inequities in access to

reliable and affordable broadband infrastructure. 13 Finally, though schools in all areas faced

challenges, those in high poverty areas had fewer resources to adapt to remote and hybrid




Sebastian D. Romano et al., Trends in Racial and Ethnic Disparities in COVID-19 Hospitalizations, by
Region – United States, March-December 2020, MMWR Morb Mortal Wkly Rep 2021, 70:560-565 (Apr.
16, 2021), https://www.cdc.gov/mmwr/volumes/70/wr/mm7015e2.htm?s_cid=mm7015e2_w.
Center on Budget and Policy Priorities, Tracking the COVID-19 Recession’s Effects on Food, Housing,
and Employment Hardships, https://www.cbpp.org/research/poverty-and-inequality/tracking-the-covid-
19-recessions-effects-on-housing-and (last visited May 4, 2021).
Lisa R. Fortuna et al., Inequity and the Disproportionate Impact of COVID-19 on Communities of
Color in the United States: The Need for Trauma-Informed Social Justice Response, Psychological
Trauma Vol. 12(5):443-45 (2020), available at https://psycnet.apa.org/fulltext/2020-37320-001.pdf.
Emily Vogles et al., 53% of Americans Say the Internet Has Been Essential During the COVID-19
Outbreak (Apr. 30, 2020), https://www.pewresearch.org/internet/2020/04/30/53-of-americans-say-the-
internet-has-been-essential-during-the-covid-19-outbreak/.



Page 94
learning models. 14 Unfortunately, the pandemic also has reversed many gains made by

communities of color in the prior economic expansion. 15

B. The Statute and Interim Final Rule

On March 11, 2021, the American Rescue Plan Act (ARPA) was signed into law by the

President. 16 Section 9901 of ARPA amended Title VI of the Social Security Act 17 (the Act) to

add section 602, which establishes the Coronavirus State Fiscal Recovery Fund, and section 603,

which establishes the Coronavirus Local Fiscal Recovery Fund (together, the Fiscal Recovery

Funds). 18 The Fiscal Recovery Funds are intended to provide support to State, local, and Tribal

governments (together, recipients) in responding to the impact of COVID-19 and in their efforts

to contain COVID-19 on their communities, residents, and businesses. The Fiscal Recovery

Funds build on and expand the support provided to these governments over the last year,

including through the Coronavirus Relief Fund (CRF). 19




Emma Dorn et al., COVID-19 and student learning in the United States: The hurt could last a lifetime
(June 2020), https://webtest.childrensinstitute.net/sites/default/files/documents/COVID-19-and-student-
learning-in-the-United-States_FINAL.pdf; Andrew Bacher-Hicks et al., Inequality in Household
Adaptation to Schooling Shocks: Covid-Induced Online Engagement in Real Time, J. of Public Econ.
Vol. 193(C) (July 2020), available at https://www.nber.org/papers/w27555.
See, e.g., Tyler Atkinson & Alex Richter, Pandemic Disproportionately Affects Women, Minority
Labor Force Participation, https://www.dallasfed.org/research/economics/2020/1110 (last visited May 9,
2021); Jared Bernstein & Janelle Jones, The Impact of the COVID19 Recession on the Jobs and Incomes
of Persons of Color, https://www.cbpp.org/sites/default/files/atoms/files/6-2-20bud_0.pdf (last visited
May 9, 2021).
American Rescue Plan Act of 2021 (ARPA) § 9901, Pub. L. No. 117-2, codified at 42 U.S.C. § 802 et
seq.
42 U.S.C. 801 et seq.
§§ 602, 603 of the Act.
The CRF was established by the section 601 of the Act as added by the Coronavirus Aid, Relief, and
Economic Security Act (CARES Act), Pub. L. No. 116-136, 134 Stat. 281 (2020).



Page 95
Through the Fiscal Recovery Funds, Congress provided State, local, and Tribal governments

with significant resources to respond to the COVID-19 public health emergency and its

economic impacts through four categories of eligible uses. Section 602 and section 603 contain

the same eligible uses; the primary difference between the two sections is that section 602

establishes a fund for States, territories, and Tribal governments and section 603 establishes a

fund for metropolitan cities, nonentitlement units of local government, and counties.

Sections 602(c)(1) and 603(c)(1) provide that funds may be used:

a) To respond to the 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;

b) To respond to workers performing essential work during the COVID-19 public health

emergency by providing premium pay to eligible workers;

c) For the provision of 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; and

d) To make necessary investments in water, sewer, or broadband infrastructure.

In addition, Congress clarified two types of uses which do not fall within these four

categories. Sections 602(c)(2)(B) and 603(c)(2) provide that these eligible uses do not include,

and thus funds may not be used for, depositing funds into any pension fund. Section

602(c)(2)(A) also provides, for States and territories, that the eligible uses do not include:

“directly or indirectly offset[ting] a reduction in the net tax revenue of [the] State

or territory resulting from a change in law, regulation, or administrative

interpretation.”





Page 96
The ARPA provides a substantial infusion of resources to meet pandemic response needs

and rebuild a stronger, more equitable economy as the country recovers. First, payments from

the Fiscal Recovery Funds help to ensure that State, local, and Tribal governments have the

resources needed to continue to take actions to decrease the spread of COVID-19 and bring the

pandemic under control. Payments from the Fiscal Recovery Funds may also be used by

recipients to provide support for costs incurred in addressing public health and economic

challenges resulting from the pandemic, including resources to offer premium pay to essential

workers, in recognition of their sacrifices over the last year. Recipients may also use payments

from the Fiscal Recovery Funds to replace State, local, and Tribal government revenue lost due

to COVID-19, helping to ensure that governments can continue to provide needed services and

avoid cuts or layoffs. Finally, these resources lay the foundation for a strong, equitable

economic recovery, not only by providing immediate economic stabilization for households and

businesses, but also by addressing the systemic public health and economic challenges that may

have contributed to more severe impacts of the pandemic among low-income communities and

people of color.

Within the eligible use categories outlined in the Fiscal Recovery Funds provisions of

ARPA, State, local, and Tribal governments have flexibility to determine how best to use

payments from the Fiscal Recovery Funds to meet the needs of their communities and

populations. The Interim Final Rule facilitates swift and effective implementation by

establishing a framework for determining the types of programs and services that are eligible

under the ARPA along with examples of uses that State, local, and Tribal governments may

consider. These uses build on eligible expenditures under the CRF, including some expansions

in eligible uses to respond to the public health emergency, such as vaccination campaigns. They





Page 97
also reflect changes in the needs of communities, as evidenced by, for example, nationwide data

demonstrating disproportionate impacts of the COVID-19 public health emergency on certain

populations, geographies, and economic sectors. The Interim Final Rule takes into consideration

these disproportionate impacts by recognizing a broad range of eligible uses to help States, local,

and Tribal governments support the families, businesses, and communities hardest hit by the

COVID-19 public health emergency.

Implementation of the Fiscal Recovery Funds also reflect the importance of public input,

transparency, and accountability. Treasury seeks comment on all aspects of the Interim Final

Rule and, to better facilitate public comment, has included specific questions throughout this

Supplementary Information. Treasury encourages State, local, and Tribal governments in

particular to provide feedback and to engage with Treasury regarding issues that may arise

regarding all aspects of this Interim Final Rule and Treasury’s work in administering the Fiscal

Recovery Funds. In addition, the Interim Final Rule establishes certain regular reporting

requirements, including by requiring State, local, and Tribal governments to publish information

regarding uses of Fiscal Recovery Funds payments in their local jurisdiction. These reporting

requirements reflect the need for transparency and accountability, while recognizing and

minimizing the burden, particularly for smaller local governments. Treasury urges State,

territorial, Tribal, and local governments to engage their constituents and communities in

developing plans to use these payments, given the scale of funding and its potential to catalyze

broader economic recovery and rebuilding.







Page 98
II. Eligible Uses

A. Public Health and Economic Impacts

Sections 602(c)(1)(A) and 603(c)(1)(A) provide significant resources for State, territorial,

Tribal governments, and counties, metropolitan cities, and nonentitlement units of local

governments (each referred to as a recipient) to meet the wide range of public health and

economic impacts of the COVID-19 public health emergency.

These provisions authorize the use of payments from the Fiscal Recovery Funds to

respond to the public health emergency with respect to COVID-19 or its negative economic

impacts. Section 602 and section 603 also describe several types of uses that would be

responsive to the impacts of the COVID-19 public health emergency, including assistance to

households, small businesses, and nonprofits and aid to impacted industries, such as tourism,

travel, and hospitality. 20

Accordingly, to assess whether a program or service is included in this category of

eligible uses, a recipient should consider whether and how the use would respond to the

COVID- 19 public health emergency. Assessing whether a program or service “responds to” the

COVID-19 public health emergency requires the recipient to, first, identify a need or negative

impact of the COVID-19 public health emergency and, second, identify how the program,

service, or other intervention addresses the identified need or impact. While the COVID-19

public health emergency affected many aspects of American life, eligible uses under this

category must be in response to the disease itself or the harmful consequences of the economic

disruptions resulting from or exacerbated by the COVID-19 public health emergency.




§§602(c)(1)(A), 603(c)(1)(A) of the Act.



Page 99
The Interim Final Rule implements these provisions by identifying a non-exclusive list of

programs or services that may be funded as responding to COVID-19 or the negative economic

impacts of the COVID-19 public health emergency, along with considerations for evaluating

other potential uses of the Fiscal Recovery Funds not explicitly listed. The Interim Final Rule

also provides flexibility for recipients to use payments from the Fiscal Recovery Funds for

programs or services that are not identified on these non-exclusive lists but that fall under the

terms of section 602(c)(1)(A) or 603(c)(1)(A) by responding to the COVID-19 public health

emergency or its negative economic impacts. As an example, in determining whether a program

or service responds to the negative economic impacts of the COVID-19 public health emergency,

the Interim Final Rule provides that payments from the Fiscal Recovery Funds should be

designed to address an economic harm resulting from or exacerbated by the public health

emergency. Recipients should assess the connection between the negative economic harm and

the COVID-19 public health emergency, the nature and extent of that harm, and how the use of

this funding would address such harm.

As discussed, the pandemic and the necessary actions taken to control the spread had a

severe impact on households and small businesses, including in particular low-income workers

and communities and people of color. While eligible uses under sections 602(c)(1)(A) and

603(c)(1)(A)provide flexibility to recipients to identify the most pressing local needs, Treasury

encourages recipients to provide assistance to those households, businesses, and non-profits in

communities most disproportionately impacted by the pandemic.







Page 100
1. Responding to COVID-19

On January 21, 2020, the Centers for Disease Control and Prevention (CDC) identified

the first case of novel coronavirus in the United States. 21 By late March, the virus had spread to

many States and the first wave was growing rapidly, centered in the northeast. 22 This wave

brought acute strain on health care and public health systems: hospitals and emergency medical

services struggled to manage a major influx of patients; response personnel faced shortages of

personal protective equipment; testing for the virus was scarce; and congregate living facilities

like nursing homes and prisons saw rapid spread. State, local, and Tribal governments mobilized

to support the health care system, issue public health orders to mitigate virus spread, and

communicate safety measures to the public. The United States has since faced at least two

additional COVID-19 waves that brought many similar challenges: the second in the summer,

centered in the south and southwest, and a wave throughout the fall and winter, in which the

virus reached a point of uncontrolled spread across the country and over 3,000 people died per

day. 23 By early May 2021, the United States has experienced over 32 million confirmed

COVID-19 cases and over 575,000 deaths. 24




Press Release, Centers for Disease Control and Prevention, First Travel-related Case of 2019 Novel
Coronavirus Detected in United States (Jan. 21, 2020), https://www.cdc.gov/media/releases/2020/p0121-
novel-coronavirus-travel-case.html.
Anne Schuchat et al., Public Health Response to the Initiation and Spread of Pandemic COVID-19 in
the United States, February 24 – April 21, 2021, MMWR Morb Mortal Wkly Rep 2021, 69(18):551-56
(May 8, 2021), https://www.cdc.gov/mmwr/volumes/69/wr/mm6918e2.htm.
Centers for Disease Control and Prevention, COVID Data Tracker: Trends in Number of COVID-19
Cases and Deaths in the US Reported to CDC, by State/Territory, https://covid.cdc.gov/covid-data-
tracker/#trends_dailytrendscases (last visited May 8, 2021).
Id.



Page 101
Mitigating the impact of COVID-19, including taking actions to control its spread and

support hospitals and health care workers caring for the sick, continues to require a major public

health response from State, local and Tribal governments. New or heightened public health

needs include COVID-19 testing, major expansions in contact tracing, support for individuals in

isolation or quarantine, enforcement of public health orders, new public communication efforts,

public health surveillance (e.g., monitoring case trends and genomic sequencing for variants),

enhancement to health care capacity through alternative care facilities, and enhancement of

public health data systems to meet new demands or scaling needs. State, local, and Tribal

governments have also supported major efforts to prevent COVID-19 spread through safety

measures at key settings like nursing homes, schools, congregate living settings, dense worksites,

incarceration settings, and in other public facilities. This has included implementing infection

prevention measures or making ventilation improvements in congregate settings, health care

settings, or other key locations.

Other response and adaptation costs include capital investments in public facilities to

meet pandemic operational needs, such as physical plant improvements to public hospitals and

health clinics or adaptations to public buildings to implement COVID-19 mitigation tactics. In

recent months, State, local, and Tribal governments across the country have mobilized to support

the national vaccination campaign, resulting in over 250 million doses administered to date. 25

The need for public health measures to respond to COVID-19 will continue in the months

and potentially years to come. This includes the continuation of the vaccination campaign for

the general public and, if vaccinations are approved for children in the future, eventually for




Centers for Disease Control and Prevention, COVID Data Tracker: COVID-19 Vaccinations in the

United States, https://covid.cdc.gov/covid-data-tracker/#vaccinations (last visited May 8, 2021).



Page 102
youths. This also includes monitoring the spread of COVID-19 variants, understanding the

impact of these variants (especially on vaccination efforts), developing approaches to respond to

those variants, and monitoring global COVID-19 trends to understand continued risks to the

United States. Finally, the long-term health impacts of COVID-19 will continue to require a

public health response, including medical services for individuals with “long COVID,” and

research to understand how COVID-19 impacts future health needs and raises risks for the

millions of Americans who have been infected.

Other areas of public health have also been negatively impacted by the COVID-19

pandemic. For example, in one survey in January 2021, over 40 percent of American adults

reported symptoms of depression or anxiety, up from 11 percent in the first half of 2019. 26, The

proportion of children’s emergency department visits related to mental health has also risen

noticeably. 27 Similarly, rates of substance misuse and overdose deaths have spiked: preliminary

data from the CDC show a nearly 30 percent increase in drug overdose mortality from

September 2019 to September 2020. 28 Stay-at-home orders and other pandemic responses may

have also reduced the ability of individuals affected by domestic violence to access services. 29




Panchal, supra note 4; Mark É. Czeisler et al., Mental Health, Substance Abuse, and Suicidal Ideation
During COVID-19 Pandemic– United States, June 24-30 2020, Morb. Mortal. Wkly. Rep. 69(32):1049-
57 (Aug. 14, 2020), https://www.cdc.gov/mmwr/volumes/69/wr/mm6932a1.htm.
Leeb, supra note 4.
Centers for Disease Prevention and Control, National Center for Health Statistics, Provisional Drug
Overdose Death Counts, https://www.cdc.gov/nchs/nvss/vsrr/drug-overdose-data.htm (last visited May 8,
2021).
Megan L. Evans, et al., A Pandemic within a Pandemic – Intimate Partner Violence during Covid-19,
N. Engl. J. Med. 383:2302-04 (Dec. 10, 2020), available at
https://www.nejm.org/doi/full/10.1056/NEJMp2024046.



Page 103
Finally, some preventative public health measures like childhood vaccinations have been

deferred and potentially forgone. 30

While the pandemic affected communities across the country, it disproportionately

impacted some demographic groups and exacerbated health inequities along racial, ethnic, and

socioeconomic lines. 31 The CDC has found that racial and ethnic minorities are at increased risk

for infection, hospitalization, and death from COVID-19, with Hispanic or Latino and Native

American or Alaska Native patients at highest risk. 32

Similarly, low-income and socially vulnerable communities have seen the most severe

health impacts. For example, counties with high poverty rates also have the highest rates of

infections and deaths, with 223 deaths per 100,000 compared to the U.S. average of 175 deaths

per 100,000, as of May 2021. 33 Counties with high social vulnerability, as measured by factors

such as poverty and educational attainment, have also fared more poorly than the national




Jeanne M. Santoli et al., Effects of the COVID-19 Pandemic on Routine Pediatric Vaccine Ordering
and Administration – United States, Morb. Mortal. Wkly. Rep. 69(19):591-93 (May 8, 2020),
https://www.cdc.gov/mmwr/volumes/69/wr/mm6919e2.htm; Marisa Langdon-Embry et al., Notes from
the Field: Rebound in Routine Childhood Vaccine Administration Following Decline During the COVID-
19 Pandemic – New York City, March 1-June 27, 2020, Morb. Mortal. Wkly. Rep. 69(30):999-1001 (Jul.
31 2020), https://www.cdc.gov/mmwr/volumes/69/wr/mm6930a3.htm.
Office of the White House, National Strategy for the COVID-19 Response and Pandemic Preparedness
(Jan. 21, 2021), https://www.whitehouse.gov/wp-content/uploads/2021/01/National-Strategy-for-the-
COVID-19-Response-and-Pandemic-Preparedness.pdf.
In a study of 13 states from October to December 2020, the CDC found that Hispanic or Latino and
Native American or Alaska Native individuals were 1.7 times more likely to visit an emergency room for
COVID-19 than White individuals, and Black individuals were 1.4 times more likely to do so than White
individuals. See Romano, supra note 10.
Centers for Disease Control and Prevention, COVID Data Tracker: Trends in COVID-19 Cases and
Deaths in the United States, by County-level Population Factors, https://covid.cdc.gov/covid-data-
tracker/#pop-factors_totaldeaths (last visited May 8, 2021).



Page 104
average, with 211 deaths per 100,000 as of May 2021. 34 Over the last year, Native Americans

have experienced more than one and a half times the rate of COVID-19 infections, more than

triple the rate of hospitalizations, and more than double the death rate compared to White

Americans. 35 Low-income and minority communities also exhibit higher rates of pre-existing

conditions that may contribute to an increased risk of COVID-19 mortality. 36

In addition, individuals living in low-income communities may have had more limited

ability to socially distance or to self-isolate when ill, resulting in faster spread of the virus, and

were over-represented among essential workers, who faced greater risk of exposure. 37 Social

distancing measures in response to the pandemic may have also exacerbated pre-existing public

health challenges. For example, for children living in homes with lead paint, spending

substantially more time at home raises the risk of developing elevated blood lead levels, while




The CDC’s Social Vulnerability Index includes fifteen variables measuring social vulnerability,
including unemployment, poverty, education levels, single-parent households, disability status, non-
English speaking households, crowded housing, and transportation access.
Centers for Disease Control and Prevention, COVID Data Tracker: Trends in COVID-19 Cases and
Deaths in the United States, by Social Vulnerability Index, https://covid.cdc.gov/covid-data-tracker/#pop-
factors_totaldeaths (last visited May 8, 2021).
Centers for Disease Control and Prevention, Risk for COVID-19 Infection, Hospitalization, and Death
By Race/Ethnicity, https://www.cdc.gov/coronavirus/2019-ncov/covid-data/investigations-
discovery/hospitalization-death-by-race-ethnicity.html (last visited Apr. 26, 2021).
See, e.g., Centers for Disease Control and Prevention, Risk of Severe Illness or Death from COVID-19
(Dec. 10, 2020), https://www.cdc.gov/coronavirus/2019-ncov/community/health-equity/racial-ethnic-
disparities/disparities-illness.html (last visited Apr. 26, 2021).
Milena Almagro et al., Racial Disparities in Frontline Workers and Housing Crowding During COVID-
19: Evidence from Geolocation Data (Sept. 22, 2020), NYU Stern School of Business (forthcoming),
available at https://papers.ssrn.com/sol3/papers.cfm?abstract_id=3695249; Grace McCormack et al.,
Economic Vulnerability of Households with Essential Workers, JAMA 324(4):388-90 (2020), available
at https://jamanetwork.com/journals/jama/fullarticle/2767630.



Page 105
screenings for elevated blood lead levels declined during the pandemic. 38 The combination of

these underlying social and health vulnerabilities may have contributed to more severe public

health outcomes of the pandemic within these communities, resulting in an exacerbation of pre-

existing disparities in health outcomes. 39

Eligible Public Health Uses. The Fiscal Recovery Funds provide resources to meet and

address these emergent public health needs, including through measures to counter the spread of

COVID-19, through the provision of care for those impacted by the virus, and through programs

or services that address disparities in public health that have been exacerbated by the pandemic.

To facilitate implementation and use of payments from the Fiscal Recovery Funds, the Interim

Final Rule identifies a non-exclusive list of eligible uses of funding to respond to the COVID-19

public health emergency. Eligible uses listed under this section build and expand upon

permissible expenditures under the CRF, while recognizing the differences between the ARPA

and CARES Act, and recognizing that the response to the COVID-19 public health emergency

has changed and will continue to change over time. To assess whether additional uses would be

eligible under this category, recipients should identify an effect of COVID-19 on public health,

including either or both of immediate effects or effects that may manifest over months or years,

and assess how the use would respond to or address the identified need.



See, e.g., Joseph G. Courtney et al., Decreases in Young Children Who Received Blood Lead Level
Testing During COVID-19 – 34 Jurisdictions, January-May 2020, Morb. Mort. Wkly. Rep. 70(5):155-61
(Feb. 5, 2021), https://www.cdc.gov/mmwr/volumes/70/wr/mm7005a2.htm; Emily A. Benfer & Lindsay
F. Wiley, Health Justice Strategies to Combat COVID-19: Protecting Vulnerable Communities During a
Pandemic, Health Affairs Blog (Mar. 19, 2020),
https://www.healthaffairs.org/do/10.1377/hblog20200319.757883/full/.
See, e.g., Centers for Disease Control and Prevention, supra note 34; Benfer & Wiley, supra note 38;
Nathaniel M. Lewis et al., Disparities in COVID-19 Incidence, Hospitalizations, and Testing, by Area-
Level Deprivation – Utah, March 3-July 9, 2020, Morb. Mortal. Wkly. Rep. 69(38):1369-73 (Sept. 25,
2020), https://www.cdc.gov/mmwr/volumes/69/wr/mm6938a4.htm.



Page 106
The Interim Final Rule identifies a non-exclusive list of uses that address the effects of the

COVID-19 public health emergency, including:

• COVID-19 Mitigation and Prevention. A broad range of services and programming are

needed to contain COVID-19. Mitigation and prevention efforts for COVID-19 include

vaccination programs; medical care; testing; contact tracing; support for isolation or

quarantine; supports for vulnerable populations to access medical or public health

services; public health surveillance (e.g., monitoring case trends, genomic sequencing for

variants); enforcement of public health orders; public communication efforts;

enhancement to health care capacity, including through alternative care facilities;

purchases of personal protective equipment; support for prevention, mitigation, or other

services in congregate living facilities (e.g., nursing homes, incarceration settings,

homeless shelters, group living facilities) and other key settings like schools; 40 ventilation

improvements in congregate settings, health care settings, or other key locations;

enhancement of public health data systems; and other public health responses. 41 They

also include capital investments in public facilities to meet pandemic operational needs,

such as physical plant improvements to public hospitals and health clinics or adaptations




This includes implementing mitigation strategies consistent with the Centers for Disease Control and
Prevention’s (CDC) Operational Strategy for K-12 Schools through Phased Prevention, available at
https://www.cdc.gov/coronavirus/2019-ncov/community/schools-childcare/operation-strategy.html.
Many of these expenses were also eligible in the CRF. Generally, funding uses eligible under CRF as a
response to the direct public health impacts of COVID-19 will continue to be eligible under the ARPA,
including those not explicitly listed here (e.g., telemedicine costs, costs to facilitate compliance with
public health orders, disinfection of public areas, facilitating distance learning, increased solid waste
disposal needs related to PPE, paid sick and paid family and medical leave to public employees to enable
compliance with COVID–19 public health precautions), with the following two exceptions: 1) the
standard for eligibility of public health and safety payrolls has been updated (see details on page 20) and
2) expenses related to the issuance of tax-anticipation notes are no longer an eligible funding use (see
discussion of debt service on page 44).



Page 107
to public buildings to implement COVID-19 mitigation tactics. These COVID-19

prevention and mitigation programs and services, among others, were eligible

expenditures under the CRF and are eligible uses under this category of eligible uses for

the Fiscal Recovery Funds. 42

• Medical Expenses. The COVID-19 public health emergency continues to have

devastating effects on public health; the United States continues to average hundreds of

deaths per day and the spread of new COVID-19 variants has raised new risks and

genomic surveillance needs. 43 Moreover, our understanding of the potentially serious

and long-term effects of the virus is growing, including the potential for symptoms like

shortness of breath to continue for weeks or months, for multi-organ impacts from

COVID-19, or for post-intensive care syndrome. 44 State and local governments may

need to continue to provide care and services to address these near- and longer-term

needs. 45

• Behavioral Health Care. In addition, new or enhanced State, local, and Tribal

government services may be needed to meet behavioral health needs exacerbated by the

pandemic and respond to other public health impacts. These services include mental

health treatment, substance misuse treatment, other behavioral health services, hotlines or




Coronavirus Relief Fund for States, Tribal Governments, and Certain Eligible Local Governments, 86
Fed. Reg. 4182 (Jan. 15, 2021), available at https://home.treasury.gov/system/files/136/CRF-Guidance-
Federal-Register_2021-00827.pdf.
Centers for Disease Control and Prevention, supra note 24.
Centers for Disease Control and Prevention, Long-Term Effects (Apr. 8, 2021),
https://www.cdc.gov/coronavirus/2019-ncov/long-term-effects.html (last visited Apr. 26, 2021).
Pursuant to 42 CFR 433.51 and 45 CFR 75.306, Fiscal Recovery Funds may not serve as a State or
locality’s contribution of certain Federal funds.



Page 108
warmlines, crisis intervention, overdose prevention, infectious disease prevention, and

services or outreach to promote access to physical or behavioral health primary care and

preventative medicine.


• Public Health and Safety Staff. Treasury recognizes that responding to the public health

and negative economic impacts of the pandemic, including administering the services

described above, requires a substantial commitment of State, local, and Tribal

government human resources. As a result, the Fiscal Recovery Funds may be used for

payroll and covered benefits expenses for public safety, public health, health care, human

services, and similar employees, to the extent that their services are devoted to mitigating

or responding to the COVID–19 public health emergency. 46 Accordingly, the Fiscal

Recovery Funds may be used to support the payroll and covered benefits for the portion

of the employee’s time that is dedicated to responding to the COVID-19 public health

emergency. For administrative convenience, the recipient may consider public health and

safety employees to be entirely devoted to mitigating or responding to the COVID-19

public health emergency, and therefore fully covered, if the employee, or his or her

operating unit or division, is primarily dedicated to responding to the COVID-19 public

health emergency. Recipients may consider other presumptions for assessing the extent

to which an employee, division, or operating unit is engaged in activities that respond to




In general, if an employee’s wages and salaries are an eligible use of Fiscal Recovery Funds, recipients
may treat the employee’s covered benefits as an eligible use of Fiscal Recovery Funds. For purposes of
the Fiscal Recovery Funds, covered benefits include costs of all types of leave (vacation, family-related,
sick, military, bereavement, sabbatical, jury duty), employee insurance (health, life, dental, vision),
retirement (pensions, 401(k)), unemployment benefit plans (federal and state), workers compensation
insurance, and Federal Insurance Contributions Act (FICA) taxes (which includes Social Security and
Medicare taxes).



Page 109
the COVID-19 public health emergency, provided that the recipient reassesses

periodically and maintains records to support its assessment, such as payroll records,

attestations from supervisors or staff, or regular work product or correspondence

demonstrating work on the COVID-19 response. Recipients need not routinely track

staff hours.


• Expenses to Improve the Design and Execution of Health and Public Health Programs.

State, local, and Tribal governments may use payments from the Fiscal Recovery Funds

to engage in planning and analysis in order to improve programs addressing the COVID-

19 pandemic, including through use of targeted consumer outreach, improvements to data

or technology infrastructure, impact evaluations, and data analysis.

Eligible Uses to Address Disparities in Public Health Outcomes. In addition, in recognition of

the disproportionate impacts of the COVID-19 pandemic on health outcomes in low-income and

Native American communities and the importance of mitigating these effects, the Interim Final

Rule identifies a broader range of services and programs that will be presumed to be responding

to the public health emergency when provided in these communities. Specifically, Treasury will

presume that certain types of services, outlined below, are eligible uses when provided in a

Qualified Census Tract (QCT), 47 to families living in QCTs, or when these services are provided



Qualified Census Tracts are a common, readily-accessible, and geographically granular method of
identifying communities with a large proportion of low-income residents. Using an existing measure may
speed implementation and decrease administrative burden, while identifying areas of need at a highly-
localized level.
While QCTs are an effective tool generally, many tribal communities have households with a wide range
of income levels due in part to non-tribal member, high income residents living in the community. Mixed
income communities, with a significant share of tribal members at the lowest levels of income, are often
not included as eligible QCTs yet tribal residents are experiencing disproportionate impacts due to the
pandemic. Therefore, including all services provided by Tribal governments is a more effective means of
ensuring that disproportionately impacted Tribal members can receive services.



Page 110
by Tribal governments. 48 Recipients may also provide these services to other populations,

households, or geographic areas that are disproportionately impacted by the pandemic. In

identifying these disproportionately-impacted communities, recipients should be able to support

their determination that the pandemic resulted in disproportionate public health or economic

outcomes to the specific populations, households, or geographic areas to be served.

Given the exacerbation of health disparities during the pandemic and the role of pre-existing

social vulnerabilities in driving these disparate outcomes, services to address health disparities

are presumed to be responsive to the public health impacts of the pandemic. Specifically,

recipients may use payments from the Fiscal Recovery Funds to facilitate access to resources that

improve health outcomes, including services that connect residents with health care resources

and public assistance programs and build healthier environments, such as:

• Funding community health workers to help community members access health

services and services to address the social determinants of health; 49,

• Funding public benefits navigators to assist community members with navigating

and applying for available Federal, State, and local public benefits or services;




U.S. Department of Housing and Urban Development (HUD), Qualified Census Tracts and Difficult
Development Areas, https://www.huduser.gov/portal/datasets/qct.html (last visited Apr. 26, 2021); U.S.
Department of the Interior, Bureau of Indian Affairs, Indian Lands of Federally Recognized Tribes of the
United States (June 2016), https://www.bia.gov/sites/bia.gov/files/assets/bia/ots/webteam/pdf/idc1-
028635.pdf (last visited Apr. 26, 2021).
The social determinants of health are the social and environmental conditions that affect health
outcomes, specifically economic stability, health care access, social context, neighborhoods and built
environment, and education access. See, e.g., U.S. Department of Health and Human Services, Office of
Disease Prevention and Health Promotion, Healthy People 2030: Social Determinants of Health,
https://health.gov/healthypeople/objectives-and-data/social-determinants-health (last visited Apr. 26,
2021).



Page 111
• Housing services to support healthy living environments and neighborhoods

conducive to mental and physical wellness;

• Remediation of lead paint or other lead hazards to reduce risk of elevated blood lead

levels among children; and

• Evidence-based community violence intervention programs to prevent violence and

mitigate the increase in violence during the pandemic. 50

2. Responding to Negative Economic Impacts

Impacts on Households and Individuals. The public health emergency, including the

necessary measures taken to protect public health, resulted in significant economic and financial

hardship for many Americans. As businesses closed, consumers stayed home, schools shifted to

remote education, and travel declined precipitously, over 20 million jobs were lost in March and

April 2020. 51 Although many have returned to work, as of April 2021, the economy remains

8.2 million jobs below its pre-pandemic peak, 52 and more than 3 million workers have dropped

out of the labor market altogether relative to February 2020. 53

Rates of unemployment are particularly severe among workers of color and workers with

lower levels of educational attainment; for example, the overall unemployment rate in the United



National Commission on COVID-19 and Criminal Justice, Impact Report: COVID-19 and Crime (Jan.
31, 2021), https://covid19.counciloncj.org/2021/01/31/impact-report-covid-19-and-crime-3/ (showing a
spike in homicide and assaults); Brad Boesrup et al., Alarming Trends in US domestic violence during the
COVID-19 pandemic, Am. J. of Emerg. Med. 38(12): 2753-55 (Dec. 1, 2020), available at
https://www.ajemjournal.com/article/S0735-6757(20)30307-7/fulltext (showing a spike in domestic
violence).
U.S. Bureau of Labor Statistics, All Employees, Total Nonfarm (PAYEMS), retrieved from FRED,
Federal Reserve Bank of St. Louis; https://fred.stlouisfed.org/series/PAYEMS (last visited May 8, 2021).
Id.
U.S. Bureau of Labor Statistics, Civilian Labor Force Level [CLF16OV], retrieved from FRED, Federal

Reserve Bank of St. Louis, https://fred.stlouisfed.org/series/CLF16OV (last visited May 8, 2021).



Page 112
States was 6.1 percent in April 2021, but certain groups saw much higher rates: 9.7 percent for

Black workers, 7.9 percent for Hispanic or Latino workers, and 9.3 percent for workers without a

high school diploma. 54 Job losses have also been particularly steep among low wage workers,

with these workers remaining furthest from recovery as of the end of 2020. 55 A severe

recession–and its concentrated impact among low-income workers–has amplified food and

housing insecurity, with an estimated nearly 17 million adults living in households where there is

sometimes or often not enough food to eat and an estimated 10.7 million adults living in

households that were not current on rent. 56 Over the course of the pandemic, inequities also

manifested along gender lines, as schools closed to in-person activities, leaving many working

families without child care during the day. 57 Women of color have been hit especially hard: the




U.S. Bureau of Labor Statistics, Labor Force Statistics from the Current Population Survey:
Employment status of the civilian population by sex and age (May 8 2021),
https://www.bls.gov/news.release/empsit.t01.htm (last visited May 8, 2021); U.S. Bureau of Labor
Statistics, Labor Force Statistics from the Current Population Survey: Employment status of the civilian
noninstitutional population by race, Hispanic or Latino ethnicity, sex, and age (May 8, 2021),
https://www.bls.gov/web/empsit/cpseea04.htm (last visited May 8, 2021); U.S. Bureau of Labor
Statistics, Labor Force Statistics from the Current Population Survey: Employment status of the civilian
noninstitutional population 25 years and over by educational attainment (May 8, 2021),
https://www.bls.gov/web/empsit/cpseea05.htm (last visited May 8, 2021).
Elise Gould & Jori Kandra, Wages grew in 2020 because the bottom fell out of the low-wage labor
market, Economic Policy Institute (Feb. 24, 2021), https://files.epi.org/pdf/219418.pdf. See also, Michael
Dalton et al., The K-Shaped Recovery: Examining the Diverging Fortunes of Workers in the Recovery
from the COVID-19 Pandemic using Business and Household Survey Microdata¸ U.S. Bureau of Labor
Statistics Working Paper Series (Feb. 2021), https://www.bls.gov/osmr/research-
papers/2021/pdf/ec210020.pdf.
Center on Budget and Policy Priorities, Tracking the COVID-19 Recession’s Effects on Food, Housing,
and Employment Hardships, https://www.cbpp.org/research/poverty-and-inequality/tracking-the-covid-
19-recessions-effects-on-food-housing-and (last visited May 8, 2021).
Women have carried a larger share of childcare responsibilities than men during the COVID-19 crisis.
See, e.g., Gema Zamarro & María J. Prados, Gender differences in couples’ division of childcare, work
and mental health during COVID-19, Rev. Econ. Household 19:11-40 (2021), available at
https://link.springer.com/article/10.1007/s11150-020-09534-7; Titan Alon et al., The Impact of COVID-
19 on Gender Equality, National Bureau of Economic Research Working Paper 26947 (April 2020),
available at https://www.nber.org/papers/w26947.



Page 113
labor force participation rate for Black women has fallen by 3.2 percentage points 58 during the

pandemic as compared to 1.0 percentage points for Black men 59 and 2.0 percentage points for

White women. 60

As the economy recovers, the effects of the pandemic-related recession may continue to

impact households, including a risk of longer-term effects on earnings and economic potential.

For example, unemployed workers, especially those who have experienced longer periods of

unemployment, earn lower wages over the long term once rehired. 61 In addition to the labor

market consequences for unemployed workers, recessions can also cause longer-term economic

challenges through, among other factors, damaged consumer credit scores 62 and reduced familial

and childhood wellbeing. 63 These potential long-term economic consequences underscore the

continued need for robust policy support.




U.S. Bureau of Labor Statistics, Labor Force Participation Rate - 20 Yrs. & Over, Black or African
American Women [LNS11300032], retrieved from FRED, Federal Reserve Bank of St. Louis;
https://fred.stlouisfed.org/series/LNS11300032 (last visited May 8, 2021).
U.S. Bureau of Labor Statistics, Labor Force Participation Rate - 20 Yrs. & Over, Black or African
American Men [LNS11300031], retrieved from FRED, Federal Reserve Bank of St. Louis;
https://fred.stlouisfed.org/series/LNS11300031 (last visited May 8, 2021).
U.S. Bureau of Labor Statistics, Labor Force Participation Rate - 20 Yrs. & Over, White Women
[LNS11300029], retrieved from FRED, Federal Reserve Bank of St. Louis;
https://fred.stlouisfed.org/series/LNS11300029 (last visited May 8, 2021).
See, e.g., Michael Greenstone & Adam Looney, Unemployment and Earnings Losses: A Look at Long-
Term Impacts of the Great Recession on American Workers, Brookings Institution (Nov. 4, 2021),
https://www.brookings.edu/blog/jobs/2011/11/04/unemployment-and-earnings-losses-a-look-at-long-
term-impacts-of-the-great-recession-on-american-workers/.
Chi Chi Wu, Solving the Credit Conundrum: Helping Consumers’ Credit Records Impaired by the
Foreclosure Crisis and Great Recession (Dec. 2013),
https://www.nclc.org/images/pdf/credit_reports/report-credit-conundrum-2013.pdf.
Irwin Garfinkel, Sara McLanahan, Christopher Wimer, eds., Children of the Great Recession, Russell
Sage Foundation (Aug. 2016), available at https://www.russellsage.org/publications/children-great-
recession.



Page 114
Impacts on Businesses. The pandemic has also severely impacted many businesses, with

small businesses hit especially hard. Small businesses make up nearly half of U.S. private-sector

employment 64 and play a key role in supporting the overall economic recovery as they are

responsible for two-thirds of net new jobs. 65 Since the beginning of the pandemic, however,

400,000 small businesses have closed, with many more at risk. 66 Sectors with a large share of

small business employment have been among those with the most drastic drops in employment. 67

The negative outlook for small businesses has continued: as of April 2021, approximately

70 percent of small businesses reported that the pandemic has had a moderate or large negative

effect on their business, and over a third expect that it will take over 6 months for their business

to return to their normal level of operations. 68

This negative outlook is likely the result of many small businesses having faced periods

of closure and having seen declining revenues as customers stayed home. 69 In general, small

businesses can face greater hurdles in accessing credit, 70 and many small businesses were




Board of Governors of the Federal Reserve System, supra note 5.
U.S. Small Business Administration, Office of Advocacy, Small Businesses Generate 44 Percent of
U.S. Economic Activity (Jan. 30, 2019), https://advocacy.sba.gov/2019/01/30/small-businesses-generate-
44-percent-of-u-s-economic-activity/.
Biden, supra note 6.
Daniel Wilmoth, U.S. Small Business Administration Office of Advocacy, The Effects of the COVID-
19 Pandemic on Small Businesses, Issue Brief No. 16 (Mar. 2021), available at
https://cdn.advocacy.sba.gov/wp-content/uploads/2021/03/02112318/COVID-19-Impact-On-Small-
Business.pdf.
U.S. Census Bureau, Small Business Pulse Survey, https://portal.census.gov/pulse/data/ (last visited

May 8, 2021).
Olivia S. Kim et al., Revenue Collapses and the Consumption of Small Business Owners in the Early
Stages of the COVID-19 Pandemic (Nov. 2020), https://www.nber.org/papers/w28151.
See e.g., Board of Governors of the Federal Reserve System, Report to Congress on the Availability of
Credit to Small Businesses (Sept. 2017), available at https://www.federalreserve.gov/publications/2017-
september-availability-of-credit-to-small-businesses.htm.



Page 115
already financially fragile at the outset of the pandemic. 71 Non-profits, which provide vital

services to communities, have similarly faced economic and financial challenges due to the

pandemic. 72

Impacts to State, Local, and Tribal Governments. State, local, and Tribal governments

have felt substantial fiscal pressures. As noted above, State, local, and Tribal governments have

faced significant revenue shortfalls and remain over 1 million jobs below their pre-pandemic

staffing levels. 73 These reductions in staffing may undermine the ability to deliver services

effectively, as well as add to the number of unemployed individuals in their jurisdictions.

Exacerbation of Pre-existing Disparities. The COVID-19 public health emergency may

have lasting negative effects on economic outcomes, particularly in exacerbating disparities that

existed prior to the pandemic.

The negative economic impacts of the COVID-19 pandemic are particularly pronounced

in certain communities and families. Low- and moderate-income jobs make up a substantial

portion of both total pandemic job losses, 74 and jobs that require in-person frontline work, which




Alexander W. Bartik et al., The Impact of COVID-19 on small business outcomes and expectations,

PNAS 117(30): 17656-66 (July 28, 2020), available at https://www.pnas.org/content/117/30/17656.
Federal Reserve Bank of San Francisco, Impacts of COVID-19 on Nonprofits in the Western United
States (May 2020), https://www.frbsf.org/community-development/files/impact-of-covid-nonprofits-
serving-western-united-states.pdf.
Wolfe & Kassa, supra note 7; Elijah Moreno & Heather Sobrepena, Tribal entities remain resilient as
COVID-19 batters their finances, Federal Reserve Bank of Minneapolis (Nov. 10, 2021),
https://www.minneapolisfed.org/article/2020/tribal-entities-remain-resilient-as-covid-19-batters-their-
finances.
Kim Parker et al., Economic Fallout from COVID-19 Continues to Hit Lower-Income Americans the
Hardest, Pew Research Center (Sept. 24, 2020), https://www.pewresearch.org/social-
trends/2020/09/24/economic-fallout-from-covid-19-continues-to-hit-lower-income-americans-the-
hardest/; Gould, supra note 55.



Page 116
are exposed to greater risk of contracting COVID-19. 75 Both factors compound pre-existing

vulnerabilities and the likelihood of food, housing, or other financial insecurity in low- and

moderate-income families and, given the concentration of low- and moderate-income families

within certain communities, 76 raise a substantial risk that the effects of the COVID-19 public

health emergency will be amplified within these communities.

These compounding effect of recessions on concentrated poverty and the long-lasting

nature of this effect were observed after the 2007-2009 recession, including a large increase in

concentrated poverty with the number of people living in extremely poor neighborhoods more

than doubling by 2010-2014 relative to 2000. 77 Concentrated poverty has a range of deleterious

impacts, including additional burdens on families and reduced economic potential and social

cohesion. 78 Given the disproportionate impact of COVID-19 on low-income households

discussed above, there is a risk that the current pandemic-induced recession could further

increase concentrated poverty and cause long-term damage to economic prospects in

neighborhoods of concentrated poverty.

The negative economic impacts of COVID-19 also include significant impacts to children

in disproportionately affected families and include impacts to education, health, and welfare, all




See infra Section II.B of this Supplementary Information.
Elizabeth Kneebone, The Changing geography of US poverty, Brookings Institution (Feb. 15, 2017),
https://www.brookings.edu/testimonies/the-changing-geography-of-us-poverty/.
Elizabeth Kneebone & Natalie Holmes, U.S. concentrated poverty in the wake of the Great Recession,
Brookings Institution (Mar. 31, 2016), https://www.brookings.edu/research/u-s-concentrated-poverty-in-
the-wake-of-the-great-recession/.
David Erickson et al., The Enduring Challenge of Concentrated Poverty in America: Case Studies from
Communities Across the U.S. (2008), available at https://www.frbsf.org/community-
development/files/cp_fullreport.pdf.



Page 117
of which contribute to long-term economic outcomes. 79 Many low-income and minority

students, who were disproportionately served by remote or hybrid education during the

pandemic, lacked the resources to participate fully in remote schooling or live in households

without adults available throughout the day to assist with online coursework. 80 Given these

trends, the pandemic may widen educational disparities and worsen outcomes for low-income

students, 81 an effect that would substantially impact their long-term economic outcomes.

Increased economic strain or material hardship due to the pandemic could also have a long-term

impact on health, educational, and economic outcomes of young children. 82 Evidence suggests




Educational quality, as early as Kindergarten, has a long-term impact on children’s public health and
economic outcomes. See, e.g., Tyler W. Watts et al., The Chicago School Readiness Project: Examining
the long-term impacts of an early childhood intervention, PLoS ONE 13(7) (2018), available at
https://journals.plos.org/plosone/article?id=10.1371/journal.pone.0200144; Opportunity Insights, How
Can We Amplify Education as an Engine of Mobility? Using big data to help children get the most from
school, https://opportunityinsights.org/education/ (last visited Apr. 26, 2021); U.S. Department of Health
and Human Services (HHS), Office of Disease Prevention and Health Promotion, Early Childhood
Development and Education, https://www.healthypeople.gov/2020/topics-objectives/topic/social-
determinants-health/interventions-resources/early-childhood-development-and-education (last visited
Apr. 26, 2021).
See, e.g., Bacher-Hicks, supra note 14.
A Department of Education survey found that, as of February 2021, 42 percent of fourth grade students
nationwide were offered only remote education, compared to 48 percent of economically disadvantaged
students, 54 percent of Black students and 57 percent of Hispanic students. Large districts often
disproportionately serve low-income students. See Institute of Education Sciences, Monthly School
Survey Dashboard, https://ies.ed.gov/schoolsurvey/ (last visited Apr. 26, 2021). In summer 2020, a
review found that 74 percent of the largest 100 districts chose remote learning only. See Education Week,
School Districts’ Reopening Plans: A Snapshot (Jul. 15, 2020),
https://www.edweek.org/leadership/school-districts-reopening-plans-a-snapshot/2020/07 (last visited May
4, 2021).
HHS, supra note 79.



Page 118
that adverse conditions in early childhood, including exposure to poverty, food insecurity,

housing insecurity, or other economic hardships, are particularly impactful. 83

The pandemic’s disproportionate economic impacts are also seen in Tribal communities

across the country—for Tribal governments as well as families and businesses on and off Tribal

lands. In the early months of the pandemic, Native American unemployment spiked to

26 percent and, while partially recovered, remains at nearly 11 percent. 84 Tribal enterprises are a

significant source of revenue for Tribal governments to support the provision of government

services. These enterprises, notably concentrated in gaming, tourism, and hospitality, frequently

closed, significantly reducing both revenues to Tribal governments and employment. As a result,

Tribal governments have reduced essential services to their citizens and communities. 85

Eligible Uses. Sections 602(c)(1)(A) and 603(c)(1)(A) permit use of payments from the

Fiscal Recovery Funds to respond to the negative economic impacts of the COVID-19 public

health emergency. Eligible uses that respond to the negative economic impacts of the public

health emergency must be designed to address an economic harm resulting from or exacerbated

by the public health emergency. In considering whether a program or service would be eligible

under this category, the recipient should assess whether, and the extent to which, there has been



Hirokazu Yoshikawa, Effects of the Global Coronavirus Disease – 2019 Pandemic on Early Childhood
Development: Short- and Long-Term Risks and Mitigating Program and Policy Actions, J. of Pediatrics
Vol. 223:188-93 (Aug. 1, 2020), available at https://www.jpeds.com/article/S0022-3476(20)30606-
5/abstract.
Based on calculations conducted by the Minneapolis Fed’s Center for Indian Country Development
using Flood et al. (2020)’s Current Population Survey.” Sarah Flood, Miriam King, Renae Rodgers,
Steven Ruggles and J. Robert Warren. Integrated Public Use Microdata Series, Current Population
Survey: Version 8.0 [dataset]. Minneapolis, MN: IPUMS, 2020. https://doi.org/10.18128/D030.V8.0; see
also Donna Feir & Charles Golding, Native Employment During COVID-19: Hard hit in April but
Starting to Rebount? (Aug. 5, 2020), https://www.minneapolisfed.org/article/2020/native-employment-
during-covid-19-hit-hard-in-april-but-starting-to-rebound.
Moreno & Sobrepena, supra note 73.



Page 119
an economic harm, such as loss of earnings or revenue, that resulted from the COVID-19 public

health emergency and whether, and the extent to which, the use would respond or address this

harm. 86 A recipient should first consider whether an economic harm exists and whether this

harm was caused or made worse by the COVID-19 public health emergency. While economic

impacts may either be immediate or delayed, assistance or aid to individuals or businesses that

did not experience a negative economic impact from the public health emergency would not be

an eligible use under this category.

In addition, the eligible use must “respond to” the identified negative economic impact.

Responses must be related and reasonably proportional to the extent and type of harm

experienced; uses that bear no relation or are grossly disproportionate to the type or extent of

harm experienced would not be eligible uses. Where there has been a negative economic impact

resulting from the public health emergency, States, local, and Tribal governments have broad

latitude to choose whether and how to use the Fiscal Recovery Funds to respond to and address

the negative economic impact. Sections 602(c)(1)(A) and 603(c)(1)(A) describe several types of

uses that would be eligible under this category, including assistance to households, small

businesses, and nonprofits and aid to impacted industries such as tourism, travel, and hospitality.

To facilitate implementation and use of payments from the Fiscal Recovery Funds, the

Interim Final Rule identifies a non-exclusive list of eligible uses of funding that respond to the

negative economic impacts of the public health emergency. Consistent with the discussion

above, the eligible uses listed below would respond directly to the economic or financial harms

resulting from and or exacerbated by the public health emergency.



In some cases, a use may be permissible under another eligible use category even if it falls outside the
scope of section (c)(1)(A) of the Act.



Page 120
• Assistance to Unemployed Workers. This includes assistance to unemployed

workers, including services like job training to accelerate rehiring of unemployed

workers; these services may extend to workers unemployed due to the pandemic or

the resulting recession, or who were already unemployed when the pandemic

began and remain so due to the negative economic impacts of the pandemic.

• State Unemployment Insurance Trust Funds. Consistent with the approach taken

in the CRF, recipients may make deposits into the state account of the

Unemployment Trust Fund established under section 904 of the Social Security

Act (42 U.S.C. 1104) up to the level needed to restore the pre-pandemic balances

of such account as of January 27, 2020 or to pay back advances received under

Title XII of the Social Security Act (42 U.S.C. 1321) for the payment of benefits

between January 27, 2020 and [INSERT DATE OF PUBLICATION IN THE

FEDERAL REGISTER], given the close nexus between Unemployment Trust

Fund costs, solvency of Unemployment Trust Fund systems, and pandemic

economic impacts. Further, Unemployment Trust Fund deposits can decrease

fiscal strain on Unemployment Insurance systems impacted by the pandemic.

States facing a sharp increase in Unemployment Insurance claims during the

pandemic may have drawn down positive Unemployment Trust Fund balances

and, after exhausting the balance, required advances to fund continuing obligations

to claimants. Because both of these impacts were driven directly by the need for

assistance to unemployed workers during the pandemic, replenishing

Unemployment Trust Funds up to the pre-pandemic level responds to the

pandemic’s negative economic impacts on unemployed workers.




Page 121
• Assistance to Households. Assistance to households or populations facing

negative economic impacts due to COVID-19 is also an eligible use. This

includes: food assistance; rent, mortgage, or utility assistance; counseling and legal

aid to prevent eviction or homelessness; cash assistance (discussed below);

emergency assistance for burials, home repairs, weatherization, or other needs;

internet access or digital literacy assistance; or job training to address negative

economic or public health impacts experienced due to a worker’s occupation or

level of training. As discussed above, in considering whether a potential use is

eligible under this category, a recipient must consider whether, and the extent to

which, the household has experienced a negative economic impact from the

pandemic. In assessing whether a household or population experienced economic

harm as a result of the pandemic, a recipient may presume that a household or

population that experienced unemployment or increased food or housing insecurity

or is low- or moderate-income experienced negative economic impacts resulting

from the pandemic. For example, a cash transfer program may focus on

unemployed workers or low- and moderate-income families, which have faced

disproportionate economic harms due to the pandemic. Cash transfers must be

reasonably proportional to the negative economic impact they are intended to

address. Cash transfers grossly in excess of the amount needed to address the

negative economic impact identified by the recipient would not be considered to be

a response to the COVID-19 public health emergency or its negative impacts. In

particular, when considering the appropriate size of permissible cash transfers

made in response to the COVID-19 public health emergency, State, local and




Page 122
Tribal governments may consider and take guidance from the per person amounts

previously provided by the Federal government in response to the COVID-19

crisis. Cash transfers that are grossly in excess of such amounts would be outside

the scope of eligible uses under section 602(c)(1)(A) and 603(c)(1)(A) and could

be subject to recoupment. In addition, a recipient could provide survivor’s benefits

to surviving family members of COVID-19 victims, or cash assistance to widows,

widowers, and dependents of eligible COVID-19 victims.

• Expenses to Improve Efficacy of Economic Relief Programs. State, local, and

Tribal governments may use payments from the Fiscal Recovery Funds to improve

efficacy of programs addressing negative economic impacts, including through use

of data analysis, targeted consumer outreach, improvements to data or technology

infrastructure, and impact evaluations.

• Small Businesses and Non-profits. As discussed above, small businesses and non-

profits faced significant challenges in covering payroll, mortgages or rent, and

other operating costs as a result of the public health emergency and measures taken

to contain the spread of the virus. State, local, and Tribal governments may

provide assistance to small businesses to adopt safer operating procedures, weather

periods of closure, or mitigate financial hardship resulting from the COVID-19

public health emergency, including:

o Loans or grants to mitigate financial hardship such as declines in revenues

or impacts of periods of business closure, for example by supporting

payroll and benefits costs, costs to retain employees, mortgage, rent, or

utilities costs, and other operating costs;




Page 123
o Loans, grants, or in-kind assistance to implement COVID-19 prevention

or mitigation tactics, such as physical plant changes to enable social

distancing, enhanced cleaning efforts, barriers or partitions, or COVID-19

vaccination, testing, or contact tracing programs; and

o Technical assistance, counseling, or other services to assist with business

planning needs.

As discussed above, these services should respond to the negative economic

impacts of COVID-19. Recipients may consider additional criteria to target

assistance to businesses in need, including small businesses. Such criteria may

include businesses facing financial insecurity, substantial declines in gross

receipts (e.g., comparable to measures used to assess eligibility for the Paycheck

Protection Program), or other economic harm due to the pandemic, as well as

businesses with less capacity to weather financial hardship, such as the smallest

businesses, those with less access to credit, or those serving disadvantaged

communities. Recipients should consider local economic conditions and business

data when establishing such criteria. 87

• Rehiring State, Local, and Tribal Government Staff. State, local, and Tribal

governments continue to see pandemic impacts in overall staffing levels: State,

local, and Tribal government employment remains more than 1 million jobs lower




See Federal Reserve Bank of Cleveland, An Uphill Battle: COVID-19’s Outsized Toll on Minority-
Owned Firms (Oct. 8, 2020), https://www.clevelandfed.org/newsroom-and-
events/publications/community-development-briefs/db-20201008-misera-report.aspx (discussing the
impact of COVID-19 on minority owned businesses).



Page 124
in April 2021 than prior to the pandemic. 88 Employment losses decrease a state

or local government’s ability to effectively administer services. Thus, the Interim

Final Rule includes as an eligible use payroll, covered benefits, and other costs

associated with rehiring public sector staff, up to the pre-pandemic staffing level

of the government.

• Aid to Impacted Industries. Sections 602(c)(1)(A) and 603(c)(1)(A) recognize

that certain industries, such as tourism, travel, and hospitality, were

disproportionately and negatively impacted by the COVID-19 public health

emergency. Aid provided to tourism, travel, and hospitality industries should

respond to the negative economic impacts of the pandemic on those and similarly

impacted industries. For example, aid may include assistance to implement

COVID-19 mitigation and infection prevention measures to enable safe

resumption of tourism, travel, and hospitality services, for example,

improvements to ventilation, physical barriers or partitions, signage to facilitate

social distancing, provision of masks or personal protective equipment, or

consultation with infection prevention professionals to develop safe reopening

plans.

Aid may be considered responsive to the negative economic impacts of the

pandemic if it supports businesses, attractions, business districts, and Tribal

development districts operating prior to the pandemic and affected by required



U.S. Bureau of Labor Statistics, All Employees, State Government [CES9092000001] and All
Employees, Local Government [CES9093000001], retrieved from FRED, Federal Reserve Bank of St.
Louis, https://fred.stlouisfed.org/series/CES9092000001 and
https://fred.stlouisfed.org/series/CES9093000001 (last visited May 8, 2021).



Page 125
closures and other efforts to contain the pandemic. For example, a recipient may

provide aid to support safe reopening of businesses in the tourism, travel, and

hospitality industries and to business districts that were closed during the COVID-

19 public health emergency, as well as aid for a planned expansion or upgrade of

tourism, travel, and hospitality facilities delayed due to the pandemic.

When considering providing aid to industries other than tourism, travel,

and hospitality, recipients should consider the extent of the economic impact as

compared to tourism, travel, and hospitality, the industries enumerated in the

statute. For example, on net, the leisure and hospitality industry has experienced

an approximately 24 percent decline in revenue and approximately 17 percent

decline in employment nationwide due to the COVID-19 public health

emergency. 89 Recipients should also consider whether impacts were due to the

COVID-19 pandemic, as opposed to longer-term economic or industrial trends

unrelated to the pandemic.

To facilitate transparency and accountability, the Interim Final Rule

requires that State, local, and Tribal governments publicly report assistance

provided to private-sector businesses under this eligible use, including tourism,

travel, hospitality, and other impacted industries, and its connection to negative




From February 2020 to April 2021, employment in “Leisure and hospitality” has fallen by
approximately 17 percent. See U.S. Bureau of Labor Statistics, All Employees, Leisure and Hospitality,
retrieved from FRED, Federal Reserve Bank of St. Louis, https://fred.stlouisfed.org/series/USLAH (last
visited May 8, 2021). From 2019Q4 to 2020Q4, gross output (e.g. revenue) in arts, entertainment,
recreation, accommodation, and food services has fallen by approximately 24 percent. See Bureau of
Economic Analysis, News Release: Gross Domestic Product (Third Estimate), Corporate Profits, and
GDP by Industry, Fourth Quarter and Year 2020 (Mar. 25, 2021), Table 17,
https://www.bea.gov/sites/default/files/2021-03/gdp4q20_3rd.pdf.



Page 126
economic impacts of the pandemic. Recipients also should maintain records to

support their assessment of how businesses or business districts receiving

assistance were affected by the negative economic impacts of the pandemic and

how the aid provided responds to these impacts.

As discussed above, economic disparities that existed prior to the COVID-19 public

health emergency amplified the impact of the pandemic among low-income and minority groups.

These families were more likely to face housing, food, and financial insecurity; are over-

represented among low-wage workers; and many have seen their livelihoods deteriorate further

during the pandemic and economic contraction. In recognition of the disproportionate negative

economic impacts on certain communities and populations, the Interim Final Rule identifies

services and programs that will be presumed to be responding to the negative economic impacts

of the COVID-19 public health emergency when provided in these communities.

Specifically, Treasury will presume that certain types of services, outlined below, are

eligible uses when provided in a QCT, to families and individuals living in QCTs, or when these

services are provided by Tribal governments. 90 Recipients may also provide these services to

other populations, households, or geographic areas disproportionately impacted by the pandemic.

In identifying these disproportionately impacted communities, recipients should be able to

support their determination that the pandemic resulted in disproportionate public health or

economic outcomes to the specific populations, households, or geographic areas to be served.

The Interim Final Rule identifies a non-exclusive list of uses that address the disproportionate

negative economic effects of the COVID-19 public health emergency, including:




HUD, supra note 48.



Page 127
o Building Stronger Communities through Investments in Housing and Neighborhoods. The

economic impacts of COVID-19 have likely been most acute in lower-income

neighborhoods, including concentrated areas of high unemployment, limited economic

opportunity, and housing insecurity. 91 Services in this category alleviate the immediate

economic impacts of the COVID-19 pandemic on housing insecurity, while addressing

conditions that contributed to poor public health and economic outcomes during the

pandemic, namely concentrated areas with limited economic opportunity and inadequate

or poor-quality housing. 92 Eligible services include:

 Services to address homelessness such as supportive housing, and to improve

access to stable, affordable housing among unhoused individuals;

 Affordable housing development to increase supply of affordable and high-quality

living units; and

 Housing vouchers, residential counseling, or housing navigation assistance to

facilitate household moves to neighborhoods with high levels of economic

opportunity and mobility for low-income residents, to help residents increase their

economic opportunity and reduce concentrated areas of low economic

opportunity. 93



Stuart M. Butler & Jonathan Grabinsky, Tackling the legacy of persistent urban inequality and
concentrated poverty, Brookings Institution (Nov. 16, 2020), https://www.brookings.edu/blog/up-
front/2020/11/16/tackling-the-legacy-of-persistent-urban-inequality-and-concentrated-poverty/.
U.S. Department of Health and Human Services (HHS), Office of Disease Prevention and Health
Promotion, Quality of Housing, https://www.healthypeople.gov/2020/topics-objectives/topic/social-
determinants-health/interventions-resources/quality-of-housing#11 (last visited Apr. 26, 2021).
The Opportunity Atlas, https://www.opportunityatlas.org/ (last visited Apr. 26, 2021); Raj Chetty &
Nathaniel Hendren, The Impacts of Neighborhoods on Intergenerational Mobility I: Childhood Exposure
Effects, Quarterly J. of Econ. 133(3):1107-162 (2018), available at
https://opportunityinsights.org/paper/neighborhoodsi/.



Page 128
o Addressing Educational Disparities. As outlined above, school closures and the

transition to remote education raised particular challenges for lower-income students,

potentially exacerbating educational disparities, while increases in economic hardship

among families could have long-lasting impacts on children’s educational and economic

prospects. Services under this prong would enhance educational supports to help

mitigate impacts of the pandemic. Eligible services include:

 New, expanded, or enhanced early learning services, including pre-kindergarten,

Head Start, or partnerships between pre-kindergarten programs and local

education authorities, or administration of those services;

 Providing assistance to high-poverty school districts to advance equitable funding

across districts and geographies;

 Evidence-based educational services and practices to address the academic needs

of students, including tutoring, summer, afterschool, and other extended learning

and enrichment programs; and

 Evidence-based practices to address the social, emotional, and mental health

needs of students;

o Promoting Healthy Childhood Environments. Children’s economic and family

circumstances have a long-term impact on their future economic outcomes. 94 Increases in

economic hardship, material insecurity, and parental stress and behavioral health

challenges all raise the risk of long-term harms to today’s children due to the pandemic.

Eligible services to address this challenge include:




See supra notes 52 and 84.



Page 129
 New or expanded high-quality childcare to provide safe and supportive care for

children;

 Home visiting programs to provide structured visits from health, parent educators,

and social service professionals to pregnant women or families with young

children to offer education and assistance navigating resources for economic

support, health needs, or child development; and

 Enhanced services for child welfare-involved families and foster youth to provide

support and training on child development, positive parenting, coping skills, or

recovery for mental health and substance use challenges.

State, local, and Tribal governments are encouraged to use payments from the Fiscal

Recovery Funds to respond to the direct and immediate needs of the pandemic and its negative

economic impacts and, in particular, the needs of households and businesses that were

disproportionately and negatively impacted by the public health emergency. As highlighted

above, low-income communities and workers and people of color have faced more severe health

and economic outcomes during the pandemic, with pre-existing social vulnerabilities like low-

wage or insecure employment, concentrated neighborhoods with less economic opportunity, and

pre-existing health disparities likely contributing to the magnified impact of the pandemic. The

Fiscal Recovery Funds provide resources to not only respond to the immediate harms of the

pandemic but also to mitigate its longer-term impact in compounding the systemic public health

and economic challenges of disproportionately impacted populations. Treasury encourages

recipients to consider funding uses that foster a strong, inclusive, and equitable recovery,

especially uses with long-term benefits for health and economic outcomes.







Page 130
Uses Outside the Scope of this Category. Certain uses would not be within the scope of

this eligible use category, although may be eligible under other eligible use categories. A

general infrastructure project, for example, typically would not be included unless the project

responded to a specific pandemic public health need (e.g., investments in facilities for the

delivery of vaccines) or a specific negative economic impact like those described above (e.g.,

affordable housing in a QCT). The ARPA explicitly includes infrastructure if it is “necessary”

and in water, sewer, or broadband. See Section II.D of this Supplementary Information. State,

local, and Tribal governments also may use the Fiscal Recovery Funds under

sections 602(c)(1)(C) or 603(c)(1)(C) to provide “government services” broadly to the extent of

their reduction in revenue. See Section II.C of this Supplementary Information.

This category of eligible uses also would not include contributions to rainy day funds,

financial reserves, or similar funds. Resources made available under this eligible use category

are intended to help meet pandemic response needs and provide relief for households and

businesses facing near- and long-term negative economic impacts. Contributions to rainy day

funds and similar financial reserves would not address these needs or respond to the COVID-19

public health emergency but would rather constitute savings for future spending needs.

Similarly, this eligible use category would not include payment of interest or principal on

outstanding debt instruments, including, for example, short-term revenue or tax anticipation

notes, or other debt service costs. As discussed below, payments from the Fiscal Recovery

Funds are intended to be used prospectively and the Interim Final Rule precludes use of these

funds to cover the costs of debt incurred prior to March 3, 2021. Fees or issuance costs

associated with the issuance of new debt would also not be covered using payments from the

Fiscal Recovery Funds because such costs would not themselves have been incurred to address





Page 131
the needs of pandemic response or its negative economic impacts. The purpose of the Fiscal

Recovery Funds is to provide fiscal relief that will permit State, local, and Tribal governments to

continue to respond to the COVID-19 public health emergency.

For the same reasons, this category of eligible uses would not include satisfaction of any

obligation arising under or pursuant to a settlement agreement, judgment, consent decree, or

judicially confirmed debt restructuring plan in a judicial, administrative, or regulatory

proceeding, except to the extent the judgment or settlement requires the provision of services that

would respond to the COVID-19 public health emergency. That is, satisfaction of a settlement

or judgment would not itself respond to COVID-19 with respect to the public health emergency

or its negative economic impacts, unless the settlement requires the provision of services or aid

that did directly respond to these needs, as described above.

In addition, as described in Section V.III of this Supplementary Information, Treasury

will establish reporting and record keeping requirements for uses within this category, including

enhanced reporting requirements for certain types of uses.

Question 1: Are there other types of services or costs that Treasury should consider as

eligible uses to respond to the public health impacts of COVID-19? Describe how these respond

to the COVID-19 public health emergency.

Question 2: The Interim Final Rule permits coverage of payroll and benefits costs of public

health and safety staff primarily dedicated to COVID-19 response, as well as rehiring of public

sector staff up to pre-pandemic levels. For how long should these measures remain in place?

What other measures or presumptions might Treasury consider to assess the extent to which

public sector staff are engaged in COVID-19 response, and therefore reimbursable, in an easily-

administrable manner?





Page 132
Question 3: The Interim Final Rule permits rehiring of public sector staff up to the

government’s pre-pandemic staffing level, which is measured based on employment as of

January 27, 2021. Does this approach adequately measure the pre-pandemic staffing level in a

manner that is both accurate and easily administrable? Why or why not?

Question 4: The Interim Final Rule permits deposits to Unemployment Insurance Trust

Funds, or using funds to pay back advances, up to the pre-pandemic balance. What, if any,

conditions should be considered to ensure that funds repair economic impacts of the pandemic

and strengthen unemployment insurance systems?

Question 5: Are there other types of services or costs that Treasury should consider as

eligible uses to respond to the negative economic impacts of COVID-19? Describe how these

respond to the COVID-19 public health emergency.

Question 6: What other measures, presumptions, or considerations could be used to assess

“impacted industries” affected by the COVID-19 public health emergency?

Question 7: What are the advantages and disadvantages of using Qualified Census Tracts

and services provided by Tribal governments to delineate where a broader range of eligible uses

are presumed to be responsive to the public health and economic impacts of COVID-19? What

other measures might Treasury consider? Are there other populations or geographic areas that

were disproportionately impacted by the pandemic that should be explicitly included?

Question 8: Are there other services or costs that Treasury should consider as eligible uses

to respond to the disproportionate impacts of COVID-19 on low-income populations and

communities? Describe how these respond to the COVID-19 public health emergency or its

negative economic impacts, including its exacerbation of pre-existing challenges in these areas.







Page 133
Question 9: The Interim Final Rule includes eligible uses to support affordable housing and

stronger neighborhoods in disproportionately-impacted communities. Discuss the advantages

and disadvantages of explicitly including other uses to support affordable housing and stronger

neighborhoods, including rehabilitation of blighted properties or demolition of abandoned or

vacant properties. In what ways does, or does not, this potential use address public health or

economic impacts of the pandemic? What considerations, if any, could support use of Fiscal

Recovery Funds in ways that do not result in resident displacement or loss of affordable housing

units?

B. Premium Pay

Fiscal Recovery Funds payments may be used by recipients to provide premium pay to eligible

workers performing essential work during the COVID-19 public health emergency or to provide

grants to third-party employers with eligible workers performing essential work. 95 These are

workers who have been and continue to be relied on to maintain continuity of operations of

essential critical infrastructure sectors, including those who are critical to protecting the health

and wellbeing of their communities.

Since the start of the COVID-19 public health emergency in January 2020, essential

workers have put their physical wellbeing at risk to meet the daily needs of their communities

and to provide care for others. In the course of this work, many essential workers have

contracted or died of COVID-19. 96 Several examples reflect the severity of the health impacts



§§602(c)(1)(B), 603(c)(1)(B) of the Act.
See, e.g., Centers for Disease Control and Prevention, COVID Data Tracker: Cases & Death among
Healthcare Personnel, https://covid.cdc.gov/covid-data-tracker/#health-care-personnel (last visited May 4,
2021); Centers for Disease Control and Prevention, COVID Data Tracker: Confirmed COVID-19 Cases
and Deaths among Staff and Rate per 1,000 Resident-Weeks in Nursing Homes, by Week – United States,
https://covid.cdc.gov/covid-data-tracker/#nursing-home-staff (last visited May 4, 2021).



Page 134
for essential workers. Meat processing plants became “hotspots” for transmission, with 700 new

cases reported at a single plant on a single day in May 2020. 97 In New York City, 120

employees of the Metropolitan Transit Authority were estimated to have died due to COVID-19

by mid-May 2020, with nearly 4,000 testing positive for the virus. 98 Furthermore, many

essential workers are people of color or low-wage workers. 99 These workers, in particular, have

borne a disproportionate share of the health and economic impacts of the pandemic. Such

workers include:

• Staff at nursing homes, hospitals, and home care settings;

• Workers at farms, food production facilities, grocery stores, and restaurants;

• Janitors and sanitation workers;

• Truck drivers, transit staff, and warehouse workers;

• Public health and safety staff;

• Childcare workers, educators, and other school staff; and

• Social service and human services staff.

During the public health emergency, employers’ policies on COVID-19-related hazard

pay have varied widely, with many essential workers not yet compensated for the heightened




See, e.g., The Lancet, The plight of essential workers during the COVID-19 pandemic, Vol. 395, Issue
10237:1587 (May 23, 2020), available at https://www.thelancet.com/journals/lancet/article/PIIS0140-
6736%2820%2931200-9/fulltext.
Id.
Joanna Gaitens et al., Covid-19 and essential workers: A narrative review of health outcomes and moral
injury, Int’l J. of Envtl. Research and Pub. Health 18(4):1446 (Feb. 4, 2021), available at
https://pubmed.ncbi.nlm.nih.gov/33557075/; Tiana N. Rogers et al., Racial Disparities in COVID‐19
Mortality Among Essential Workers in the United States, World Med. & Health policy 12(3):311-27
(Aug. 5, 2020), available at https://onlinelibrary.wiley.com/doi/full/10.1002/wmh3.358 (finding that
vulnerability to coronavirus exposure was increased among non-Hispanic blacks, who disproportionately
occupied the top nine essential occupations).



Page 135
risks they have faced and continue to face. 100 Many of these workers earn lower wages on

average and live in socioeconomically vulnerable communities as compared to the general

population. 101 A recent study found that 25 percent of essential workers were estimated to have

low household income, with 13 percent in high-risk households. 102 The low pay of many

essential workers makes them less able to cope with the financial consequences of the pandemic

or their work-related health risks, including working hours lost due to sickness or disruptions to

childcare and other daily routines, or the likelihood of COVID-19 spread in their households or

communities. Thus, the threats and costs involved with maintaining the ongoing operation of

vital facilities and services have been, and continue to be, borne by those that are often the most

vulnerable to the pandemic. The added health risk to essential workers is one prominent way in

which the pandemic has amplified pre-existing socioeconomic inequities.

The Fiscal Recovery Funds will help respond to the needs of essential workers by

allowing recipients to remunerate essential workers for the elevated health risks they have faced

and continue to face during the public health emergency. To ensure that premium pay is targeted

to workers that faced or face heightened risks due to the character of their work, the Interim Final

Rule defines essential work as work involving regular in-person interactions or regular physical

handling of items that were also handled by others. A worker would not be engaged in essential

work and, accordingly may not receive premium pay, for telework performed from a residence.




Economic Policy Institute, Only 30% of those working outside their home are receiving hazard pay
(June 16, 2020), https://www.epi.org/press/only-30-of-those-working-outside-their-home-are-receiving-
hazard-pay-black-and-hispanic-workers-are-most-concerned-about-bringing-the-coronavirus-home/.
McCormack, supra note 37.
Id.



Page 136
Sections 602(g)(2) and 603(g)(2) define eligible worker to mean “those workers needed

to maintain continuity of operations of essential critical infrastructure sectors and additional

sectors as each Governor of a State or territory, or each Tribal government, may designate as

critical to protect the health and well-being of the residents of their State, territory, or Tribal

government.” 103 The rule incorporates this definition and provides a list of industries recognized

as essential critical infrastructure sectors. 104 These sectors include healthcare, public health and

safety, childcare, education, sanitation, transportation, and food production and services, among

others as noted above. As provided under sections 602(g)(2) and 603(g)(2), the chief executive

of each recipient has discretion to add additional sectors to this list, so long as additional sectors

are deemed critical to protect the health and well-being of residents.

In providing premium pay to essential workers or grants to eligible employers, a recipient

must consider whether the pay or grant would “respond to” to the worker or workers performing

essential work. Premium pay or grants provided under this section respond to workers

performing essential work if it addresses the heightened risk to workers who must be physically

present at a jobsite and, for many of whom, the costs associated with illness were hardest to bear

financially. Many of the workers performing critical essential services are low- or moderate-

income workers, such as those described above. The ARPA recognizes this by defining

premium pay to mean an amount up to $13 per hour in addition to wages or remuneration the

worker otherwise receives and in an aggregate amount not to exceed $25,000 per eligible worker.

To ensure the provision is implemented in a manner that compensates these workers, the Interim




§§602(g)(2), 603(g)(2) of the Act.
The list of critical infrastructure sectors provided in the Interim Final Rule is based on the list of
essential workers under The Heroes Act, H.R. 6800, 116th Cong. (2020).



Page 137
Final Rule provides that any premium pay or grants provided using the Fiscal Recovery Funds

should prioritize compensation of those lower income eligible workers that perform essential

work.

As such, providing premium pay to eligible workers responds to such workers by helping

address the disparity between the critical services and risks taken by essential workers and the

relatively low compensation they tend to receive in exchange. If premium pay would increase a

worker’s total pay above 150 percent of their residing state’s average annual wage for all

occupations, as defined by the Bureau of Labor Statistics’ Occupational Employment and Wage

Statistics, or their residing county’s average annual wage, as defined by the Bureau of Labor

Statistics’ Occupational Employment and Wage Statistics, whichever is higher, on an annual

basis, the State, local, or Tribal government must provide Treasury and make publicly available,

whether for themselves or on behalf of a grantee, a written justification of how the premium pay

or grant is responsive to workers performing essential worker during the public health

emergency. 105

The threshold of 150 percent for requiring additional written justification is based on an

analysis of the distribution of labor income for a sample of 20 occupations that generally

correspond to the essential workers as defined in the Interim Final Rule. 106 For these




County median annual wage is taken to be that of the metropolitan or nonmetropolitan area that
includes the county. See U.S. Bureau of Labor Statistics, State Occupational Employment and Wage
Estimates, https://www.bls.gov/oes/current/oessrcst.htm (last visited May 1, 2021); U.S. Bureau of Labor
Statistics, May 2020 Metropolitan and Nonmetropolitan Area Estimates listed by county or town,
https://www.bls.gov/oes/current/county_links.htm (last visited May 1, 2021).
Treasury performed this analysis with data from the U.S. Census Bureau’s 2019 Annual Social and
Economic Supplement. In determining which occupations to include in this analysis, Treasury excluded
management and supervisory positions, as such positions may not necessarily involve regular in-person
interactions or physical handling of items to the same extent as non-managerial positions.



Page 138
occupations, labor income for the vast majority of workers was under 150 percent of average

annual labor income across all occupations. Treasury anticipates that the threshold of

150 percent of the annual average wage will be greater than the annual average wage of the vast

majority of eligible workers performing essential work. These enhanced reporting requirements

help to ensure grants are directed to essential workers in critical infrastructure sectors and

responsive to the impacts of the pandemic observed among essential workers, namely the mis-

alignment between health risks and compensation. Enhanced reporting also provides

transparency to the public. Finally, using a localized measure reflects differences in wages and

cost of living across the country, making this standard administrable and reflective of essential

worker incomes across a diverse range of geographic areas.

Furthermore, because premium pay is intended to compensate essential workers for

heightened risk due to COVID-19, it must be entirely additive to a worker’s regular rate of

wages and other remuneration and may not be used to reduce or substitute for a worker’s normal

earnings. The definition of premium pay also clarifies that premium pay may be provided

retrospectively for work performed at any time since the start of the COVID-19 public health

emergency, where those workers have yet to be compensated adequately for work previously

performed. 107 Treasury encourages recipients to prioritize providing retrospective premium pay

where possible, recognizing that many essential workers have not yet received additional

compensation for work conducted over the course of many months. Essential workers who have

already earned premium pay for essential work performed during the COVID-19 public health




However, such compensation must be “in addition to” remuneration or wages already received. That
is, employers may not reduce such workers’ current pay and use Fiscal Recovery Funds to compensate
themselves for premium pay previously provided to the worker.



Page 139
emergency remain eligible for additional payments, and an essential worker may receive both

retrospective premium pay for prior work as well as prospective premium pay for current or

ongoing work.

To ensure any grants respond to the needs of essential workers and are made in a fair and

transparent manner, the rule imposes some additional reporting requirements for grants to third-

party employers, including the public disclosure of grants provided. See Section VIII of this

Supplementary Information, discussing reporting requirements. In responding to the needs of

essential workers, a grant to an employer may provide premium pay to eligible workers

performing essential work, as these terms are defined in the Interim Final Rule and discussed

above. A grant provided to an employer may also be for essential work performed by eligible

workers pursuant to a contract. For example, if a municipality contracts with a third party to

perform sanitation work, the third-party contractor could be eligible to receive a grant to provide

premium pay for these eligible workers.

Question 10: Are there additional sectors beyond those listed in the Interim Final Rule

that should be considered essential critical infrastructure sectors?

Question 11: What, if any, additional criteria should Treasury consider to ensure that

premium pay responds to essential workers?

Question 12: What consideration, if any, should be given to the criteria on salary

threshold, including measure and level, for requiring written justification?

C. Revenue Loss

Recipients may use payments from the Fiscal Recovery Funds for the provision of

government services to the extent of the reduction in revenue experienced due to the COVID-19







Page 140
public health emergency. 108 Pursuant to sections 602(c)(1)(C) and 603(c)(1)(C) of the Act, a

recipient’s reduction in revenue is measured relative to the revenue collected in the most recent

full fiscal year prior to the emergency.

Many State, local, and Tribal governments are experiencing significant budget shortfalls,

which can have a devastating impact on communities. State government tax revenue from major

sources were down 4.3 percent in the six months ended September 2020, relative to the same

period 2019. 109 At the local level, nearly 90 percent of cities have reported being less able to

meet the fiscal needs of their communities and, on average, cities expect a double-digit decline in

general fund revenues in their fiscal year 2021. 110 Similarly, surveys of Tribal governments and

Tribal enterprises found majorities of respondents reporting substantial cost increases and

revenue decreases, with Tribal governments reporting reductions in healthcare, housing, social

services, and economic development activities as a result of reduced revenues. 111 These budget

shortfalls are particularly problematic in the current environment, as State, local, and Tribal

governments work to mitigate and contain the COVID-19 pandemic and help citizens weather

the economic downturn.




ARPA, supra note 16.
Major sources include personal income tax, corporate income tax, sales tax, and property tax. See Lucy
Dadayan., States Reported Revenue Growth in July- – September Quarter, Reflecting Revenue Shifts
from the Prior Quarter, State Tax and Econ. Rev. (Q. 3, 2020), available at
https://www.urban.org/sites/default/files/publication/103938/state-tax-and-economic-review-2020-
q3_0.pdf
National League of Cities, City Fiscal Conditions (2020), available at https://www.nlc.org/wp-

content/uploads/2020/08/City_Fiscal_Conditions_2020_FINAL.pdf
Surveys conducted by the Center for Indian Country Development at the Federal Reserve Bank of

Minneapolis in March, April, and September 2020. See Moreno & Sobrepena, supra note 73.



Page 141
Further, State, local, and Tribal government budgets affect the broader economic

recovery. During the period following the 2007-2009 recession, State and local government

budget pressures led to fiscal austerity that was a significant drag on the overall economic

recovery. 112 Inflation-adjusted State and local government revenue did not return to the previous

peak until 2013, 113 while State, local, and Tribal government employment did not recover to its

prior peak for over a decade, until August 2019 – just a few months before the COVID-19 public

health emergency began. 114

Sections 602(c)(1)(C) and 603(c)(1)(C) of the Act allow recipients facing budget

shortfalls to use payments from the Fiscal Recovery Funds to avoid cuts to government services

and, thus, enable State, local, and Tribal governments to continue to provide valuable services

and ensure that fiscal austerity measures do not hamper the broader economic recovery. The

Interim Final Rule implements these provisions by establishing a definition of “general revenue”

for purposes of calculating a loss in revenue and by providing a methodology for calculating

revenue lost due to the COVID-19 public health emergency.




See, e.g., Fitzpatrick, Haughwout & Setren, Fiscal Drag from the State and Local Sector?, Liberty
Street Economics Blog, Federal Reserve Bank of New York (June 27, 2012),
https://www.libertystreeteconomics.newyorkfed.org/2012/06/fiscal-drag-from-the-state-and-local-
sector.html; Jiri Jonas, Great Recession and Fiscal Squeeze at U.S. Subnational Government Level, IMF
Working Paper 12/184, (July 2012), available at
https://www.imf.org/external/pubs/ft/wp/2012/wp12184.pdf; Gordon, supra note 9.
State and local government general revenue from own sources, adjusted for inflation using the GDP
price index. U.S. Census Bureau, Annual Survey of State Government Finances and U.S. Bureau of
Economic Analysis, National Income and Product Accounts,
U.S. Bureau of Labor Statistics, All Employees, State Government [CES9092000001] and All
Employees, Local Government [CES9093000001], retrieved from FRED, Federal Reserve Bank of St.
Louis, https://fred.stlouisfed.org/series/CES9092000001 and
https://fred.stlouisfed.org/series/CES9093000001 (last visited Apr. 27, 2021).



Page 142
General Revenue. The Interim Final Rule adopts a definition of “general revenue” based

largely on the components reported under “General Revenue from Own Sources” in the Census

Bureau’s Annual Survey of State and Local Government Finances, and for purposes of this

Interim Final Rule, helps to ensure that the components of general revenue would be calculated

in a consistent manner. 115 By relying on a methodology that is both familiar and comprehensive,

this approach minimizes burden to recipients and provides consistency in the measurement of

general revenue across a diverse set of recipients.

The Interim Final Rule defines the term “general revenue” to include revenues collected

by a recipient and generated from its underlying economy and would capture a range of different

types of tax revenues, as well as other types of revenue that are available to support government

services. 116 In calculating revenue, recipients should sum across all revenue streams covered as

general revenue. This approach minimizes the administrative burden for recipients, provides for

greater consistency across recipients, and presents a more accurate representation of the overall

impact of the COVID-19 public health emergency on a recipient’s revenue, rather than relying




U.S. Census Bureau, Annual Survey of State and Local Government Finances,
https://www.census.gov/programs-surveys/gov-finances.html (last visited Apr. 30, 2021).
The Interim Final Rule would define tax revenue in a manner consistent with the Census Bureau’s
definition of tax revenue, with certain changes (i.e., inclusion of revenue from liquor stores and certain
intergovernmental transfers). Current charges are defined as “charges imposed for providing current
services or for the sale of products in connection with general government activities.” It includes
revenues such as public education institution, public hospital, and toll revenues. Miscellaneous general
revenue comprises of all other general revenue of governments from their own sources (i.e., other than
liquor store, utility, and insurance trust revenue), including rents, royalties, lottery proceeds, and fines.



Page 143
on financial reporting prepared by each recipient, which vary in methodology used and which

generally aggregates revenue by purpose rather than by source. 117

Consistent with the Census Bureau’s definition of “general revenue from own sources,”

the definition of general revenue in the Interim Final Rule would exclude refunds and other

correcting transactions, proceeds from issuance of debt or the sale of investments, and agency or

private trust transactions. The definition of general revenue also would exclude revenue

generated by utilities and insurance trusts. In this way, the definition of general revenue focuses

on sources that are generated from economic activity and are available to fund government

services, rather than a fund or administrative unit established to account for and control a

particular activity. 118 For example, public utilities typically require financial support from the

State, local, or Tribal government, rather than providing revenue to such government, and any

revenue that is generated by public utilities typically is used to support the public utility’s

continued operation, rather than being used as a source of revenue to support government

services generally.

The definition of general revenue would include all revenue from Tribal enterprises, as

this revenue is generated from economic activity and is available to fund government services.

Tribes are not able to generate revenue through taxes in the same manner as State and local

governments and, as a result, Tribal enterprises are critical sources of revenue for Tribal




Fund-oriented reporting, such as what is used under the Governmental Accounting Standards Board
(GASB), focuses on the types of uses and activities funded by the revenue, as opposed to the economic
activity from which the revenue is sourced. See Governmental Accounting Standards Series, Statement
No. 54 of the Governmental Accounting Standards Board: Fund Balance Reporting and Governmental
Fund Type Definitions, No. 287-B (Feb. 2009).
Supra note 116.



Page 144
governments that enable Tribal governments to provide a range of services, including elder care,

health clinics, wastewater management, and forestry.

Finally, the term “general revenue” includes intergovernmental transfers between State

and local governments, but excludes intergovernmental transfers from the Federal government,

including Federal transfers made via a State to a local government pursuant to the CRF or as part

of the Fiscal Recovery Funds. States and local governments often share or collect revenue on

behalf of one another, which results in intergovernmental transfers. When attributing revenue to

a unit of government, the Census Bureau’s methodology considers which unit of government

imposes, collects, and retains the revenue and assigns the revenue to the unit of government that

meets at least two of those three factors. 119 For purposes of measuring loss in general revenue

due to the COVID-19 public health emergency and to better allow continued provision of

government services, the retention and ability to use the revenue is a more critical factor.

Accordingly, and to better measure the funds available for the provision of government services,

the definition of general revenue would include intergovernmental transfers from States or local

governments other than funds transferred pursuant to ARPA, CRF, or another Federal program.

This formulation recognizes the importance of State transfers for local government revenue. 120

Calculation of Loss. In general, recipients will compute the extent of the reduction in

revenue by comparing actual revenue to a counterfactual trend representing what could have

been expected to occur in the absence of the pandemic. This approach measures losses in




U.S. Census Bureau, Government Finance and Employment Classification Manual (Dec. 2000),
https://www2.census.gov/govs/class/classfull.pdf
For example, in 2018, state transfers to localities accounted for approximately 27 percent of local
revenues. U.S. Census Bureau, Annual Survey of State and Local Government Finances, Table 1 (2018),
https://www.census.gov/data/datasets/2018/econ/local/public-use-datasets.html.



Page 145
revenue relative to the most recent fiscal year prior to the COVID-19 public health emergency by

using the most recent pre-pandemic fiscal year as the starting point for estimates of revenue

growth absent the pandemic. In other words, the counterfactual trend starts with the last full

fiscal year prior to the COVID-19 public health emergency and then assumes growth at a

constant rate in the subsequent years. Because recipients can estimate the revenue shortfall at

multiple points in time throughout the covered period as revenue is collected, this approach

accounts for variation across recipients in the timing of pandemic impacts. 121 Although revenue

may decline for reasons unrelated to the COVID-19 public health emergency, to minimize the

administrative burden on recipients and taking into consideration the devastating effects of the

COVID-19 public health emergency, any diminution in actual revenues relative to the

counterfactual pre-pandemic trend would be presumed to have been due to the COVID-19 public

health emergency.

For purposes of measuring revenue growth in the counterfactual trend, recipients may use

a growth adjustment of either 4.1 percent per year or the recipient’s average annual revenue

growth over the three full fiscal years prior to the COVID-19 public health emergency,

whichever is higher. The option of 4.1 percent represents the average annual growth across all

State and local government “General Revenue from Own Sources” in the most recent three years




For example, following the 2007-09 recession, local government property tax collections did not begin
to decline until 2011, suggesting that property tax collection declines can lag downturns. See U.S. Bureau
of Economic Analysis, Personal current taxes: State and local: Property taxes [S210401A027NBEA],
retrieved from Federal Reserve Economic Data, Federal Reserve Bank of St. Louis,
https://fred.stlouisfed.org/graph/?g=r3YI (last visited Apr. 22, 2021). Estimating the reduction in revenue
at points throughout the covered period will allow for this type of lagged effect to be taken into account
during the covered period.



Page 146
of available data. 122 This approach provides recipients with a standardized growth adjustment

when calculating the counterfactual revenue trend and thus minimizes administrative burden,

while not disadvantaging recipients with revenue growth that exceeded the national average prior

to the COVID-19 public health emergency by permitting these recipients to use their own

revenue growth rate over the preceding three years.

Recipients should calculate the extent of the reduction in revenue as of four points in

time: December 31, 2020; December 31, 2021; December 31, 2022; and December 31, 2023.

To calculate the extent of the reduction in revenue at each of these dates, recipients should

follow a four-step process:

• Step 1: Identify revenues collected in the most recent full fiscal year prior to the

public health emergency (i.e., last full fiscal year before January 27, 2020), called

the base year revenue.

• Step 2: Estimate counterfactual revenue, which is equal to base year revenue *

[(1 + growth adjustment) ^( n/12)], where n is the number of months elapsed since

the end of the base year to the calculation date, and growth adjustment is the

greater of 4.1 percent and the recipient’s average annual revenue growth in the

three full fiscal years prior to the COVID-19 public health emergency.

• Step 3: Identify actual revenue, which equals revenues collected over the past

twelve months as of the calculation date.



Together with revenue from liquor stores from 2015 to 2018. This estimate does not include any
intergovernmental transfers. A recipient using the three-year average to calculate their growth adjustment
must be based on the definition of general revenue, including treatment of intergovernmental transfers.
2015 – 2018 represents the most recent available data. See U.S. Census Bureau, State & Local
Government Finance Historical Datasets and Tables (2018), https://www.census.gov/programs-
surveys/gov-finances/data/datasets.html.



Page 147
• Step 4: The extent of the reduction in revenue is equal to counterfactual revenue

less actual revenue. If actual revenue exceeds counterfactual revenue, the extent

of the reduction in revenue is set to zero for that calculation date.

For illustration, consider a hypothetical recipient with base year revenue equal to 100. In

Step 2, the hypothetical recipient finds that 4.1 percent is greater than the recipient’s average

annual revenue growth in the three full fiscal years prior to the public health emergency.

Furthermore, this recipient’s base year ends June 30. In this illustration, n (months elapsed) and

counterfactual revenue would be equal to:

As of: 12/31/2020 12/31/2021 12/31/2022 12/31/2023
n (months
18 30 42 54
elapsed)
Counterfactual
106.2 110.6 115.1 119.8
revenue:


The overall methodology for calculating the reduction in revenue is illustrated in the

figure below:



130 --
c:::::::::J Base year revenue
Extent of reduction in revenue
Actual revenue (last twelve months)
- +-- Counterfactual revenue


-- -- ---
100 --- --- ---









Page 148
Upon receiving Fiscal Recovery Fund payments, recipients may immediately calculate revenue

loss for the period ending December 31, 2020.

Sections 602(c)(1)(C) and 603(c)(1)(C) of the Act provide recipients with broad latitude to

use the Fiscal Recovery Funds for the provision of government services. Government services

can include, but are not limited to, maintenance or pay-go funded building 123 of infrastructure,

including roads; modernization of cybersecurity, including hardware, software, and protection of

critical infrastructure; health services; environmental remediation; school or educational

services; and the provision of police, fire, and other public safety services. However, expenses

associated with obligations under instruments evidencing financial indebtedness for borrowed

money would not be considered the provision of government services, as these financing

expenses do not directly provide services or aid to citizens. Specifically, government services

would not include interest or principal on any outstanding debt instrument, including, for

example, short-term revenue or tax anticipation notes, or fees or issuance costs associated with

the issuance of new debt. For the same reasons, government services would not include

satisfaction of any obligation arising under or pursuant to a settlement agreement, judgment,

consent decree, or judicially confirmed debt restructuring in a judicial, administrative, or

regulatory proceeding, except if the judgment or settlement required the provision of government

services. That is, satisfaction of a settlement or judgment itself is not a government service,

unless the settlement required the provision of government services. In addition, replenishing

financial reserves (e.g., rainy day or other reserve funds) would not be considered provision of a




Pay-go infrastructure funding refers to the practice of funding capital projects with cash-on-hand from
taxes, fees, grants, and other sources, rather than with borrowed sums.



Page 149
government service, since such expenses do not directly relate to the provision of government

services.

Question 13: Are there sources of revenue that either should or should not be included in

the Interim Final Rule’s measure of “general revenue” for recipients? If so, discuss why these

sources either should or should not be included.

Question 14: In the Interim Final Rule, recipients are expected to calculate the reduction

in revenue on an aggregate basis. Discuss the advantages and disadvantages of, and any

potential concerns with, this approach, including circumstances in which it could be necessary

or appropriate to calculate the reduction in revenue by source.

Question 15: Treasury is considering whether to take into account other factors,

including actions taken by the recipient as well as the expiration of the COVID-19 public health

emergency, in determining whether to presume that revenue losses are “due to” the COVID-19

public health emergency. Discuss the advantages and disadvantages of this presumption,

including when, if ever, during the covered period it would be appropriate to reevaluate the

presumption that all losses are attributable to the COVID-19 public health emergency.

Question 16: Do recipients anticipate lagged revenue effects of the public health

emergency? If so, when would these lagged effects be expected to occur, and what can Treasury

to do support these recipients through its implementation of the program?

Question 17: In the Interim Final Rule, paying interest or principal on government debt

is not considered provision of a government service. Discuss the advantages and disadvantages of

this approach, including circumstances in which paying interest or principal on government debt

could be considered provision of a government service.







Page 150
D. Investments in Infrastructure

To assist in meeting the critical need for investments and improvements to existing

infrastructure in water, sewer, and broadband, the Fiscal Recovery Funds provide funds to State,

local, and Tribal governments to make necessary investments in these sectors. The Interim Final

Rule outlines eligible uses within each category, allowing for a broad range of necessary

investments in projects that improve access to clean drinking water, improve wastewater and

stormwater infrastructure systems, and provide access to high-quality broadband service.

Necessary investments are designed to provide an adequate minimum level of service and are

unlikely to be made using private sources of funds. Necessary investments include projects that

are required to maintain a level of service that, at least, meets applicable health-based standards,

taking into account resilience to climate change, or establishes or improves broadband service to

unserved or underserved populations to reach an adequate level to permit a household to work or

attend school, and that are unlikely to be met with private sources of funds. 124

It is important that necessary investments in water, sewer, or broadband infrastructure be

carried out in ways that produce high-quality infrastructure, avert disruptive and costly delays,

and promote efficiency. Treasury encourages recipients to ensure that water, sewer, and

broadband projects use strong labor standards, including project labor agreements and

community benefits agreements that offer wages at or above the prevailing rate and include local

hire provisions, not only to promote effective and efficient delivery of high-quality infrastructure

projects but also to support the economic recovery through strong employment opportunities for

workers. Using these practices in construction projects may help to ensure a reliable supply of



Treasury notes that using funds to support or oppose collective bargaining would not be included as
part of “necessary investments in water, sewer, or broadband infrastructure.”



Page 151
skilled labor that would minimize disruptions, such as those associated with labor disputes or

workplace injuries.

To provide public transparency on whether projects are using practices that promote on-

time and on-budget delivery, Treasury will seek information from recipients on their workforce

plans and practices related to water, sewer, and broadband projects undertaken with Fiscal

Recovery Funds. Treasury will provide additional guidance and instructions on the reporting

requirements at a later date.

1. Water and Sewer Infrastructure

The ARPA provides funds to State, local, and Tribal governments to make necessary

investments in water and sewer infrastructure. 125 By permitting funds to be used for water and

sewer infrastructure needs, Congress recognized the critical role that clean drinking water and

services for the collection and treatment of wastewater and stormwater play in protecting public

health. Understanding that State, local, and Tribal governments have a broad range of water and

sewer infrastructure needs, the Interim Final Rule provides these governments with wide latitude

to identify investments in water and sewer infrastructure that are of the highest priority for their

own communities, which may include projects on privately-owned infrastructure. The Interim

Final Rule does this by aligning eligible uses of the Fiscal Recovery Funds with the wide range

of types or categories of projects that would be eligible to receive financial assistance through

the Environmental Protection Agency’s (EPA) Clean Water State Revolving Fund (CWSRF) or

Drinking Water State Revolving Fund (DWSRF). 126



§§ 602(c)(1)(D), 603(c)(1)(D) of the Act.
Environmental Protection Agency, Drinking Water State Revolving fund, https://www.epa.gov/dwsrf
(last visited Apr. 30, 2021); Environmental Protection Agency, Clean Water State Revolving Fund,
https://www.epa.gov/cwsrf (last visited Apr. 30, 2021).



Page 152
Established by the 1987 amendments 127 to the Clean Water Act (CWA), 128 the CWSRF

provides financial assistance for a wide range of water infrastructure projects to improve water

quality and address water pollution in a way that enables each State to address and prioritize the

needs of their populations. The types of projects eligible for CWSRF assistance include projects

to construct, improve, and repair wastewater treatment plants, control non-point sources of

pollution, improve resilience of infrastructure to severe weather events, create green

infrastructure, and protect waterbodies from pollution. 129 Each of the 51 State programs

established under the CWSRF have the flexibility to direct funding to their particular

environmental needs, and each State may also have its own statutes, rules, and regulations that

guide project eligibility. 130




Water Quality Act of 1987, P.L. 100-4.
Federal Water Pollution Control Act as amended, codified at 33 U.S.C. §§ 1251 et. seq., common
name (Clean Water Act). In 2009, the American Recovery and Reinvestment Act created the Green
Project Reserve, which increased the focus on green infrastructure, water and energy efficient, and
environmentally innovative projects. P.L. 111-5. The CWA was amended by the Water Resources
Reform and Development Act of 2014 to further expand the CWSRF’s eligibilities. P.L. 113-121. The
CWSRF’s eligibilities were further expanded in 2018 by the America’s Water Infrastructure Act of 2018,
P.L. 115-270.
See Environmental Protection Agency, The Drinking Water State Revolving Funds: Financing
America’s Drinking Water, EPA-816-R-00-023 (Nov. 2000),
https://nepis.epa.gov/Exe/ZyPDF.cgi/200024WB.PDF?Dockey=200024WB.PDF; See also
Environmental Protection Agency, Learn About the Clean Water State Revolving Fund,
https://www.epa.gov/cwsrf/learn-about-clean-water-state-revolving-fund-cwsrf (last visited Apr. 30,
2021).
33 U.S.C. § 1383(c). See also Environmental Protection Agency, Overview of Clean Water State
Revolving Fund Eligibilities(May 2016), https://www.epa.gov/sites/production/files/2016-
07/documents/overview_of_cwsrf_eligibilities_may_2016.pdf; Claudia Copeland, Clean Water Act: A
Summary of the Law, Congressional Research Service (Oct. 18, 2016),
https://fas.org/sgp/crs/misc/RL30030.pdf; Jonathan L Ramseur, Wastewater Infrastructure: Overview,
Funding, and Legislative Developments, Congressional Research Service (May 22, 2018),
https://fas.org/sgp/crs/misc/R44963.pdf.



Page 153
The DWSRF was modeled on the CWSRF and created as part of the 1996 amendments to

the Safe Drinking Water Act (SDWA), 131 with the principal objective of helping public water

systems obtain financing for improvements necessary to protect public health and comply with

drinking water regulations. 132 Like the CWSRF, the DWSRF provides States with the flexibility

to meet the needs of their populations. 133 The primary use of DWSRF funds is to assist

communities in making water infrastructure capital improvements, including the installation and

replacement of failing treatment and distribution systems. 134 In administering these programs,

States must give priority to projects that ensure compliance with applicable health and

environmental safety requirements; address the most serious risks to human health; and assist

systems most in need on a per household basis according to State affordability criteria. 135

By aligning use of Fiscal Recovery Funds with the categories or types of eligible projects

under the existing EPA state revolving fund programs, the Interim Final Rule provides recipients

with the flexibility to respond to the needs of their communities while ensuring that investments

in water and sewer infrastructure made using Fiscal Recovery Funds are necessary. As discussed

above, the CWSRF and DWSRF were designed to provide funding for projects that protect

public health and safety by ensuring compliance with wastewater and drinking water health




42 U.S.C. 300j-12.
Environmental Protection Agency, Drinking Water State Revolving Fund Eligibility Handbook, (June
2017), https://www.epa.gov/sites/production/files/2017-
06/documents/dwsrf_eligibility_handbook_june_13_2017_updated_508_version.pdf; Environmental
Protection Agency, Drinking Water Infrastructure Needs Survey and Assessment: Sixth Report to
Congress (March 2018), https://www.epa.gov/sites/production/files/2018-
10/documents/corrected_sixth_drinking_water_infrastructure_needs_survey_and_assessment.pdf “.
Id.
Id.
42 U.S.C. 300j-12(b)(3)(A).



Page 154
standards. 136 The need to provide funding through the state revolving funds suggests that these

projects are less likely to be addressed with private sources of funding; for example, by

remediating failing or inadequate infrastructure, much of which is publicly owned, and by

addressing non-point sources of pollution. This approach of aligning with the EPA state

revolving fund programs also supports expedited project identification and investment so that

needed relief for the people and communities most affected by the pandemic can deployed

expeditiously and have a positive impact on their health and wellbeing as soon as possible.

Further, the Interim Final Rule is intended to preserve flexibility for award recipients to direct

funding to their own particular needs and priorities and would not preclude recipients from

applying their own additional project eligibility criteria.

In addition, responding to the immediate needs of the COVID-19 public health

emergency may have diverted both personnel and financial resources from other State, local, and

Tribal priorities, including projects to ensure compliance with applicable water health and

quality standards and provide safe drinking and usable water. 137 Through sections 602(c)(1)(D)

and 603(c)(1)(D), the ARPA provides resources to address these needs. Moreover, using Fiscal

Recovery Funds in accordance with the priorities of the CWA and SWDA to “assist systems

most in need on a per household basis according to state affordability criteria” would also have




Environmental Protection Agency, Learn About the Clean Water State Revolving Fund,
https://www.epa.gov/cwsrf/learn-about-clean-water-state-revolving-fund-cwsrf (last visited Apr. 30,
2021); 42 U.S.C. 300j-12.
House Committee on the Budget, State and Local Governments are in Dire Need of Federal Relief
(Aug. 19, 2020), https://budget.house.gov/publications/report/state-and-local-governments-are-dire-need-
federal-relief.



Page 155
the benefit of providing vulnerable populations with safe drinking water that is critical to their

health and, thus, their ability to work and learn. 138

Recipients may use Fiscal Recovery Funds to invest in a broad range of projects that

improve drinking water infrastructure, such as building or upgrading facilities and transmission,

distribution, and storage systems, including replacement of lead service lines. Given the lifelong

impacts of lead exposure for children, and the widespread nature of lead service lines, Treasury

encourages recipients to consider projects to replace lead service lines.

Fiscal Recovery Funds may also be used to support the consolidation or establishment of

drinking water systems. With respect to wastewater infrastructure, recipients may use Fiscal

Recovery Funds to construct publicly owned treatment infrastructure, manage and treat

stormwater or subsurface drainage water, facilitate water reuse, and secure publicly owned

treatment works, among other uses. Finally, consistent with the CWSRF and DWSRF, Fiscal

Recovery Funds may be used for cybersecurity needs to protect water or sewer infrastructure,

such as developing effective cybersecurity practices and measures at drinking water systems and

publicly owned treatment works.

Many of the types of projects eligible under either the CWSRF or DWSRF also support

efforts to address climate change. For example, by taking steps to manage potential sources of

pollution and preventing these sources from reaching sources of drinking water, projects eligible

under the DWSRF and the ARPA may reduce energy required to treat drinking water. Similarly,




Environmental Protection Agency, Drinking Water State Revolving Fund (Nov. 2019),
https://www.epa.gov/sites/production/files/2019-11/documents/fact_sheet_-
_dwsrf_overview_final_0.pdf; Environmental Protection Agency, National Benefits Analysis for
Drinking Water Regulations, https://www.epa.gov/sdwa/national-benefits-analysis-drinking-water-
regulations (last visited Apr. 30, 2020).



Page 156
projects eligible under the CWSRF include measures to conserve and reuse water or reduce the

energy consumption of public water treatment facilities. Treasury encourages recipients to

consider green infrastructure investments and projects to improve resilience to the effects of

climate change. For example, more frequent and extreme precipitation events combined with

construction and development trends have led to increased instances of stormwater runoff, water

pollution, and flooding. Green infrastructure projects that support stormwater system resiliency

could include rain gardens that provide water storage and filtration benefits, and green streets,

where vegetation, soil, and engineered systems are combined to direct and filter rainwater from

impervious surfaces. In cases of a natural disaster, recipients may also use Fiscal Recovery

Funds to provide relief, such as interconnecting water systems or rehabilitating existing wells

during an extended drought.

Question 18: What are the advantages and disadvantages of aligning eligible uses with

the eligible project type requirements of the DWSRF and CWSRF? What other water or sewer

project categories, if any, should Treasury consider in addition to DWSRF and CWSRF eligible

projects? Should Treasury consider a broader general category of water and sewer projects?

Question 19: What additional water and sewer infrastructure categories, if any, should

Treasury consider to address and respond to the needs of unserved, undeserved, or rural

communities? How do these projects differ from DWSFR and CWSRF eligible projects?

Question 20: What new categories of water and sewer infrastructure, if any, should

Treasury consider to support State, local, and Tribal governments in mitigating the negative

impacts of climate change? Discuss emerging technologies and processes that support resiliency

of water and sewer infrastructure. Discuss any challenges faced by States and local

governments when pursuing or implementing climate resilient infrastructure projects.





Page 157
Question 21: Infrastructure projects related to dams and reservoirs are generally not

eligible under the CWSRF and DWSRF categories. Should Treasury consider expanding eligible

infrastructure under the Interim Final Rule to include dam and reservoir projects? Discuss

public health, environmental, climate, or equity benefits and costs in expanding the eligibility to

include these types of projects.


2. Broadband Infrastructure.

The COVID-19 public health emergency has underscored the importance of universally

available, high-speed, reliable, and affordable broadband coverage as millions of Americans rely

on the internet to participate in, among critical activities, remote school, healthcare, and work.

Recognizing the need for such connectivity, the ARPA provides funds to State, territorial, local,

and Tribal governments to make necessary investments in broadband infrastructure.

The National Telecommunications and Information Administration (NTIA) highlighted

the growing necessity of broadband in daily lives through its analysis of NTIA Internet Use

Survey data, noting that Americans turn to broadband Internet access service for every facet of

daily life including work, study, and healthcare. 139 With increased use of technology for daily

activities and the movement by many businesses and schools to operating remotely during the

pandemic, broadband has become even more critical for people across the country to carry out

their daily lives.




See, e.g., https://www.ntia.gov/blog/2020/more-half-american-households-used-internet-health-
related-activities-2019-ntia-data-show; https://www.ntia.gov/blog/2020/nearly-third-american-employees-
worked-remotely-2019-ntia-data-show; and generally, https://www.ntia.gov/data/digital-nation-data-
explorer.



Page 158
By at least one measure, however, tens of millions of Americans live in areas where there

is no broadband infrastructure that provides download speeds greater than 25 Mbps and upload

speeds of 3 Mbps. 140 By contrast, as noted below, many households use upload and download

speeds of 100 Mbps to meet their daily needs. Even in areas where broadband infrastructure

exists, broadband access may be out of reach for millions of Americans because it is

unaffordable, as the United States has some of the highest broadband prices in the Organisation

for Economic Co-operation and Development (OECD). 141 There are disparities in availability as

well; historically, Americans living in territories and Tribal lands as well as rural areas have

disproportionately lacked sufficient broadband infrastructure. 142 Moreover, rapidly growing

demand has, and will likely continue to, quickly outpace infrastructure capacity, a phenomenon

acknowledged by various states around the country that have set scalability requirements to

account for this anticipated growth in demand. 143




As an example, data from the Federal Communications Commission shows that as of June 2020,
9.07 percent of the U.S. population had no available cable or fiber broadband providers providing greater
than 25 Mbps download speeds and 3 Mbps upload speeds. Availability was significantly less for rural
versus urban populations, with 35.57 percent of the rural population lacking such access, compared with
2.57 percent of the urban population. Availability was also significantly less for tribal versus non-tribal
populations, with 35.93 percent of the tribal population lacking such access, compared with 8.74 of the
non-tribal population. Federal Communications Commission, Fixed Broadband Deployment,
https://broadbandmap.fcc.gov/#/ (last visited May 9, 2021).
How Do U.S. Internet Costs Compare To The Rest Of The World?, BroadbandSearch Blog Post,
available at https://www.broadbandsearch.net/blog/internet-costs-compared-worldwide.
See, e.g., Federal Communications Commission, Fourteenth Broadband Deployment Report, available
at https://docs.fcc.gov/public/attachments/FCC-21-18A1.pdf.
See, e.g., Illinois Department of Commerce & Economic Opportunity, Broadband Grants, h (last
visited May 9, 2021), https://www2.illinois.gov/dceo/ConnectIllinois/Pages/BroadbandGrants.aspx;
Kansas Office of Broadband Development, Broadband Acceleration Grant,
https://www.kansascommerce.gov/wp-content/uploads/2020/11/Broadband-Acceleration-Grant.pdf (last
visited May 9, 2021); New York State Association of Counties, Universal Broadband: Deploying High
Speed Internet Access in NYS (Jul. 2017),
https://www.nysac.org/files/BroadbandUpdateReport2017(1).pdf.



Page 159
The Interim Final Rule provides that eligible investments in broadband are those that are

designed to provide services meeting adequate speeds and are provided to unserved and

underserved households and businesses. Understanding that States, territories, localities, and

Tribal governments have a wide range of varied broadband infrastructure needs, the Interim

Final Rule provides award recipients with flexibility to identify the specific locations within their

communities to be served and to otherwise design the project.

Under the Interim Final Rule, eligible projects are expected to be designed to deliver,

upon project completion, service that reliably meets or exceeds symmetrical upload and

download speeds of 100 Mbps. There may be instances in which it would not be practicable for

a project to deliver such service speeds because of the geography, topography, or excessive costs

associated with such a project. In these instances, the affected project would be expected to be

designed to deliver, upon project completion, service that reliably meets or exceeds 100 Mbps

download and between at least 20 Mbps and 100 Mbps upload speeds and be scalable to a

minimum of 100 Mbps symmetrical for download and upload speeds. 144 In setting these

standards, Treasury identified speeds necessary to ensure that broadband infrastructure is

sufficient to enable users to generally meet household needs, including the ability to support the

simultaneous use of work, education, and health applications, and also sufficiently robust to meet

increasing household demands for bandwidth. Treasury also recognizes that different

communities and their members may have a broad range of internet needs and that those needs

may change over time.




This scalability threshold is consistent with scalability requirements used in other jurisdictions. Id.



Page 160
In considering the appropriate speed requirements for eligible projects, Treasury

considered estimates of typical households demands during the pandemic. Using the Federal

Communication Commission’s (FCC) Broadband Speed Guide, for example, a household with

two telecommuters and two to three remote learners today are estimated to need 100 Mbps

download to work simultaneously. 145 In households with more members, the demands may be

greater, and in households with fewer members, the demands may be less.

In considering the appropriate speed requirements for eligible projects, Treasury also

considered data usage patterns and how bandwidth needs have changed over time for U.S.

households and businesses as people’s use of technology in their daily lives has evolved. In the

few years preceding the pandemic, market research data showed that average upload speeds in

the United States surpassed over 10 Mbps in 2017 146 and continued to increase significantly,

with the average upload speed as of November, 2019 increasing to 48.41 Mbps, 147 attributable,

in part to a shift to using broadband and the internet by individuals and businesses to create and

share content using video sharing, video conferencing, and other applications. 148

The increasing use of data accelerated markedly during the pandemic as households

across the country became increasingly reliant on tools and applications that require greater



Federal Communications Commission, Broadband Speed Guide,
https://www.fcc.gov/consumers/guides/broadband-speed-guide (last visited Apr. 30, 2021).
Letter from Lisa R. Youngers, President and CEO of Fiber Broadband Association to FCC, WC
Docket No. 19-126 (filed Jan. 3, 2020), including an Appendix with research from RVA LLC, Data
Review Of The Importance of Upload Speeds (Jan. 2020), and Ookla speed test data, available at
https://ecfsapi.fcc.gov/file/101030085118517/FCC%20RDOF%20Jan%203%20Ex%20Parte.pdf.
Additional information on historic growth in data usage is provided in Schools, Health & Libraries
Broadband Coalition, Common Sense Solutions for Closing the Digital Divide, Apr. 29, 2021.
Id. See also United States's Mobile and Broadband Internet Speeds - Speedtest Global Index, available
at https://www.speedtest.net/global-index/united-states#fixed.
Id.



Page 161
internet capacity, both to download data but also to upload data. Sending information became as

important as receiving it. A video consultation with a healthcare provider or participation by a

child in a live classroom with a teacher and fellow students requires video to be sent and

received simultaneously. 149 As an example, some video conferencing technology platforms

indicate that download and upload speeds should be roughly equal to support two-way,

interactive video meetings. 150 For both work and school, client materials or completed school

assignments, which may be in the form of PDF files, videos, or graphic files, also need to be

shared with others. This is often done by uploading materials to a collaboration site, and the

upload speed available to a user can have a significant impact on the time it takes for the content

to be shared with others. 151 These activities require significant capacity from home internet

connections to both download and upload data, especially when there are multiple individuals in

one household engaging in these activities simultaneously.

This need for increased broadband capacity during the pandemic was reflected in

increased usage patterns seen over the last year. As OpenVault noted in recent advisories, the

pandemic significantly increased the amount of data users consume. Among data users observed

by OpenVault, per-subscriber average data usage for the fourth quarter of 2020 was

482.6 gigabytes per month, representing a 40 percent increase over the 344 gigabytes consumed

in the fourth quarter of 2019 and a 26 percent increase over the third quarter 2020 average of




One high definition Zoom meeting or class requires approximately 3.8 Mbps/3.0 Mbps (up/down).
See, e.g., Zoom, System Requirements for Windows, macOS, and Linux,
https://support.zoom.us/hc/en-us/articles/201362023-System-requirements-for-Windows-macOS-and-
Linux#h_d278c327-e03d-4896-b19a-96a8f3c0c69c (last visited May 8, 2021).
By one estimate, to upload a one gigabit video file to YouTube would take 15 minutes at an upload
speed of 10 Mbps compared with 1 minute, 30 seconds at an upload speed of 100 Mbps, and 30 seconds
at an upload speed of 300 Mbps. Reviews.org: What is Symmetrical Internet? (March 2020).



Page 162
383.8 gigabytes. 152 OpenVault also noted significant increases in upstream usage among the data

users it observed, with upstream data usage growing 63 percent – from 19 gigabytes to 31

gigabytes – between December, 2019 and December, 2020. 153 According to an OECD

Broadband statistic from June 2020, the largest percentage of U.S. broadband subscribers have

services providing speeds between 100 Mbps and 1 Gbps. 154

Jurisdictions and Federal programs are increasingly responding to the growing demands

of their communities for both heightened download and upload speeds. For example,

Illinois now requires 100 Mbps symmetrical service as the construction standard for its state

broadband grant programs. This standard is also consistent with speed levels, particularly

download speed levels, prioritized by other Federal programs supporting broadband projects.

Bids submitted as part of the FCC in its Rural Digital Opportunity Fund (RDOF), established to

support the construction of broadband networks in rural communities across the country, are

given priority if they offer faster service, with the service offerings of 100 Mbps download and




OVBI: Covid-19 Drove 15 percent Increase in Broadband Traffic in 2020, OpenVault, Quarterly
Advisory, (Feb. 10, 2021), available at https://openvault.com/ovbi-covid-19-drove-51-increase-in-
broadband-traffic-in-2020; See OpenVault’s data set incorporates information on usage by subscribers
across multiple continents, including North America and Europe. Additional data and detail on increases
in the amount of data users consume and the broadband speeds they are using is provided in OpenVault
Broadband Insights Report Q4, Quarterly Advisory (Feb. 10, 2021), available at
https://openvault.com/complimentary-report-4q20/.
OVBI Special Report: 202 Upstream Growth Nearly 4X of Pre-Pandemic Years, OpenVault, Quarterly
Advisory, (April 1, 20201), available at https://openvault.com/ovbi-special-report-2020-upstream-
growth-rate-nearly-4x-of-pre-pandemic-years/; Additional data is provided in OpenVault Broadband
Insights Pandemic Impact on Upstream Broadband Usage and Network Capacity, available at
https://openvault.com/upstream-whitepaper/.
Organisation for Economic Co-operation and Development, Fixed broadband subscriptions per 100
inhabitants, per speed tiers (June 2020), https://www.oecd.org/sti/broadband/5.1-FixedBB-SpeedTiers-
2020-06.xls www.oecd.org/sti/broadband/broadband-statistics.



Page 163
20 Mbps upload being included in the “above baseline” performance tier set by the FCC. 155 The

Broadband Infrastructure Program (BBIP) 156 of the Department of Commerce, which provides

Federal funding to deploy broadband infrastructure to eligible service areas of the country also

prioritizes projects designed to provide broadband service with a download speed of not less than

100 Mbps and an upload speed of not less than 20 Mbps. 157

The 100 Mbps upload and download speeds will support the increased and growing needs

of households and businesses. Recognizing that, in some instances, 100 Mbps upload speed may

be impracticable due to geographical, topographical, or financial constraints, the Interim Final

Rule permits upload speeds of between at least 20 Mbps and 100 Mbps in such instances. To

provide for investments that will accommodate technologies requiring symmetry in download

and upload speeds, as noted above, eligible projects that are not designed to deliver, upon project

completion, service that reliably meets or exceeds symmetrical speeds of 100 Mbps because it

would be impracticable to do so should be designed so that they can be scalable to such speeds.

Recipients are also encouraged to prioritize investments in fiber optic infrastructure where

feasible, as such advanced technology enables the next generation of application solutions for all

communities.

Under the Interim Final Rule, eligible projects are expected to focus on locations that are

unserved or underserved. The Interim Final Rule treats users as being unserved or underserved if

they lack access to a wireline connection capable of reliably delivering at least minimum speeds




Rural Digital Opportunity Fund, Report and Order, 35 FCC Rcd 686, 690, para. 9 (2020), available at
https://www.fcc.gov/document/fcc-launches-20-billion-rural-digital-opportunity-fund-0.
The BIPP was authorized by the Consolidated Appropriations Act, 2021, Section 905, Public Law

116-260, 134 Stat. 1182 (Dec. 27, 2020).
Section 905(d)(4) of the Consolidated Appropriations Act, 2021.



Page 164
of 25 Mbps download and 3 Mbps upload as households and businesses lacking this level of

access are generally not viewed as being able to originate and receive high-quality voice, data,

graphics, and video telecommunications. This threshold is consistent with the FCC’s benchmark

for an “advanced telecommunications capability.” 158 This threshold is also consistent with

thresholds used in other Federal programs to identify eligible areas to be served by programs to

improve broadband services. For example, in the FCC’s RDOF program, eligible areas include

those without current (or already funded) access to terrestrial broadband service providing

25 Mbps download and 3 Mbps upload speeds. 159 The Department of Commerce’s BBIP also

considers households to be “unserved” generally if they lack access to broadband service with a

download speed of not less than 25 Mbps download and 3 Mbps upload, among other conditions.

In selecting an area to be served by a project, recipients are encouraged to avoid investing in

locations that have existing agreements to build reliable wireline service with minimum speeds

of 100 Mbps download and 20 Mbps upload by December 31, 2024, in order to avoid duplication

of efforts and resources.

Recipients are also encouraged to consider ways to integrate affordability options into

their program design. To meet the immediate needs of unserved and underserved households

and businesses, recipients are encouraged to focus on projects that deliver a physical broadband

connection by prioritizing projects that achieve last mile-connections. Treasury also encourages

recipients to prioritize support for broadband networks owned, operated by, or affiliated with




Deployment Report, supra note 142.
Rural Digital Opportunity Fund, supra note 156.





Page 165
local governments, non-profits, and co-operatives—providers with less pressure to turn profits

and with a commitment to serving entire communities.

Under sections 602(c)(1)(A) and 603(c)(1)(A), assistance to households facing negative

economic impacts due to COVID-19 is also an eligible use, including internet access or digital

literacy assistance. As discussed above, in considering whether a potential use is eligible under

this category, a recipient must consider whether, and the extent to which, the household has

experienced a negative economic impact from the pandemic.

Question 22: What are the advantages and disadvantages of setting minimum

symmetrical download and upload speeds of 100 Mbps? What other minimum standards would

be appropriate and why?

Question 23: Would setting such a minimum be impractical for particular types of

projects? If so, where and on what basis should those projects be identified? How could such a

standard be set while also taking into account the practicality of using this standard in

particular types of projects? In addition to topography, geography, and financial factors, what

other constraints, if any, are relevant to considering whether an investment is impracticable?

Question 24: What are the advantages and disadvantages of setting a minimum level of

service at 100 Mbps download and 20 Mbps upload in projects where it is impracticable to set

minimum symmetrical download and upload speeds of 100 Mbps? What are the advantages and

disadvantages of setting a scalability requirement in these cases? What other minimum

standards would be appropriate and why?

Question 25: What are the advantages and disadvantages of focusing these investments

on those without access to a wireline connection that reliably delivers 25 Mbps download by

3 Mbps upload? Would another threshold be appropriate and why?





Page 166
Question 26: What are the advantages and disadvantages of setting any particular

threshold for identifying unserved or underserved areas, minimum speed standards or scalability

minimum? Are there other standards that should be set (e.g., latency)? If so, why and

how? How can such threshold, standards, or minimum be set in a way that balances the public’s

interest in making sure that reliable broadband services meeting the daily needs of all Americans

are available throughout the country with the providing recipients flexibility to meet the varied

needs of their communities?

III. Restrictions on Use

As discussed above, recipients have considerable flexibility to use Fiscal Recovery Funds

to address the diverse needs of their communities. To ensure that payments from the Fiscal

Recovery Funds are used for these congressionally permitted purposes, the ARPA includes two

provisions that further define the boundaries of the statute’s eligible uses. Section 602(c)(2)(A)

of the Act provides that States and territories may not “use the funds … to either directly or

indirectly offset a reduction in … net tax revenue … resulting from a change in law, regulation,

or administrative interpretation during the covered period that reduces any tax … or delays the

imposition of any tax or tax increase.” In addition, sections 602(c)(2)(B) and 603(c)(2) prohibit

any recipient, including cities, nonentitlement units of government, and counties, from using

Fiscal Recovery Funds for deposit into any pension fund. These restrictions support the use of

funds for the congressionally permitted purposes described in Section II of this Supplementary

Information by providing a backstop against the use of funds for purposes outside of the eligible

use categories.

These provisions give force to Congress’s clear intent that Fiscal Recovery Funds be

spent within the four eligible uses identified in the statute—(1) to respond to the public health





Page 167
emergency and its negative economic impacts, (2) to provide premium pay to essential workers,

(3) to provide government services to the extent of eligible governments’ revenue losses, and

(4) to make necessary water, sewer, and broadband infrastructure investments—and not

otherwise. These four eligible uses reflect Congress’s judgment that the Fiscal Recovery Funds

should be expended in particular ways that support recovery from the COVID-19 public health

emergency. The further restrictions reflect Congress’s judgment that tax cuts and pension

deposits do not fall within these eligible uses. The Interim Final Rule describes how Treasury

will identify when such uses have occurred and how it will recoup funds put toward these

impermissible uses and, as discussed in Section VIII of this Supplementary Information,

establishes a reporting framework for monitoring the use of Fiscal Recovery Funds for eligible

uses.

A. Deposit into Pension Funds

The statute provides that recipients may not use Fiscal Recovery Funds for “deposit into

any pension fund.” For the reasons discussed below, Treasury interprets “deposit” in this context

to refer to an extraordinary payment into a pension fund for the purpose of reducing an accrued,

unfunded liability. More specifically, the Interim Final Rule does not permit this assistance to be

used to make a payment into a pension fund if both:

1. the payment reduces a liability incurred prior to the start of the COVID-19 public health

emergency, and

2. the payment occurs outside the recipient’s regular timing for making such payments.

Under this interpretation, a “deposit” is distinct from a “payroll contribution,” which

occurs when employers make payments into pension funds on regular intervals, with

contribution amounts based on a pre-determined percentage of employees’ wages and salaries.





Page 168
As discussed above, eligible uses for premium pay and responding to the negative

economic impacts of the COVID-19 public health emergency include hiring and compensating

public sector employees. Interpreting the scope of “deposit” to exclude contributions that are

part of payroll contributions is more consistent with these eligible uses and would reduce

administrative burden for recipients. Accordingly, if an employee’s wages and salaries are an

eligible use of Fiscal Recovery Funds, recipients may treat the employee’s covered benefits as an

eligible use of Fiscal Recovery Funds. For purposes of the Fiscal Recovery Funds, covered

benefits include costs of all types of leave (vacation, family-related, sick, military, bereavement,

sabbatical, jury duty), employee insurance (health, life, dental, vision), retirement (pensions,

401(k)), unemployment benefit plans (Federal and State), workers’ compensation insurance, and

Federal Insurance Contributions Act taxes (which includes Social Security and Medicare taxes).

Treasury anticipates that this approach to employees’ covered benefits will be

comprehensive and, for employees whose wage and salary costs are eligible expenses, will allow

all covered benefits listed in the previous paragraph to be eligible under the Fiscal Recovery

Funds. Treasury expects that this will minimize the administrative burden on recipients by

treating all the specified covered benefit types as eligible expenses, for employees whose wage

and salary costs are eligible expenses.

Question 27: Beyond a “deposit” and a “payroll contribution,” are there other types of

payments into a pension fund that Treasury should consider?







Page 169
B. Offset a Reduction in Net Tax Revenue

For States and territories (recipient governments 160), section 602(c)(2)(A)—the offset

provision—prohibits the use of Fiscal Recovery Funds to directly or indirectly offset a reduction

in net tax revenue resulting from a change in law, regulation, or administrative interpretation 161

during the covered period. If a State or territory uses Fiscal Recovery Funds to offset a reduction

in net tax revenue, the ARPA provides that the State or territory must repay to the Treasury an

amount equal to the lesser of (i) the amount of the applicable reduction attributable to the

impermissible offset and (ii) the amount received by the State or territory under the ARPA. See

Section IV of this Supplementary Information. As discussed below Section IV of this

Supplementary Information, a State or territory that chooses to use Fiscal Recovery Funds to

offset a reduction in net tax revenue does not forfeit its entire allocation of Fiscal Recovery

Funds (unless it misused the full allocation to offset a reduction in net tax revenue) or any non-

ARPA funding received.

The Interim Final Rule implements these conditions by establishing a framework for

States and territories to determine the cost of changes in law, regulation, or interpretation that

reduce tax revenue and to identify and value the sources of funds that will offset—i.e., cover the

cost of—any reduction in net tax revenue resulting from such changes. A recipient government

would only be considered to have used Fiscal Recovery Funds to offset a reduction in net tax

revenue resulting from changes in law, regulation, or interpretation if, and to the extent that, the




In this sub-section, “recipient governments” refers only to States and territories. In other sections,
“recipient governments” refers more broadly to eligible governments receiving funding from the Fiscal
Recovery Funds.
For brevity, referred to as “changes in law, regulation, or interpretation” for the remainder of this
preamble.



Page 170
recipient government could not identify sufficient funds from sources other than the Fiscal

Recovery Funds to offset the reduction in net tax revenue. If sufficient funds from other sources

cannot be identified to cover the full cost of the reduction in net tax revenue resulting from

changes in law, regulation, or interpretation, the remaining amount not covered by these sources

will be considered to have been offset by Fiscal Recovery Funds, in contravention of the offset

provision. The Interim Final Rule recognizes three sources of funds that may offset a reduction

in net tax revenue other than Fiscal Recovery Funds—organic growth, increases in revenue (e.g.,

an increase in a tax rate), and certain cuts in spending.

In order to reduce burden, the Interim Final Rule’s approach also incorporates the types

of information and modeling already used by States and territories in their own fiscal and

budgeting processes. By incorporating existing budgeting processes and capabilities, States and

territories will be able to assess and evaluate the relationship of tax and budget decisions to uses

of the Fiscal Recovery Funds based on information they likely have or can obtain. This

approach ensures that recipient governments have the information they need to understand the

implications of their decisions regarding the use of the Fiscal Recovery Funds—and, in

particular, whether they are using the funds to directly or indirectly offset a reduction in net tax

revenue, making them potentially subject to recoupment.

Reporting on both the eligible uses and on a State’s or territory’s covered tax changes

that would reduce tax revenue will enable identification of, and recoupment for, use of Fiscal

Recovery Funds to directly offset reductions in tax revenue resulting from tax relief. Moreover,

this approach recognizes that, because money is fungible, even if Fiscal Recovery Funds are not

explicitly or directly used to cover the costs of changes that reduce net tax revenue, those funds

may be used in a manner inconsistent with the statute by indirectly being used to substitute for





Page 171
the State’s or territory’s funds that would otherwise have been needed to cover the costs of the

reduction. By focusing on the cost of changes that reduce net tax revenue—and how a recipient

government is offsetting those reductions in constructing its budget over the covered period—the

framework prevents efforts to use Fiscal Recovery Funds to indirectly offset reductions in net tax

revenue for which the recipient government has not identified other offsetting sources of

funding.

As discussed in greater detail below in this preamble, the framework set forth in the

Interim Final Rule establishes a step-by-step process for determining whether, and the extent to

which, Fiscal Recovery Funds have been used to offset a reduction in net tax revenue. Based on

information reported annually by the recipient government:

• First, each year, each recipient government will identify and value the changes in law,

regulation, or interpretation that would result in a reduction in net tax revenue, as it

would in the ordinary course of its budgeting process. The sum of these values in the

year for which the government is reporting is the amount it needs to “pay for” with

sources other than Fiscal Recovery Funds (total value of revenue reducing changes).

• Second, the Interim Final Rule recognizes that it may be difficult to predict how a change

would affect net tax revenue in future years and, accordingly, provides that if the total

value of the changes in the year for which the recipient government is reporting is below

a de minimis level, as discussed below, the recipient government need not identify any

sources of funding to pay for revenue reducing changes and will not be subject to

recoupment.

• Third, a recipient government will consider the amount of actual tax revenue recorded in

the year for which they are reporting. If the recipient government’s actual tax revenue is




Page 172
greater than the amount of tax revenue received by the recipient for the fiscal year ending

2019, adjusted annually for inflation, the recipient government will not be considered to

have violated the offset provision because there will not have been a reduction in net tax

revenue.

• Fourth, if the recipient government’s actual tax revenue is less than the amount of tax

revenue received by the recipient government for the fiscal year ending 2019, adjusted

annually for inflation, in the reporting year the recipient government will identify any

sources of funds that have been used to permissibly offset the total value of covered tax

changes other than Fiscal Recovery Funds. These are:

o State or territory tax changes that would increase any source of general fund

revenue, such as a change that would increase a tax rate; and

o Spending cuts in areas not being replaced by Fiscal Recovery Funds.

The recipient government will calculate the value of revenue reduction remaining after

applying these sources of offsetting funding to the total value of revenue reducing

changes—that, is, how much of the tax change has not been paid for. The recipient

government will then compare that value to the difference between the baseline and

actual tax revenue. A recipient government will not be required to repay to the Treasury

an amount that is greater than the recipient government’s actual tax revenue shortfall

relative to the baseline (i.e., fiscal year 2019 tax revenue adjusted for inflation). This

“revenue reduction cap,” together with Step 3, ensures that recipient governments can use

organic revenue growth to offset the cost of revenue reductions.







Page 173
• Finally, if there are any amounts that could be subject to recoupment, Treasury will

provide notice to the recipient government of such amounts. This process is discussed in

greater detail in Section IV of this Supplementary Information.

Together, these steps allow Treasury to identify the amount of reduction in net tax

revenue that both is attributable to covered changes and has been directly or indirectly offset

with Fiscal Recovery Funds. This process ensures Fiscal Recovery Funds are used in a manner

consistent with the statute’s defined eligible uses and the offset provision’s limitation on these

eligible uses, while avoiding undue interference with State and territory decisions regarding tax

and spending policies.

The Interim Final Rule also implements a process for recouping Fiscal Recovery Funds

that were used to offset reductions in net tax revenue, including the calculation of any amounts

that may be subject to recoupment, a process for a recipient government to respond to a notice of

recoupment, and clarification regarding amounts excluded from recoupment. See Section IV of

this Supplementary Information.

The Interim Final Rule includes several definitions that are applicable to the

implementation of the offset provision.

Covered change. The offset provision is triggered by a reduction in net tax revenue

resulting from “a change in law, regulation, or administrative interpretation.” A covered change

includes any final legislative or regulatory action, a new or changed administrative interpretation,

and the phase-in or taking effect of any statute or rule where the phase-in or taking effect was not

prescribed prior to the start of the covered period. Changed administrative interpretations would

not include corrections to replace prior inaccurate interpretations; such corrections would instead

be treated as changes implementing legislation enacted or regulations issued prior to the covered




Page 174
period; the operative change in those circumstances is the underlying legislation or regulation

that occurred prior to the covered period. Moreover, only the changes within the control of the

State or territory are considered covered changes. Covered changes do not include a change in

rate that is triggered automatically and based on statutory or regulatory criteria in effect prior to

the covered period. For example, a state law that sets its earned income tax credit (EITC) at a

fixed percentage of the Federal EITC will see its EITC payments automatically increase—and

thus its tax revenue reduced—because of the Federal government’s expansion of the EITC in the

ARPA. 162 This would not be considered a covered change. In addition, the offset provision

applies only to actions for which the change in policy occurs during the covered period; it

excludes regulations or other actions that implement a change or law substantively enacted prior

to March 3, 2021. Finally, Treasury has determined and previously announced that income tax

changes—even those made during the covered period—that simply conform with recent changes

in Federal law (including those to conform to recent changes in Federal taxation of

unemployment insurance benefits and taxation of loan forgiveness under the Paycheck

Protection Program) are permissible under the offset provision.

Baseline. For purposes of measuring a reduction in net tax revenue, the Interim Final

Rule measures actual changes in tax revenue relative to a revenue baseline (baseline). The

baseline will be calculated as fiscal year 2019 (FY 2019) tax revenue indexed for inflation in




See, e.g., Tax Policy Center, How do state earned income tax credits work?,
https://www.taxpolicycenter.org/briefing-book/how-do-state-earned-income-tax-credits-work/ (last
visited May 9, 2021).



Page 175
each year of the covered period, with inflation calculated using the Bureau of Economic

Analysis’s Implicit Price Deflator. 163

FY 2019 was chosen as the starting year for the baseline because it is the last full fiscal

year prior to the COVID-19 public health emergency. 164 This baseline year is consistent with the

approach directed by the ARPA in sections 602(c)(1)(C) and 603(c)(1)(C), which identify the

“most recent full fiscal year of the [State, territory, or Tribal government] prior to the

emergency” as the comparator for measuring revenue loss. U.S. gross domestic product is

projected to rebound to pre-pandemic levels in 2021, 165 suggesting that an FY 2019 pre-

pandemic baseline is a reasonable comparator for future revenue levels. The FY 2019 baseline

revenue will be adjusted annually for inflation to allow for direct comparison of actual tax

revenue in each year (reported in nominal terms) to baseline revenue in common units of

measurement; without inflation adjustment, each dollar of reported actual tax revenue would be

worth less than each dollar of baseline revenue expressed in 2019 terms.

Reporting year. The Interim Final Rule defines “reporting year” as a single year within

the covered period, aligned to the current fiscal year of the recipient government during the

covered period, for which a recipient government reports the value of covered changes and any

sources of offsetting revenue increases (“in-year” value), regardless of when those changes were

enacted. For the fiscal years ending in 2021 or 2025 (partial years), the term “reporting year”




U.S. Department of Commerce, Bureau of Economic Analysis, GDP Price Deflator,
https://www.bea.gov/data/prices-inflation/gdp-price-deflator (last visited May 9, 2021).
Using Fiscal Year 2019 is consistent with section 602 as Congress provided for using that baseline for
determining the impact of revenue loss affecting the provision of government services. See section
602(c)(1)(C).
Congressional Budget Office, An Overview of the Economic Outlook: 2021 to 2031 (February 1,

2021), available at https://www.cbo.gov/publication/56965.



Page 176
refers to the portion of the year falling within the covered period. For example, the reporting

year for a fiscal year beginning July 2020 and ending June 2021 would be from March 3, 2021 to

July 2021.

Tax revenue. The Interim Final Rule’s definition of “tax revenue” is based on the Census

Bureau’s definition of taxes, used for its Annual Survey of State Government Finances. 166 It

provides a consistent, well-established definition with which States and territories will be

familiar and is consistent with the approach taken in Section II.C of this Supplementary

Information describing the implementation of sections 602(c)(1)(C) and 603(c)(1)(C) of the Act,

regarding revenue loss. Consistent with the approach described in Section II.C of this

Supplementary Information, tax revenue does not include revenue taxed and collected by a

different unit of government (e.g., revenue from taxes levied by a local government and

transferred to a recipient government).

Framework. The Interim Final Rule provides a step-by-step framework, to be used in

each reporting year, to calculate whether the offset provision applies to a State’s or territory’s use

of Fiscal Recovery Funds:

(1) Covered changes that reduce tax revenue. For each reporting year, a recipient

government will identify and value covered changes that the recipient government predicts will

have the effect of reducing tax revenue in a given reporting year, similar to the way it would in

the ordinary course of its budgeting process. The value of these covered changes may be

reported based on estimated values produced by a budget model, incorporating reasonable

assumptions, that aligns with the recipient government’s existing approach for measuring the



U.S. Census Bureau, Annual Survey of State and Local Government Finances Glossary,
https://www.census.gov/programs-surveys/state/about/glossary.html (last visited Apr. 30, 2021).



Page 177
effects of fiscal policies, and that measures relative to a current law baseline. The covered

changes may also be reported based on actual values using a statistical methodology to isolate

the change in year-over-year revenue attributable to the covered change(s), relative to the current

law baseline prior to the change(s). Further, estimation approaches should not use dynamic

methodologies that incorporate the projected effects of macroeconomic growth because

macroeconomic growth is accounted for separately in the framework. Relative to these dynamic

scoring methodologies, scoring methodologies that do not incorporate projected effects of

macroeconomic growth rely on fewer assumptions and thus provide greater consistency among

States and territories. Dynamic scoring that incorporates macroeconomic growth may also

increase the likelihood of underestimation of the cost of a reduction in tax revenue.

In general and where possible, reporting should be produced by the agency of the

recipient government responsible for estimating the costs and effects of fiscal policy changes.

This approach offers recipient governments the flexibility to determine their reporting

methodology based on their existing budget scoring practices and capabilities. In addition, the

approach of using the projected value of changes in law that enact fiscal policies to estimate the

net effect of such policies is consistent with the way many States and territories already consider

tax changes. 167

(2) In excess of the de minimis. The recipient government will next calculate the total

value of all covered changes in the reporting year resulting in revenue reductions, identified in

Step 1. If the total value of the revenue reductions resulting from these changes is below the de



See, e.g., Megan Randall & Kim Rueben, Tax Policy Center, Sustainable Budgeting in the States:
Evidence on State Budget Institutions and Practices (Nov. 2017), available at
https://www.taxpolicycenter.org/sites/default/files/publication/149186/sustainable-budgeting-in-the-
states_1.pdf.



Page 178
minimis level, the recipient government will be deemed not to have any revenue-reducing

changes for the purpose of determining the recognized net reduction. If the total is above the de

minimis level, the recipient government must identify sources of in-year revenue to cover the full

costs of changes that reduce tax revenue.

The de minimis level is calculated as 1 percent of the reporting year’s baseline. Treasury

recognizes that, pursuant to their taxing authority, States and territories may make many small

changes to alter the composition of their tax revenues or implement other policies with marginal

effects on tax revenues. They may also make changes based on projected revenue effects that

turn out to differ from actual effects, unintentionally resulting in minor revenue changes that are

not fairly described as “resulting from” tax law changes. The de minimis level recognizes the

inherent challenges and uncertainties that recipient governments face, and thus allows relatively

small reductions in tax revenue without consequence. Treasury determined the 1 percent level

by assessing the historical effects of state-level tax policy changes in state EITCs implemented to

effect policy goals other than reducing net tax revenues. 168 The 1 percent de minimis level

reflects the historical reductions in revenue due to minor changes in state fiscal policies.

(3) Safe harbor. The recipient government will then compare the reporting year’s actual

tax revenue to the baseline. If actual tax revenue is greater than the baseline, Treasury will deem

the recipient government not to have any recognized net reduction for the reporting year, and

therefore to be in a safe harbor and outside the ambit of the offset provision. This approach is

consistent with the ARPA, which contemplates recoupment of Fiscal Recovery Funds only in the

event that such funds are used to offset a reduction in net tax revenue. If net tax revenue has not




Data provided by the Urban-Brookings Tax Policy Center for state-level EITC changes for 2004-2017.



Page 179
been reduced, this provision does not apply. In the event that actual tax revenue is above the

baseline, the organic revenue growth that has occurred, plus any other revenue-raising changes,

by definition must have been enough to offset the in-year costs of the covered changes.

(4) Consideration of other sources of funding. Next, the recipient government will

identify and calculate the total value of changes that could pay for revenue reduction due to

covered changes and sum these items. This amount can be used to pay for up to the total value

of revenue-reducing changes in the reporting year. These changes consist of two categories:

(a) Tax and other increases in revenue. The recipient government must identify and

consider covered changes in policy that the recipient government predicts will have the effect of

increasing general revenue in a given reporting year. As when identifying and valuing covered

changes that reduce tax revenue, the value of revenue-raising changes may be reported based on

estimated values produced by a budget model, incorporating reasonable assumptions, aligned

with the recipient government’s existing approach for measuring the effects of fiscal policies,

and measured relative to a current law baseline, or based on actual values using a statistical

methodology to isolate the change in year-over-year revenue attributable to the covered

change(s). Further, and as discussed above, estimation approaches should not use dynamic

scoring methodologies that incorporate the effects of macroeconomic growth because growth is

accounted for separately under the Interim Final Rule. In general and where possible, reporting

should be produced by the agency of the recipient government responsible for estimating the

costs and effects of fiscal policy changes. This approach offers recipient governments the

flexibility to determine their reporting methodology based on their existing budget scoring

practices and capabilities.







Page 180
(b) Covered spending cuts. A recipient government also may cut spending in certain

areas to pay for covered changes that reduce tax revenue, up to the amount of the recipient

government’s net reduction in total spending as described below. These changes must be

reductions in government outlays not in an area where the recipient government has spent Fiscal

Recovery Funds. To better align with existing reporting and accounting, the Interim Final Rule

considers the department, agency, or authority from which spending has been cut and whether

the recipient government has spent Fiscal Recovery Funds on that same department, agency, or

authority. This approach was selected to allow recipient governments to report how Fiscal

Recovery Funds have been spent using reporting units already incorporated into their budgeting

process. If they have not spent Fiscal Recovery Funds in a department, agency, or authority, the

full amount of the reduction in spending counts as a covered spending cut, up to the recipient

government’s net reduction in total spending. If they have, the Fiscal Recovery Funds generally

would be deemed to have replaced the amount of spending cut and only reductions in spending

above the amount of Fiscal Recovery Funds spent on the department, agency, or authority would

count.

To calculate the amount of spending cuts that are available to offset a reduction in tax

revenue, the recipient government must first consider whether there has been a reduction in total

net spending, excluding Fiscal Recovery Funds (net reduction in total spending). This approach

ensures that reported spending cuts actually create fiscal space, rather than simply offsetting

other spending increases. A net reduction in total spending is measured as the difference

between total spending in each reporting year, excluding Fiscal Recovery Funds spent, relative to

total spending for the recipient’s fiscal year ending in 2019, adjusted for inflation. Measuring

reductions in spending relative to 2019 reflects the fact that the fiscal space created by a





Page 181
spending cut persists so long as spending remains below its original level, even if it does not

decline further, relative to the same amount of revenue. Measuring spending cuts from year to

year would, by contrast, not recognize any available funds to offset revenue reductions unless

spending continued to decline, failing to reflect the actual availability of funds created by a

persistent change and limiting the discretion of States and territories. In general and where

possible, reporting should be produced by the agency of the recipient government responsible for

estimating the costs and effects of fiscal policy changes. Treasury chose this approach because

while many recipient governments may score budget legislation using projections, spending cuts

are readily observable using actual values.

This approach—allowing only spending reductions in areas where the recipient

government has not spent Fiscal Recovery Funds to be used as an offset for a reduction in net tax

revenue—aims to prevent recipient governments from using Fiscal Recovery Funds to supplant

State or territory funding in the eligible use areas, and then use those State or territory funds to

offset tax cuts. Such an approach helps ensure that Fiscal Recovery Funds are not used to

“indirectly” offset revenue reductions due to covered changes.

In order to help ensure recipient governments use Fiscal Recovery Funds in a manner

consistent with the prescribed eligible uses and do not use Fiscal Recovery Funds to indirectly

offset a reduction in net tax revenue resulting from a covered change, Treasury will monitor

changes in spending throughout the covered period. If, over the course of the covered period, a

spending cut is subsequently replaced with Fiscal Recovery Funds and used to indirectly offset a

reduction in net tax revenue resulting from a covered change, Treasury may consider such

change to be an evasion of the restrictions of the offset provision and seek recoupment of such

amounts.





Page 182
(5) Identification of amounts subject to recoupment. If a recipient government (i) reports

covered changes that reduce tax revenue (Step 1); (ii) to a degree greater than the de minimis

(Step 2); (iii) has experienced a reduction in net tax revenue (Step 3); and (iv) lacks sufficient

revenue from other, permissible sources to pay for the entirety of the reduction (Step 4), then the

recipient government will be considered to have used Fiscal Recovery Funds to offset a

reduction in net tax revenue, up to the amount that revenue has actually declined. That is, the

maximum value of reduction in revenue due to covered changes which a recipient government

must cover is capped at the difference between the baseline and actual tax revenue. 169 In the

event that the baseline is above actual tax revenue and the difference between them is less than

the sum of revenue reducing changes that are not paid for with other, permissible sources,

organic revenue growth has implicitly offset a portion of the reduction. For example, if a

recipient government reduces tax revenue by $1 billion, makes no other changes, and

experiences revenue growth driven by organic economic growth worth $500 million, it need only

pay for the remaining $500 million with sources other than Fiscal Recovery Funds. The revenue

reduction cap implements this approach for permitting organic revenue growth to cover the cost

of tax cuts.

Finally, as discussed further in Section IV of this Supplementary Information, a recipient

government may request reconsideration of any amounts identified as subject to recoupment

under this framework. This process ensures that all relevant facts and circumstances, including

information regarding planned spending cuts and budgeting assumptions, are considered prior to

a determination that an amount must be repaid. Amounts subject to recoupment are calculated



This cap is applied in section 35.8(c) of the Interim Final Rule, calculating the amount of funds used in
violation of the tax offset provision.



Page 183
on an annual basis; amounts recouped in one year cannot be returned if the State or territory

subsequently reports an increase in net tax revenue.

To facilitate the implementation of the framework above, and in addition to reporting

required on eligible uses, in each year of the reporting period, each State and territory will report

to Treasury the following items:

• Actual net tax revenue for the reporting year;

• Each revenue-reducing change made to date during the covered period and the in-year

value of each change;

• Each revenue-raising change made to date during the covered period and the in-year

value of each change;

• Each covered spending cut made to date during the covered period, the in-year value of

each cut, and documentation demonstrating that each spending cut is covered as

prescribed under the Interim Final Rule;

Treasury will provide additional guidance and instructions the reporting requirements at a later

date.

Question 28: Does the Interim Final Rule’s definition of tax revenue accord with existing

State and territorial practice and, if not, are there other definitions or elements Treasury should

consider? Discuss why or why not.

Question 29: The Interim Final Rule permits certain spending cuts to cover the costs of

reductions in tax revenue, including cuts in a department, agency, or authority in which the

recipient government is not using Fiscal Recovery Funds. How should Treasury and recipient

governments consider the scope of a department, agency, or authority for the use of funds to







Page 184
ensure spending cuts are not being substituted with Fiscal Recovery Funds while also avoiding

an overbroad definition of that captures spending that is, in fact, distinct?

Question 30: Discuss the budget scoring methodologies currently used by States and

territories. How should the Interim Final Rule take into consideration differences in

approaches? Please discuss the use of practices including but not limited to macrodynamic

scoring, microdynamic scoring, and length of budget windows.

Question 31: If a recipient government has a balanced budget requirement, how will that

requirement impact its use of Fiscal Recovery Funds and ability to implement this framework?

Question 32: To implement the framework described above, the Interim Final Rule

establishes certain reporting requirements. To what extent do recipient governments already

produce this information and on what timeline? Discuss ways that Treasury and recipient

governments may better rely on information already produced, while ensuring a consistent

application of the framework.

Question 33: Discuss States’ and territories’ ability to produce the figures and numbers

required for reporting under the Interim Final Rule. What additional reporting tools, such as a

standardized template, would facilitate States’ and territories’ ability to complete the reporting

required under the Interim Final Rule?

C. Other Restrictions on Use

Payments from the Fiscal Recovery Funds are also subject to pre-existing limitations

provided in other Federal statutes and regulations and may not be used as non-Federal match for

other Federal programs whose statute or regulations bar the use of Federal funds to meet







Page 185
matching requirements. For example, payments from the Fiscal Recovery Funds may not be

used to satisfy the State share of Medicaid. 170

As provided for in the award terms, payments from the Fiscal Recovery Funds as a

general matter will be subject to the provisions of the Uniform Administrative Requirements,

Cost Principles, and Audit Requirements for Federal Awards (2 CFR 200) (the Uniform

Guidance), including the cost principles and restrictions on general provisions for selected items

of cost.

D. Timeline for Use of Fiscal Recovery Funds

Section 602(c)(1) and section 603(c)(1) require that payments from the Fiscal Recovery

Funds be used only to cover costs incurred by the State, territory, Tribal government, or local

government by December 31, 2024. Similarly, the CARES Act provided that payments from the

CRF be used to cover costs incurred by December 31, 2021. 171 The definition of “incurred” does

not have a clear meaning. With respect to the CARES Act, on the understanding that the CRF

was intended to be used to meet relatively short-term needs, Treasury interpreted this

requirement to mean that, for a cost to be considered to have been incurred, performance of the

service or delivery of the goods acquired must occur by December 31, 2021. In contrast, the

ARPA, passed at a different stage of the COVID-19 public health emergency, was intended to

provide more general fiscal relief over a broader timeline. In addition, the ARPA expressly

permits the use of Fiscal Recovery Funds for improvements to water, sewer, and broadband

infrastructure, which entail a longer timeframe. In recognition of this, Treasury is interpreting



See 42 CFR 433.51 and 45 CFR 75.306.
Section 1001 of Division N of the Consolidated Appropriations Act, 2021 amended section 601(d)(3)
of the Act by extending the end of the covered period for CRF expenditures from December 30, 2020 to
December 31, 2021.



Page 186
the requirement in section 602 and section 603 that costs be incurred by December 31, 2024, to

require only that recipients have obligated the Fiscal Recovery Funds by such date. The Interim

Final Rule adopts a definition of “obligation” that is based on the definition used for purposes of

the Uniform Guidance, which will allow for uniform administration of this requirement and is a

definition with which most recipients will be familiar.

Payments from the Fiscal Recovery Funds are grants provided to recipients to mitigate

the fiscal effects of the COVID-19 public health emergency and to respond to the public health

emergency, consistent with the eligible uses enumerated in sections 602(c)(1) and 603(c)(1). 172

As such, these funds are intended to provide economic stimulus in areas still recovering from the

economic effects of the pandemic. In implementing and interpreting these provisions, including

what it means to “respond to” the COVID-19 public health emergency, Treasury takes into

consideration pre-pandemic facts and circumstances (e.g., average revenue growth prior to the

pandemic) as well as impact of the pandemic that predate the enactment of the ARPA (e.g.,

replenishing Unemployment Trust balances drawn during the pandemic). While assessing the

effects of the COVID-19 public health emergency necessarily takes into consideration the facts

and circumstances that predate the ARPA, use of Fiscal Recovery Funds is forward looking.

As discussed above, recipients are permitted to use payments from the Fiscal Recovery

Funds to respond to the public health emergency, to respond to workers performing essential

work by providing premium pay or providing grants to eligible employers, and to make

necessary investments in water, sewer, or broadband infrastructure, which all relate to

prospective uses. In addition, sections 602(c)(1)(C) and 603(c)(1)(C) permit recipients to use




§§ 602(a), 603(a), 602(c)(1) and 603(c)(1) of the Act.



Page 187
Fiscal Recovery Funds for the provision of government services. This clause provides that the

amount of funds that may be used for this purpose is measured by reference to the reduction in

revenue due to the public health emergency relative to revenues collected in the most recent full

fiscal year, but this reference does not relate to the period during which recipients may use the

funds, which instead refers to prospective uses, consistent with the other eligible uses.

Although as discussed above the eligible uses of payments from the Fiscal Recovery

Funds are all prospective in nature, Treasury considers the beginning of the covered period for

purposes of determining compliance with section 602(c)(2)(A) to be the relevant reference point

for this purpose. The Interim Final Rule thus permits funds to be used to cover costs incurred

beginning on March 3, 2021. This aligns the period for use of Fiscal Recovery Funds with the

period during which these funds may not be used to offset reductions in net tax revenue.

Permitting Fiscal Recovery Funds to be used to cover costs incurred beginning on this date will

also mean that recipients that began incurring costs in the anticipation of enactment of the ARPA

and in advance of the issuance of this rule and receipt of payment from the Fiscal Recovery

Funds would be able to cover them using these payments. 173

As set forth in the award terms, the period of performance will run until

December 31, 2026, which will provide recipients a reasonable amount of time to complete

projects funded with payments from the Fiscal Recovery Funds.




Given the nature of this program, recipients will not be permitted to use funds to cover pre-award
costs, i.e., those incurred prior to March 3, 2021.



Page 188
IV. Recoupment Process

Under the ARPA, failure to comply with the restrictions on use contained in

sections 602(c) and 603(c) of the Act may result in recoupment of funds. 174 The Interim Final

Rule implements these provisions by establishing a process for recoupment.

Identification and Notice of Violations. Failure to comply with the restrictions on use

will be identified based on reporting provided by the recipient. As discussed further in

Sections III.B and VIII of this Supplementary Information, Treasury will collect information

regarding eligible uses on a quarterly basis and on the tax offset provision on an annual basis.

Treasury also may consider other information in identifying a violation, such as information

provided by members of the public. If Treasury identifies a violation, it will provide written

notice to the recipient along with an explanation of such amounts.

Request for Reconsideration. Under the Interim Final Rule, a recipient may submit a

request for reconsideration of any amounts identified in the notice provided by Treasury. This

reconsideration process provides a recipient the opportunity to submit additional information it

believes supports its request in light of the notice of recoupment, including, for example,

additional information regarding the recipient’s use of Fiscal Recovery Funds or its tax revenues.

The process also provides the Secretary with an opportunity to consider all information relevant

to whether a violation has occurred, and if so, the appropriate amount for recoupment.

The Interim Final Rule also establishes requirements for the timing of a request for

reconsideration. Specifically, if a recipient wishes to request reconsideration of any amounts

identified in the notice, the recipient must submit a written request for reconsideration to the




§§ 602(e) and 603(e) of the Act.



Page 189
Secretary within 60 calendar days of receipt of such notice. The request must include an

explanation of why the recipient believes that the finding of a violation or recoupable amount

identified in the notice of recoupment should be reconsidered. To facilitate the Secretary’s

review of a recipient’s request for reconsideration, the request should identify all supporting

reasons for the request. Within 60 calendar days of receipt of the recipient’s request for

reconsideration, the recipient will be notified of the Secretary’s decision to affirm, withdraw, or

modify the notice of recoupment. Such notification will include an explanation of the decision,

including responses to the recipient’s supporting reasons and consideration of additional

information provided.

The process and timeline established by the Interim Final Rule are intended to provide

the recipient with an adequate opportunity to fully present any issues or arguments in response to

the notice of recoupment. 175 This process will allow the Secretary to respond to the issues and

considerations raised in the request for reconsideration taking into account the information and

arguments presented by the recipient along with any other relevant information.

Repayment. Finally, the Interim Final Rule provides that any amounts subject to

recoupment must be repaid within 120 calendar days of receipt of any final notice of recoupment

or, if the recipient has not requested reconsideration, within 120 calendar days of the initial

notice provided by the Secretary.

Question 34: Discuss the timeline for requesting reconsideration under the Interim Final

Rule. What, if any, challenges does this timeline present?




The Interim Final Rule also provides that Treasury may extend any deadlines.



Page 190
V. Payments in Tranches to Local Governments and Certain States

Section 603 of the Act provides that the Secretary will make payments to local

governments in two tranches, with the second tranche being paid twelve months after the first

payment. In addition, section 602(b)(6)(A)(ii) provides that the Secretary may withhold payment

of up to 50 percent of the amount allocated to each State and territory for a period of up to twelve

months from the date on which the State or territory provides its certification to the Secretary.

Any such withholding for a State or territory is required to be based on the unemployment rate in

the State or territory as of the date of the certification.

The Secretary has determined to provide in this Interim Final Rule for withholding of

50 percent of the amount of Fiscal Recovery Funds allocated to all States (and the District of

Columbia) other than those with an unemployment rate that is 2.0 percentage points or more

above its pre-pandemic (i.e., February 2020) level. The Secretary will refer to the latest

available monthly data from the Bureau of Labor Statistics as of the date the certification is

provided. Based on data available at the time of public release of this Interim Final Rule, this

threshold would result in a majority of States being paid in two tranches.

Splitting payments for the majority of States is consistent with the requirement in

section 603 of the Act to make payments from the Coronavirus Local Fiscal Recovery Fund to

local governments in two tranches. 176 Splitting payments to States into two tranches will help



With respect to Federal financial assistance more generally, States are subject to the requirements of
the Cash Management Improvement Act (CMIA), under which Federal funds are drawn upon only on an
as needed basis and States are required to remit interest on unused balances to Treasury. Given the
statutory requirement for Treasury to make payments to States within a certain period, these requirements
of the CMIA and Treasury’s implementing regulations at 31 CFR part 205 will not apply to payments
from the Fiscal Recovery Funds. Providing funding in two tranches to the majority of States reflects, to
the maximum extent permitted by section 602 of the Act, the general principles of Federal cash
management and stewardship of federal funding, yet will be much less restrictive than the usual
requirements to which States are subject.



Page 191
encourage recipients to adapt, as necessary, to new developments that could arise over the

coming twelve months, including potential changes to the nature of the public health emergency

and its negative economic impacts. While the U.S. economy has been recovering and adding

jobs in aggregate, there is still considerable uncertainty in the economic outlook and the

interaction between the pandemic and the economy. 177 For these reasons, Treasury believes it

will be appropriate for a majority of recipients to adapt their plans as the recovery evolves. For

example, a faster-than-expected economic recovery in 2021 could lead a recipient to dedicate

more Fiscal Recovery Funds to longer-term investments starting in 2022. In contrast, a slower-

than-expected economic recovery in 2021 could lead a recipient to use additional funds for near-

term stimulus in 2022.

At the same time, the statute contemplates the possibility that elevated unemployment in

certain States could justify a single payment. Elevated unemployment is indicative of a greater

need to assist unemployed workers and stimulate a faster economic recovery. For this reason,

the Interim Final Rule provides that States and territories with an increase in their unemployment

rate over a specified threshold may receive a single payment, with the expectation that a single

tranche will better enable these States and territories to take additional immediate action to aid

the unemployed and strengthen their economies.

Following the initial pandemic-related spike in unemployment in 2020, States’

unemployment rates have been trending back towards pre-pandemic levels. However, some

States’ labor markets are healing more slowly than others. Moreover, States varied widely in



The potential course of the virus, and its impact on the economy, has contributed to a heightened
degree of uncertainty relative to prior periods. See, e.g., Dave Altig et al., Economic uncertainty before
and during the COVID-19 pandemic, J. of Public Econ. (Nov. 2020), available at
https://www.sciencedirect.com/science/article/abs/pii/S0047272720301389



Page 192
their pre-pandemic levels of unemployment, and some States remain substantially further from

their pre-pandemic starting point. Consequently, Treasury is delineating States with significant

remaining elevation in the unemployment rate, based on the net difference to pre-pandemic

levels.

Treasury has established that significant remaining elevation in the unemployment rate is

a net change in the unemployment rate of 2.0 percentage points or more relative to pre-pandemic

levels. In the four previous recessions going back to the early 1980s, the national unemployment

rate rose by 3.6, 2.3, 2.0, and 5.0 percentage points, as measured from the start of the recession to

the eventual peak during or immediately following the recession. 178 Each of these increases can

therefore represent a recession’s impact on unemployment. To identify States with significant

remaining elevation in unemployment, Treasury took the lowest of these four increases,

2.0 percentage points, to indicate states where, despite improvement in the unemployment rate,

current labor market conditions are consistent still with a historical benchmark for a recession.

No U.S. territory will be subject to withholding of its payment from the Fiscal Recovery

Funds. For Puerto Rico, the Secretary has determined that the current level of the unemployment

rate (8.8 percent, as of March 2021 179) is sufficiently high such that Treasury should not

withhold any portion of its payment from the Fiscal Recovery Funds regardless of its change in




Includes the period during and immediately following recessions, as defined by the National Bureau of
Economic Research. National Bureau of Economic Research, US Business Cycle Expansions and
Contractions, https://www.nber.org/research/data/us-business-cycle-expansions-and-contractions (last
visited Apr. 27, 20201). Based on data from U.S. Bureau of Labor Statistics, Unemployment Rate
[UNRATE], retrieved from FRED, Federal Reserve Bank of St. Louis,
https://fred.stlouisfed.org/series/UNRATE (last visited Apr. 27, 2021).
U.S. Bureau of Labor Statistics, Economic News Release – Table 1. Civilian labor force and
unemployment by state and selected area, seasonally adjusted,
https://www.bls.gov/news.release/laus.t01.htm (last visited Apr. 30, 2021).



Page 193
unemployment rate relative to its pre-pandemic level. For U.S. territories that are not included in

the Bureau of Labor Statistics’ monthly unemployment rate data, the Secretary will not exercise

the authority to withhold amounts from the Fiscal Recovery Funds.

VI. Transfer

The statute authorizes State, territorial, and Tribal governments; counties; metropolitan

cities; and nonentitlement units of local government (counties, metropolitan cities, and

nonentitlement units of local government are collectively referred to as “local governments”) to

transfer amounts paid from the Fiscal Recovery Funds to a number of specified entities. By

permitting these transfers, Congress recognized the importance of providing flexibility to

governments seeking to achieve the greatest impact with their funds, including by working with

other levels or units of government or private entities to assist recipient governments in carrying

out their programs. This includes special-purpose districts that perform specific functions in the

community, such as fire, water, sewer, or mosquito abatement districts.

Specifically, under section 602(c)(3), a State, territory, or Tribal government may transfer

funds to a “private nonprofit organization . . . a Tribal organization . . . a public benefit

corporation involved in the transportation of passengers or cargo, or a special-purpose unit of

State or local government.” 180 Similarly, section 603(c)(3) authorizes a local government to

transfer funds to the same entities (other than Tribal organizations).

The Interim Final Rule clarifies that the lists of transferees in Sections 602(c)(3) and

603(c)(3) are not exclusive. The Interim Final Rule permits State, territorial, and Tribal

governments to transfer Fiscal Recovery Funds to other constituent units of government or




§ 602(c)(3) of the Act.



Page 194
private entities beyond those specified in the statute. Similarly, local governments are authorized

to transfer Fiscal Recovery Funds to other constituent units of government (e.g., a county is able

to transfer Fiscal Recovery Funds to a city, town, or school district within it) or to private

entities. This approach is intended to help provide funding to local governments with needs that

may exceed the allocation provided under the statutory formula.

State, local, territorial, and Tribal governments that receive a Federal award directly from

a Federal awarding agency, such as Treasury, are “recipients.” A transferee receiving a transfer

from a recipient under sections 602(c)(3) and 603(c)(3) will be a subrecipient. Subrecipients are

entities that receive a subaward from a recipient to carry out a program or project on behalf of

the recipient with the recipient’s Federal award funding. The recipient remains responsible for

monitoring and overseeing the subrecipient’s use of Fiscal Recovery Funds and other activities

related to the award to ensure that the subrecipient complies with the statutory and regulatory

requirements and the terms and conditions of the award. Recipients also remain responsible for

reporting to Treasury on their subrecipients’ use of payments from the Fiscal Recovery Funds for

the duration of the award.

Transfers under sections 602(c)(3) and 603(c)(3) must qualify as an eligible use of Fiscal

Recovery Funds by the transferor. Once Fiscal Recovery Funds are received, the transferee must

abide by the restrictions on use applicable to the transferor under the ARPA and other applicable

law and program guidance. For example, if a county transferred Fiscal Recovery Funds to a

town within its borders to respond to the COVID-19 public health emergency, the town would be

bound by the eligible use requirements applicable to the county in carrying out the county’s goal.

This also means that county A may not transfer Fiscal Recovery Funds to county B for use in







Page 195
county B because such a transfer would not, from the perspective of the transferor (county A), be

an eligible use in county A.

Section 603(c)(4) separately provides for transfers by a local government to its State or

territory. A transfer under section 603(c)(4) will not make the State a subrecipient of the local

government, and such Fiscal Recovery Funds may be used by the State for any purpose

permitted under section 602(c). A transfer under section 603(c)(4) will result in a cancellation or

termination of the award on the part of the transferor local government and a modification of the

award to the transferee State or territory. The transferor must provide notice of the transfer to

Treasury in a format specified by Treasury. If the local government does not provide such

notice, it will remain legally obligated to Treasury under the award and remain responsible for

ensuring that the awarded Fiscal Recovery Funds are being used in accordance with the statute

and program guidance and for reporting on such uses to Treasury. A State that receives a

transfer from a local government under section 603(c)(4) will be bound by all of the use

restrictions set forth in section 602(c) with respect to the use of those Fiscal Recovery Funds,

including the prohibitions on use of such Fiscal Recovery Funds to offset certain reductions in

taxes or to make deposits into pension funds.

Question 35: What are the advantages and disadvantages of treating the list of

transferees in sections 602(c)(3) and 603(c)(3) as nonexclusive, allowing States and localities to

transfer funds to entities outside of the list?

Question 36: Are there alternative ways of defining “special-purpose unit of State or

local government” and “public benefit corporation” that would better further the aims of the

Funds?







Page 196
VII. Nonentitlement Units of Government

The Fiscal Recovery Funds provides for $19.53 billion in payments to be made to States

and territories which will distribute the funds to nonentitlement units of local government

(NEUs); local governments which generally have populations below 50,000. These local

governments have not yet received direct fiscal relief from the Federal government during the

COVID-19 public health emergency, making Fiscal Recovery Funds payments an important

source of support for their public health and economic responses. Section 603 requires Treasury

to allocate and pay Fiscal Recovery Funds to the States and territories and requires the States and

territories to distribute Fiscal Recovery Funds to NEUs based on population within 30 days of

receipt unless an extension is granted by the Secretary. The Interim Final Rule clarifies certain

aspects regarding the distribution of Fiscal Recovery by States and territories to NEUs, as well as

requirements around timely payments from the Fiscal Recovery Funds.

The ARPA requires that States and territories allocate funding to NEUs in an amount that

bears the same proportion as the population of the NEU bears to the total population of all NEUs

in the State or territory, subject to a cap (described below). Because the statute requires States

and territories to make distributions based on population, States and territories may not place

additional conditions or requirements on distributions to NEUs, beyond those required by the

ARPA and Treasury’s implementing regulations and guidance. For example, a State may not

impose stricter limitations than permitted by statute or Treasury regulations or guidance on an

NEU’s use of Fiscal Recovery Funds based on the NEU’s proposed spending plan or other

policies. States and territories are also not permitted to offset any debt owed by the NEU against

the NEU’s distribution. Further, States and territories may not provide funding on a

reimbursement basis—e.g., requiring NEUs to pay for project costs up front before being





Page 197
reimbursed with Fiscal Recovery Funds payments—because this funding model would not

comport with the statutory requirement that States and territories make distributions to NEUs

within the statutory timeframe.

Similarly, States and territories distributing Fiscal Recovery Funds payments to NEUs are

responsible for complying with the Fiscal Recovery Funds statutory requirement that

distributions to NEUs not exceed 75 percent of the NEU’s most recent budget. The most recent

budget is defined as the NEU’s most recent annual total operating budget, including its general

fund and other funds, as of January 27, 2020. Amounts in excess of such cap and therefore not

distributed to the NEU must be returned to Treasury by the State or territory. States and

territories may rely for this determination on a certified top-line budget total from the NEU.

Under the Interim Final Rule, the total allocation and distribution to an NEU, including

the sum of both the first and second tranches of funding, cannot exceed the 75 percent cap.

States and territories must permit NEUs without formal budgets as of January 27, 2020 to self-

certify their most recent annual expenditures as of January 27, 2020 for the purpose of

calculating the cap. This approach will provide an administrable means to implement the cap for

small local governments that do not adopt a formal budget.

Section 603(b)(3) of the Social Security Act provides for Treasury to make payments to

counties but provides that, in the case of an amount to be paid to a county that is not a unit of

general local government, the amount shall instead be paid to the State in which such county is

located, and such State shall distribute such amount to each unit of general local government

within such county in an amount that bears the same proportion to the amount to be paid to such

county as the population of such units of general local government bears to the total population

of such county. As with NEUs, States may not place additional conditions or requirements on





Page 198
distributions to such units of general local government, beyond those required by the ARPA and

Treasury’s implementing regulations and guidance.

In the case of consolidated governments, section 603(b)(4) allows consolidated

governments (e.g., a city-county consolidated government) to receive payments under each

allocation based on the respective formulas. In the case of a consolidated government, Treasury

interprets the budget cap to apply to the consolidated government’s NEU allocation under

section 603(b)(2) but not to the consolidated government’s county allocation under

section 603(b)(3).

If necessary, States and territories may use the Fiscal Recovery Funds under

section 602(c)(1)(A) to fund expenses related to administering payments to NEUs and units of

general local government, as disbursing these funds itself is a response to the public health

emergency and its negative economic impacts. If a State or territory requires more time to

disburse Fiscal Recovery Funds to NEUs than the allotted 30 days, Treasury will grant

extensions of not more than 30 days for States and territories that submit a certification in writing

in accordance with section 603(b)(2)(C)(ii)(I). Additional extensions may be granted at the

discretion of the Secretary.

Question 37: What are alternative ways for States and territories to enforce the

75 percent cap while reducing the administrative burden on them?

Question 38: What criteria should Treasury consider in assessing requests for

extensions for further time to distribute NEU payments?

VIII. Reporting

States (defined to include the District of Columbia), territories, metropolitan cities,

counties, and Tribal governments will be required to submit one interim report and thereafter





Page 199
quarterly Project and Expenditure reports through the end of the award period on

December 31, 2026. The interim report will include a recipient’s expenditures by category at the

summary level from the date of award to July 31, 2021 and, for States and territories,

information related to distributions to nonentitlement units. Recipients must submit their interim

report to Treasury by August 31, 2021. Nonentitlement units of local government are not

required to submit an interim report.

The quarterly Project and Expenditure reports will include financial data, information on

contracts and subawards over $50,000, types of projects funded, and other information regarding

a recipient’s utilization of the award funds. The reports will include the same general data (e.g.,

on obligations, expenditures, contracts, grants, and sub-awards) as those submitted by recipients

of the CRF, with some modifications. Modifications will include updates to the expenditure

categories and the addition of data elements related to specific eligible uses, including some of

the reporting elements described in sections above. The initial quarterly Project and Expenditure

report will cover two calendar quarters from the date of award to September 30, 2021, and must

be submitted to Treasury by October 31, 2021. The subsequent quarterly reports will cover one

calendar quarter and must be submitted to Treasury within 30 days after the end of each calendar

quarter.

Nonentitlement units of local government will be required to submit annual Project and

Expenditure reports until the end of the award period on December 31, 2026. The initial annual

Project and Expenditure report for nonentitlement units of local government will cover activity

from the date of award to September 30, 2021 and must be submitted to Treasury by

October 31, 2021. The subsequent annual reports must be submitted to Treasury by October 31

each year.





Page 200
States, territories, metropolitan cities, and counties with a population that exceeds

250,000 residents will also be required to submit an annual Recovery Plan Performance report to

Treasury. The Recovery Plan Performance report will provide the public and Treasury

information on the projects that recipients are undertaking with program funding and how they

are planning to ensure project outcomes are achieved in an effective, efficient, and equitable

manner. Each jurisdiction will have some flexibility in terms of the form and content of the

Recovery Plan Performance report, as long as it includes the minimum information required by

Treasury. The Recovery Plan Performance report will include key performance indicators

identified by the recipient and some mandatory indicators identified by Treasury, as well as

programmatic data in specific eligible use categories and the specific reporting requirements

described in the sections above. The initial Recovery Plan Performance report will cover the

period from the date of award to July 31, 2021 and must be submitted to Treasury by

August 31, 2021. Thereafter, Recovery Plan Performance reports will cover a 12-month period,

and recipients will be required to submit the report to Treasury within 30 days after the end of

the 12-month period. The second Recovery Plan Performance report will cover the period from

July 1, 2021 to June 30, 2022, and must be submitted to Treasury by July 31, 2022. Each annual

Recovery Plan Performance report must be posted on the public-facing website of the recipient.

Local governments with fewer than 250,000 residents, Tribal governments, and nonentitlement

units of local government are not required to develop a Recovery Plan Performance report.

Treasury will provide additional guidance and instructions on the reporting requirements

outlined above for the Fiscal Recovery Funds at a later date.







Page 201
IX. Comments and Effective Date

This Interim Final Rule is being issued without advance notice and public comment to

allow for immediate implementation of this program. As discussed below, the requirements of

advance notice and public comment do not apply “to the extent that there is involved . . . a matter

relating to agency . . . grants.” 181 The Interim Final Rule implements statutory conditions on the

eligible uses of the Fiscal Recovery Funds grants, and addresses the payment of those funds, the

reporting on uses of funds, and potential consequences of ineligible uses. In addition and as

discussed below, the Administrative Procedure Act also provides an exception to ordinary

notice-and-comment procedures “when the agency for good cause finds (and incorporates the

finding and a brief statement of reasons therefor in the rules issued) that notice and public

procedure thereon are impracticable, unnecessary, or contrary to the public interest.” 182 This

good cause justification also supports waiver of the 60-day delayed effective date for major rules

under the Congressional Review Act at 5 U.S.C. 808(2). Although this Interim Final Rule is

effective immediately, comments are solicited from interested members of the public and from

recipient governments on all aspects of the Interim Final Rule.

These comments must be submitted on or before [INSERT DATE 60 DAYS AFTER DATE

OF PUBLICATION IN THE FEDERAL REGISTER].




5 U.S.C. 553(a)(2).
5 U.S.C. 553(b)(3)(B); see also 5 U.S.C. 553(d)(3) (creating an exception to the requirement of a 30-

day delay before the effective date of a rule “for good cause found and published with the rule”).



Page 202
X. Regulatory Analyses

Executive Orders 12866 and 13563

This Interim Final Rule is economically significant for the purposes of Executive

Orders 12866 and 13563. Treasury, however, is proceeding under the emergency provision at

Executive Order 12866 section 6(a)(3)(D) based on the need to act expeditiously to mitigate the

current economic conditions arising from the COVID-19 public health emergency. The rule has

been reviewed by the Office of Management and Budget (OMB) in accordance with Executive

Order 12866. This rule is necessary to implement the ARPA in order to provide economic relief

to State, local, and Tribal governments adversely impacted by the COVID-19 public health

emergency.

Under Executive Order 12866, OMB must determine whether this regulatory action is

“significant” and, therefore, subject to the requirements of the Executive Order and subject to

review by OMB. Section 3(f) of Executive Order 12866 defines a significant regulatory action

as an action likely to result in a rule that may:

(1) Have an annual effect on the economy of $100 million or more, or adversely affect a

sector of the economy; productivity; competition; jobs; the environment; public

health or safety; or State, local, or Tribal governments or communities in a material

way (also referred to as “economically significant” regulations);

(2) Create a serious inconsistency or otherwise interfere with an action taken or planned

by another agency;

(3) Materially alter the budgetary impacts of entitlements, grants, user fees, or loan

programs or the rights and obligations of recipients thereof; or







Page 203
(4) Raise novel legal or policy issues arising out of legal mandates, the President’s

priorities, or the principles stated in the Executive Order.

This regulatory action is an economically significant regulatory action subject to review by OMB

under section 3(f) of Executive Order 12866. Treasury has also reviewed these regulations under

Executive Order 13563, which supplements and explicitly reaffirms the principles, structures,

and definitions governing regulatory review established in Executive Order 12866. To the extent

permitted by law, section 1(b) of Executive Order 13563 requires that an agency:

(1) Propose or adopt regulations only upon a reasoned determination that their benefits

justify their costs (recognizing that some benefits and costs are difficult to quantify);

(2) Tailor its regulations to impose the least burden on society, consistent with obtaining

regulatory objectives taking into account, among other things, and to the extent

practicable, the costs of cumulative regulations;

(3) Select, in choosing among alternative regulatory approaches, those approaches that

maximize net benefits (including potential economic, environmental, public health

and safety, and other advantages; distributive impacts; and equity);

(4) To the extent feasible, specify performance objectives, rather than the behavior or

manner of compliance a regulated entity must adopt; and

(5) Identify and assess available alternatives to direct regulation, including providing

economic incentives—such as user fees or marketable permits—to encourage the

desired behavior, or providing information that enables the public to make choices.

Executive Order 13563 also requires an agency “to use the best available techniques to

quantify anticipated present and future benefits and costs as accurately as possible.” OMB’s

Office of Information and Regulatory Affairs (OIRA) has emphasized that these techniques may





Page 204
include “identifying changing future compliance costs that might result from technological

innovation or anticipated behavioral changes.”

Treasury has assessed the potential costs and benefits, both quantitative and qualitative,

of this regulatory action, and is issuing this Interim Final Rule only on a reasoned determination

that the benefits exceed the costs. In choosing among alternative regulatory approaches,

Treasury selected those approaches that would maximize net benefits. Based on the analysis that

follows and the reasons stated elsewhere in this document, Treasury believes that this Interim

Final Rule is consistent with the principles set forth in Executive Order 13563.

Treasury also has determined that this regulatory action does not unduly interfere with States,

territories, Tribal governments, and localities in the exercise of their governmental functions.

This Regulatory Impact Analysis discusses the need for regulatory action, the potential

benefits, and the potential costs.

Need for Regulatory Action. This Interim Final Rule implements the $350 billion Fiscal

Recovery Funds of the ARPA, which Congress passed to help States, territories, Tribal

governments, and localities respond to the ongoing COVID-19 public health emergency and its

economic impacts. As the agency charged with execution of these programs, Treasury has

concluded that this Interim Final Rule is needed to ensure that recipients of Fiscal Recovery

Funds fully understand the requirements and parameters of the program as set forth in the statute

and deploy funds in a manner that best reflects Congress’ mandate for targeted fiscal relief.

This Interim Final Rule is primarily a transfer rule: it transfers $350 billion in aid from the

Federal government to states, territories, Tribal governments, and localities, generating a

significant macroeconomic effect on the U.S. economy. In making this transfer, Treasury has

sought to implement the program in ways that maximize its potential benefits while minimizing





Page 205
its costs. It has done so by aiming to target relief in key areas according to the congressional

mandate; offering clarity to States, territories, Tribal governments, and localities while

maintaining their flexibility to respond to local needs; and limiting administrative burdens.

Analysis of Benefits. Relative to a pre-statutory baseline, the Fiscal Recovery Funds

provide a combined $350 billion to State, local, and Tribal governments for fiscal relief and

support for costs incurred responding to the COVID-19 pandemic. Treasury believes that this

transfer will generate substantial additional economic activity, although given the flexibility

accorded to recipients in the use of funds, it is not possible to precisely estimate the extent to

which this will occur and the timing with which it will occur. Economic research has

demonstrated that state fiscal relief is an efficient and effective way to mitigate declines in jobs

and output during an economic downturn. 183 Absent such fiscal relief, fiscal austerity among

State, local, and Tribal governments could exert a prolonged drag on the overall economic

recovery, as occurred following the 2007-09 recession. 184

This Interim Final Rule provides benefits across several areas by implementing the four

eligible funding uses, as defined in statute: strengthening the response to the COVID-19 public

health emergency and its economic impacts; easing fiscal pressure on State, local, and Tribal

governments that might otherwise lead to harmful cutbacks in employment or government




Gabriel Chodorow-Reich et al., Does State Fiscal Relief during Recessions Increase Employment?
Evidence from the American Recovery and Reinvestment Act, American Econ. J.: Econ. Policy, 4:3 118-
45 (Aug. 2012), available at https://www.aeaweb.org/articles?id=10.1257/pol.4.3.118
See, e.g., Fitzpatrick, Haughwout & Setren, Fiscal Drag from the State and Local Sector?, Liberty
Street Economics Blog, Federal Reserve Bank of New York (June 27, 2012),
https://www.libertystreeteconomics.newyorkfed.org/2012/06/fiscal-drag-from-the-state-and-local-
sector.html; Jiri Jonas, Great Recession and Fiscal Squeeze at U.S. Subnational Government Level, IMF
Working Paper 12/184, (July 2012), available at
https://www.imf.org/external/pubs/ft/wp/2012/wp12184.pdf; Gordon, supra note 9.



Page 206
services; providing premium pay to essential workers; and making necessary investments in

certain types of infrastructure. In implementing the ARPA, Treasury also sought to support

disadvantaged communities that have been disproportionately impacted by the pandemic. The

Fiscal Recovery Funds as implemented by the Interim Final Rule can be expected to channel

resources toward these uses in order to achieve substantial near-term economic and public health

benefits, as well as longer-term benefits arising from the allowable investments in water, sewer,

and broadband infrastructure and aid to families.

These benefits are achieved in the Interim Final Rule through a broadly flexible approach

that sets clear guidelines on eligible uses of Fiscal Recovery Funds and provides State, local, and

Tribal government officials discretion within those eligible uses to direct Fiscal Recovery Funds

to areas of greatest need within their jurisdiction. While preserving recipients’ overall flexibility,

the Interim Final Rule includes several provisions that implement statutory requirements and will

help support use of Fiscal Recovery Funds to achieve the intended benefits. The remainder of

this section clarifies how Treasury’s approach to key provisions in the Interim Final Rule will

contribute to greater realization of benefits from the program.

• Revenue Loss: Recipients will compute the extent of reduction in revenue by comparing

actual revenue to a counterfactual trend representing what could have plausibly been

expected to occur in the absence of the pandemic. The counterfactual trend begins with

the last full fiscal year prior to the public health emergency (as required by statute) and

projects forward with an annualized growth adjustment. Treasury’s decision to

incorporate a growth adjustment into the calculation of revenue loss ensures that the

formula more fully captures revenue shortfalls relative to recipients’ pre-pandemic

expectations. Moreover, recipients will have the opportunity to re-calculate revenue loss




Page 207
at several points throughout the program, recognizing that some recipients may

experience revenue effects with a lag. This option to re-calculate revenue loss on an

ongoing basis should result in more support for recipients to avoid harmful cutbacks in

future years. In calculating revenue loss, recipients will look at general revenue in the

aggregate, rather than on a source-by-source basis. Given that recipients may have

experienced offsetting changes in revenues across sources, Treasury’s approach provides

a more accurate representation of the effect of the pandemic on overall revenues.

• Premium Pay: Per the statute, recipients have broad latitude to designate critical

infrastructure sectors and make grants to third-party employers for the purpose of

providing premium pay or otherwise respond to essential workers. While the Interim

Final Rule generally preserves the flexibility in the statute, it does add a requirement that

recipients give written justification in the case that premium pay would increase a

worker’s annual pay above a certain threshold. To set this threshold, Treasury analyzed

data from the Bureau of Labor Statistics to determine a level that would not require

further justification for premium pay to the vast majority of essential workers, while

requiring higher scrutiny for provision of premium pay to higher-earners who, even

without premium pay, would likely have greater personal financial resources to cope with

the effects of the pandemic. Treasury believes the threshold in the Interim Final Rule

strikes the appropriate balance between preserving flexibility and helping encourage use

of these resources to help those in greatest need. The Interim Final Rule also requires

that eligible workers have regular in-person interactions or regular physical handling of

items that were also handled by others. This requirement will also help encourage use of







Page 208
financial resources for those who have endured the heightened risk of performing

essential work.

• Withholding of Payments to Recipients: Treasury believes that for the vast majority of

recipient entities, it will be appropriate to receive funds in two separate payments. As

discussed above, withholding of payments ensures that recipients can adapt spending

plans to evolving economic conditions and that at least some of the economic benefits

will be realized in 2022 or later. However, consistent with authorities granted to

Treasury in the statute, Treasury recognizes that a subset of States with significant

remaining elevation in the unemployment rate could face heightened additional near-term

needs to aid unemployed workers and stimulate the recovery. Therefore, for a subset of

State governments, Treasury will not withhold any funds from the first payment.

Treasury believes that this approach strikes the appropriate balance between the general

reasons to provide funds in two payments and the heightened additional near-term needs

in specific States. As discussed above, Treasury set a threshold based on historical

analysis of unemployment rates in recessions.

• Hiring Public Sector Employees: The Interim Final Rule states explicitly that recipients

may use funds to restore their workforces up to pre-pandemic levels. Treasury believes

that this statement is beneficial because it eliminates any uncertainty that could cause

delays or otherwise negatively impact restoring public sector workforces (which, at time

of publication, remain significantly below pre-pandemic levels).

Finally, the Interim Final Rule aims to promote and streamline the provision of assistance

to individuals and communities in greatest need, particularly communities that have been

historically disadvantaged and have experienced disproportionate impacts of the COVID-19




Page 209
crisis. Targeting relief is in line with Executive Order 13985 On Advancing Racial Equity and

Support for Underserved Communities Through the Federal Government, which laid out an

Administration-wide priority to support “equity for all, including people of color and others who

have been historically underserved, marginalized, and adversely affected by persistent poverty

and inequality.” 185 To this end, the Interim Final Rule enumerates a list of services that may be

provided using Fiscal Recovery Funds in low-income areas to address the disproportionate

impacts of the pandemic in these communities; establishes the characteristics of essential

workers eligible for premium pay and encouragement to serve workers based on financial need;

provides that recipients may use Fiscal Recovery Funds to restore (to pre-pandemic levels) state

and local workforces, where women and people of color are disproportionately represented; 186

and targets investments in broadband infrastructure to unserved and underserved areas.

Collectively, these provisions will promote use of resources to facilitate the provision of

assistance to individuals and communities with the greatest need.

Analysis of Costs. This regulatory action will generate administrative costs relative to a

pre-statutory baseline. This includes, chiefly, costs required to administer Fiscal Recovery

Funds, oversee subrecipients and beneficiaries, and file periodic reports with Treasury. It also

requires States to allocate Fiscal Recovery Funds to nonentitlement units, which are smaller units

of local government that are statutorily required to receive their funds through States.




Executive Order on Advancing Racial Equity and Support for Underserved Communities through the
Federal Government (Jan. 20, 2021), https://www.whitehouse.gov/briefing-room/presidential-
actions/2021/01/20/executive-order-advancing-racial-equity-and-support-for-underserved-communities-
through-the-federal-government/ (last visited May 9, 2021).

David Cooper, Mary Gable & Algernon Austin, Economic Policy Institute Briefing Paper, The Public-

Sector Jobs Crisis: Women and African Americans hit hardest by job losses in state and local
governments, https://www.epi.org/publication/bp339-public-sector-jobs-crisis (last visited May 9, 2021).



Page 210
Treasury expects that the administrative burden associated with this program will be

moderate for a grant program of its size. Treasury expects that most recipients receive direct or

indirect funding from Federal government programs and that many have familiarity with how to

administer and report on Federal funds or grant funding provided by other entities. In particular,

States, territories, and large localities will have received funds from the CRF and Treasury

expects them to rely heavily on established processes developed last year or through prior grant

funding, mitigating burden on these governments.

Treasury expects to provide technical assistance to defray the costs of administration of

Fiscal Recovery Funds to further mitigate burden. In making implementation choices, Treasury

has hosted numerous consultations with a diverse range of direct recipients—States, small cities,

counties, and Tribal governments —along with various communities across the United States,

including those that are underserved. Treasury lacks data to estimate the precise extent to which

this Interim Final Rule generates administrative burden for State, local, and Tribal governments,

but seeks comment to better estimate and account for these costs, as well as on ways to lessen

administrative burdens.

Executive Order 13132

Executive Order 13132 (entitled Federalism) prohibits an agency from publishing any rule that

has federalism implications if the rule either imposes substantial, direct compliance costs on

State, local, and Tribal governments, and is not required by statute, or preempts state law, unless

the agency meets the consultation and funding requirements of section 6 of the Executive Order.

This Interim Final Rule does not have federalism implications within the meaning of the

Executive Order and does not impose substantial, direct compliance costs on State, local, and

Tribal governments or preempt state law within the meaning of the Executive Order. The





Page 211
compliance costs are imposed on State, local, and Tribal governments by sections 602 and 603 of

the Social Security Act, as enacted by the ARPA. Notwithstanding the above, Treasury has

engaged in efforts to consult and work cooperatively with affected State, local, and Tribal

government officials and associations in the process of developing the Interim Final Rule.

Pursuant to the requirements set forth in section 8(a) of Executive Order 13132, Treasury

certifies that it has complied with the requirements of Executive Order 13132.

Administrative Procedure Act

The Administrative Procedure Act (APA), 5 U.S.C. 551 et seq., generally requires public

notice and an opportunity for comment before a rule becomes effective. However, the APA

provides that the requirements of 5 U.S.C. 553 do not apply “to the extent that there is involved .

. . a matter relating to agency . . . grants.” The Interim Final Rule implements statutory

conditions on the eligible uses of the Fiscal Recovery Funds grants, and addresses the payment

of those funds, the reporting on uses of funds, and potential consequences of ineligible uses. The

rule is thus “both clearly and directly related to a federal grant program.” National Wildlife

Federation v. Snow, 561 F.2d 227, 232 (D.C. Cir. 1976). The rule sets forth the “process

necessary to maintain state . . . eligibility for federal funds,” id., as well as the “method[s] by

which states can . . . qualify for federal aid,” and other “integral part[s] of the grant program,”

Center for Auto Safety v. Tiemann, 414 F. Supp. 215, 222 (D.D.C. 1976). As a result, the

requirements of 5 U.S.C. 553 do not apply.

The APA also provides an exception to ordinary notice-and-comment procedures “when

the agency for good cause finds (and incorporates the finding and a brief statement of reasons

therefor in the rules issued) that notice and public procedure thereon are impracticable,

unnecessary, or contrary to the public interest.” 5 U.S.C. 553(b)(3)(B); see also 5 U.S.C.





Page 212
553(d)(3) (creating an exception to the requirement of a 30-day delay before the effective date of

a rule “for good cause found and published with the rule”). Assuming 5 U.S.C. 553 applied,

Treasury would still have good cause under sections 553(b)(3)(B) and 553(d)(3) for not

undertaking section 553’s requirements. The ARPA is a law responding to a historic economic

and public health emergency; it is “extraordinary” legislation about which “both Congress and

the President articulated a profound sense of ‘urgency.’” Petry v. Block, 737 F.2d 1193, 1200

(D.C. Cir. 1984). Indeed, several provisions implemented by this Interim Final Rule (sections

602(c)(1)(A) and 603(c)(1)(A)) explicitly provide funds to “respond to the public health

emergency,” and the urgency is further exemplified by Congress’s command (in sections

602(b)(6)(B) and 603(b)(7)(A)) that, “[t]o the extent practicable,” funds must be provided to

Tribes and cities “not later than 60 days after the date of enactment.” See Philadelphia Citizens

in Action v. Schweiker, 669 F.2d 877, 884 (3d Cir. 1982) (finding good cause under

circumstances, including statutory time limits, where APA procedures would have been

“virtually impossible”). Finally, there is an urgent need for States to undertake the planning

necessary for sound fiscal policymaking, which requires an understanding of how funds provided

under the ARPA will augment and interact with existing budgetary resources and tax policies.

Treasury understands that many states require immediate rules on which they can rely, especially

in light of the fact that the ARPA “covered period” began on March 3, 2021. The statutory

urgency and practical necessity are good cause to forego the ordinary requirements of notice-

and-comment rulemaking.

Congressional Review Act

The Administrator of OIRA has determined that this is a major rule for purposes of Subtitle E of

the Small Business Regulatory Enforcement and Fairness Act of 1996 (also known as the





Page 213
Congressional Review Act or CRA) (5 U.S.C. 804(2) et seq.). Under the CRA, a major rule

takes effect 60 days after the rule is published in the Federal Register. 5 U.S.C. 801(a)(3).

Notwithstanding this requirement, the CRA allows agencies to dispense with the requirements of

section 801 when the agency for good cause finds that such procedure would be impracticable,

unnecessary, or contrary to the public interest and the rule shall take effect at such time as the

agency promulgating the rule determines. 5 U.S.C. 808(2). Pursuant to section 808(2), for the

reasons discussed above, Treasury for good cause finds that a 60-day delay to provide public

notice is impracticable and contrary to the public interest.

Paperwork Reduction Act

The information collections associated with State, territory, local, and Tribal government

applications materials necessary to receive Fiscal Recovery Funds (e.g., payment information

collection and acceptance of award terms) have been reviewed and approved by OMB pursuant

to the Paperwork Reduction Act (44 U.S.C. Chapter 35) (PRA) emergency processing

procedures and assigned control number 1505-0271. The information collections related to

ongoing reporting requirements, as discussed in this Interim Final Rule, will be submitted to

OMB for emergency processing in the near future. Under the PRA, an agency may not conduct

or sponsor and a respondent is not required to respond to, an information collection unless it

displays a valid OMB control number.

Estimates of hourly burden under this program are set forth in the table below. Burden

estimates below are preliminary.







Page 214
Cost to
# # Responses Hours Total
Total Respondent
Reporting Respondents Per per Burden
Responses ($48.80 per
(Estimated) Respondent response in Hours
hour*)
Recipient
.25 (15
Payment 5,050 1 5,050 1,262.5 $61,610
minutes)
Form
Acceptance
.25 (15
of Award 5,050 1 5,050 1,262.5 $61,610
minutes)
Terms
Title VI .50 (30
5,050 1 5,050 2,525 $123,220
Assurances minutes)
Quarterly
Project and 4 per year
5,050 20,200 25 505,000 $24,644,000
Expenditure after first year
Report
Annual
20,000-
Project and $14,640,000
40,000 300,000 –
Expenditure TBD 1 per year 15 -
(Estimate 600,000
Report from $29,280,000
only)
NEUs
Annual
Recovery
Plan 418 1 per year 418 100 41,800 $2,039,840
Performance
report
$41,570,280
55,768 - 851,850 -
Total 5,050 – TBD N/A 141 -
75,768 1,151,850
$56,210,280
* Bureau of Labor Statistics, U.S. Department of Labor, Occupational Outlook Handbook, Accountants
and Auditors, on the Internet at https://www.bls.gov/ooh/business-and-financial/accountants-and-
auditors.htm (visited March 28, 2020). Base wage of $33.89/hour increased by 44 percent to account for
fully loaded employer cost of employee compensation (benefits, etc.) for a fully loaded wage rate of
$48.80.


Periodic reporting is required by section 602(c) of Section VI of the Social Security Act

and under the Interim Final Rule.



Page 215
As discussed in Section VIII of this Supplementary Information, recipients of Fiscal

Recovery Funds will be required to submit one interim report and thereafter quarterly Project and

Expenditure reports until the end of the award period. Recipients must submit interim reports to

Treasury by August 31, 2021. The quarterly Project and Expenditure reports will include

financial data, information on contracts and subawards over $50,000, types of projects funded,

and other information regarding a recipient’s utilization of the award funds.

Nonentitlement unit recipients will be required to submit annual Project and Expenditure

reports until the end of the award period. The initial annual Project and Expenditure report for

Nonentitlement unit recipients must be submitted to Treasury by October 31, 2021. The

subsequent annual reports must be submitted to Treasury by October 31 each year.

States, territories, metropolitan cities, and counties with a population that exceeds 250,000

residents will also be required to submit an annual Recovery Plan Performance report to

Treasury. The Recovery Plan Performance report will include descriptions of the projects

funded and information on the performance indicators and objectives of the award. Each annual

Recovery Plan Performance report must be posted on the public-facing website of the recipient.

Treasury will provide additional guidance and instructions on the all the reporting requirements

outlined above for the Fiscal Recovery Funds program at a later date.

These and related periodic reporting requirements are under consideration and will be

submitted to OMB for approval under the PRA emergency provisions in the near future.

Treasury invites comments on all aspects of the reporting and recordkeeping requirements

including: (a) Whether the collection of information is necessary for the proper performance of

the functions of the agency, including whether the information has practical utility; (b) the

accuracy of the estimate of the burden of the collection of information; (c) ways to enhance the





Page 216
quality, utility, and clarity of the information to be collected; (d) ways to minimize the burden of

the collection of information; and (e) estimates of capital or start-up costs and costs of operation,

maintenance, and purchase of services to provide information. Comments should be sent by the

comment deadline to the www.regulations.gov docket with a copy to the Office of Information

and Regulatory Affairs, U.S. Office of Management and Budget, 725 17th Street NW,

Washington, DC 20503; or email to oira_submission@omb.eop.gov.

Regulatory Flexibility Analysis

The Regulatory Flexibility Act (RFA) generally requires that when an agency issues a proposed

rule, or a final rule pursuant to section 553(b) of the Administrative Procedure Act or another

law, the agency must prepare a regulatory flexibility analysis that meets the requirements of the

RFA and publish such analysis in the Federal Register. 5 U.S.C. 603, 604.

Rules that are exempt from notice and comment under the APA are also exempt from the

RFA requirements, including the requirement to conduct a regulatory flexibility analysis, when

among other things the agency for good cause finds that notice and public procedure are

impracticable, unnecessary, or contrary to the public interest. Since this rule is exempt from the

notice and comment requirements of the APA, Treasury is not required to conduct a regulatory

flexibility analysis.







Page 217
RULE TEXT

List of Subjects in 31 CFR Part 35

Executive compensation, State and Local Governments, Tribal Governments, Public health

emergency.

Title 31—Money and Finance: Treasury
Part 35 - PANDEMIC RELIEF PROGRAMS


1. The authority citation for Part 35 is revised to read as follows:
Authority: 42 U.S.C. 802(f); 42 U.S.C. 803(f); 31 U.S.C. 321; Consolidated Appropriations Act,
2021 (Pub. L. 116-260), Division N, Title V, Subtitle B; Community Development Banking and
Financial Institutions Act of 1994 (enacted as part of the Riegle Community and Regulatory
Improvement Act of 1994 (Pub. L. 103-325)), as amended (12 U.S.C. 4701 et seq.), Section
104A; Pub. L. 117-2.

2. Revise the part heading as shown above.

3. Add Subpart A to read as follows:

Subpart A— CORONAVIRUS STATE AND LOCAL FISCAL RECOVERY FUNDS


Sec.
35.1 Purpose.
35.2 Applicability.
35.3 Definitions.
35.4 Reservation of Authority, Reporting.
35.5 Use of Funds.
35.6 Eligible Uses.
35.7 Pensions.
35.8 Tax.
35.9. Compliance with Applicable Laws.
35.10. Recoupment.
35.11 Payments to States.
35.12. Distributions to Nonentitlement Units of Local Government and Units of General Local
Government.

Authority: 42 U.S.C. 802(f); 42 U.S.C. 803(f)






Page 218
§ 35.1 Purpose.

This part implements section 9901 of the American Rescue Plan Act (Subtitle M of Title

IX of Public Law 117-2), which amends Title VI of the Social Security Act (42 U.S.C. 801 et

seq.) by adding sections 602 and 603 to establish the Coronavirus State Fiscal Recovery Fund

and Coronavirus Local Fiscal Recovery Fund.

§ 35.2 Applicability.

This part applies to States, territories, Tribal governments, metropolitan cities,

nonentitlement units of local government, counties, and units of general local government that

accept a payment or transfer of funds made under section 602 or 603 of the Social Security Act.

§ 35.3 Definitions.

Baseline means tax revenue of the recipient for its fiscal year ending in 2019, adjusted for

inflation in each reporting year using the Bureau of Economic Analysis’s Implicit Price Deflator

for the gross domestic product of the United States.

County means a county, parish, or other equivalent county division (as defined by the

Census Bureau).

Covered benefits include, but are not limited to, the costs of all types of leave (vacation,

family-related, sick, military, bereavement, sabbatical, jury duty), employee insurance (health,

life, dental, vision), retirement (pensions, 401(k)), unemployment benefit plans (Federal and

State), workers’ compensation insurance, and Federal Insurance Contributions Act taxes (which

includes Social Security and Medicare taxes).

Covered change means a change in law, regulation, or administrative interpretation. A

change in law includes any final legislative or regulatory action, a new or changed administrative






Page 219
interpretation, and the phase-in or taking effect of any statute or rule if the phase-in or taking

effect was not prescribed prior to the start of the covered period.

Covered period means, with respect to a State, Territory, or Tribal government, the

period that:

(1) Begins on March 3, 2021; and

(2) Ends on the last day of the fiscal year of such State, Territory, or Tribal government

in which all funds received by the State, Territory, or Tribal government from a payment made

under section 602 or 603 of the Social Security Act have been expended or returned to, or

recovered by, the Secretary.

COVID-19 means the Coronavirus Disease 2019.

COVID-19 public health emergency means the period beginning on January 27, 2020 and

until the termination of the national emergency concerning the COVID-19 outbreak declared

pursuant to the National Emergencies Act (50 U.S.C. 1601 et. seq.).

Deposit means an extraordinary payment of an accrued, unfunded liability. The term

deposit does not refer to routine contributions made by an employer to pension funds as part of

the employer’s obligations related to payroll, such as either a pension contribution consisting of a

normal cost component related to current employees or a component addressing the amortization

of unfunded liabilities calculated by reference to the employer’s payroll costs.

Eligible employer means an employer of an eligible worker who performs essential work.

Eligible workers means workers needed to maintain continuity of operations of essential

critical infrastructure sectors, including health care; emergency response; sanitation, disinfection,

and cleaning work; maintenance work; grocery stores, restaurants, food production, and food

delivery; pharmacy; biomedical research; behavioral health work; medical testing and





Page 220
diagnostics; home- and community-based health care or assistance with activities of daily living;

family or child care; social services work; public health work; vital services to Tribes; any work

performed by an employee of a State, local, or Tribal government; educational work, school

nutrition work, and other work required to operate a school facility; laundry work; elections

work; solid waste or hazardous materials management, response, and cleanup work; work

requiring physical interaction with patients; dental care work; transportation and warehousing;

work at hotel and commercial lodging facilities that are used for COVID-19 mitigation and

containment; work in a mortuary; work in critical clinical research, development, and testing

necessary for COVID-19 response.

(1) With respect to a recipient that is a metropolitan city, nonentitlement unit of local

government, or county, workers in any additional sectors as each chief executive officer of such

recipient may designate as critical to protect the health and well-being of the residents of their

metropolitan city, nonentitlement unit of local government, or county; or

(2) With respect to a State, Territory, or Tribal government, workers in any additional

sectors as each Governor of a State or Territory, or each Tribal government, may designate as

critical to protect the health and well-being of the residents of their State, Territory, or Tribal

government.

Essential work means work that:

(1) Is not performed while teleworking from a residence; and

(2) Involves:

(i) Regular in-person interactions with patients, the public, or coworkers of the individual

that is performing the work; or







Page 221
(ii) Regular physical handling of items that were handled by, or are to be handled by

patients, the public, or coworkers of the individual that is performing the work.

Funds means, with respect to a recipient, amounts provided to the recipient pursuant to a

payment made under section 602(b) or 603(b) of the Social Security Act or transferred to the

recipient pursuant to section 603(c)(4) of the Social Security Act.

General revenue means money that is received from tax revenue, current charges, and

miscellaneous general revenue, excluding refunds and other correcting transactions, proceeds

from issuance of debt or the sale of investments, agency or private trust transactions, and

intergovernmental transfers from the Federal government, including transfers made pursuant to

section 9901 of the American Rescue Plan Act. General revenue does not include revenues from

utilities. Revenue from Tribal business enterprises must be included in general revenue.

Intergovernmental transfers means money received from other governments, including

grants and shared taxes.

Metropolitan city has the meaning given that term in section 102(a)(4) of the Housing

and Community Development Act of 1974 (42 U.S.C. 5302(a)(4)) and includes cities that

relinquish or defer their status as a metropolitan city for purposes of receiving allocations under

section 106 of such Act (42 U.S.C. 5306) for fiscal year 2021.

Net reduction in total spending is measured as the State or Territory’s total spending for a

given reporting year excluding its spending of funds, subtracted from its total spending for its

fiscal year ending in 2019, adjusted for inflation using the Bureau of Economic Analysis’s

Implicit Price Deflator for the gross domestic product of the United States.







Page 222
Nonentitlement unit of local government means a “city,” as that term is defined in

section 102(a)(5) of the Housing and Community Development Act of 1974

(42 U.S.C. 5302(a)(5)), that is not a metropolitan city.

Nonprofit means a nonprofit organization that is exempt from Federal income taxation

and that is described in section 501(c)(3) of the Internal Revenue Code.

Obligation means an order placed for property and services and entering into contracts,

subawards, and similar transactions that require payment.

Pension fund means a defined benefit plan and does not include a defined contribution

plan.

Premium pay means an amount of up to $13 per hour that is paid to an eligible worker, in

addition to wages or remuneration the eligible worker otherwise receives, for all work performed

by the eligible worker during the COVID-19 public health emergency. Such amount may not

exceed $25,000 with respect to any single eligible worker. Premium pay will be considered to be

in addition to wages or remuneration the eligible worker otherwise receives if, as measured on an

hourly rate, the premium pay is:

(1) With regard to work that the eligible worker previously performed, pay and

remuneration equal to the sum of all wages and remuneration previously received plus up to $13

per hour with no reduction, substitution, offset, or other diminishment of the eligible worker’s

previous, current, or prospective wages or remuneration; or

(2) With regard to work that the eligible worker continues to perform, pay of up to $13

that is in addition to the eligible worker’s regular rate of wages or remuneration, with no

reduction, substitution, offset, or other diminishment of the workers’ current and prospective

wages or remuneration.





Page 223
Qualified census tract has the same meaning given in 26 U.S.C. 42(d)(5)(B)(ii)(I).

Recipient means a State, Territory, Tribal government, metropolitan city, nonentitlement

unit of local government, county, or unit of general local government that receives a payment

made under section 602(b) or 603(b) of the Social Security Act or transfer pursuant to

section 603(c)(4) of the Social Security Act.

Reporting year means a single year or partial year within the covered period, aligned to

the current fiscal year of the State or Territory during the covered period.

Secretary means the Secretary of the Treasury.

State means each of the 50 States and the District of Columbia

Small business means a business concern or other organization that:

(1) Has no more than 500 employees, or if applicable, the size standard in number of

employees established by the Administrator of the Small Business Administration for the

industry in which the business concern or organization operates, and

(2) Is a small business concern as defined in section 3 of the Small Business Act

(15 U.S.C. 632).

Tax Revenue means revenue received from a compulsory contribution that is exacted by a

government for public purposes excluding refunds and corrections and, for purposes of § 35.8,

intergovernmental transfers. Tax revenue does not include payments for a special privilege

granted or service rendered, employee or employer assessments and contributions to finance

retirement and social insurance trust systems, or special assessments to pay for capital

improvements.

Territory means the Commonwealth of Puerto Rico, the United States Virgin Islands,

Guam, the Commonwealth of the Northern Mariana Islands, or American Samoa.





Page 224
Tribal enterprise means a business concern:

(1) That is wholly owned by one or more Tribal governments, or by a corporation that is

wholly owned by one or more Tribal governments; or

(2) That is owned in part by one or more Tribal governments, or by a corporation that is

wholly owned by one or more Tribal governments, if all other owners are either United States

citizens or small business concerns, as these terms are used and consistent with the definitions in

15 U.S.C. 657a(b)(2)(D).

Tribal government means the recognized governing body of any Indian or Alaska Native

tribe, band, nation, pueblo, village, community, component band, or component reservation,

individually identified (including parenthetically) in the list published on January 29, 2021,

pursuant to section 104 of the Federally Recognized Indian Tribe List Act of 1994

(25 U.S.C. 5131).

Unemployment rate means the U-3 unemployment rate provided by the Bureau of Labor

Statistics as part of the Local Area Unemployment Statistics program, measured as total

unemployment as a percentage of the civilian labor force.

Unemployment trust fund means an unemployment trust fund established under

section 904 of the Social Security Act (42 U.S.C. 1104).

Unit of general local government has the meaning given to that term in section 102(a)(1)

of the Housing and Community Development Act of 1974 (42 U.S.C. 5302(a)(1)).

Unserved and underserved households or businesses means one or more households or

businesses that are not currently served by a wireline connection that reliably delivers at least

25 Mbps download speed and 3 Mbps of upload speed.







Page 225
§ 35.4 Reservation of Authority, Reporting.

(a) Reservation of authority. Nothing in this part shall limit the authority of the Secretary

to take action to enforce conditions or violations of law, including actions necessary to prevent

evasions of this subpart.

(b) Extensions or accelerations of timing. The Secretary may extend or accelerate any

deadline or compliance date of this part, including reporting requirements that implement this

subpart, if the Secretary determines that such extension or acceleration is appropriate. In

determining whether an extension or acceleration is appropriate, the Secretary will consider the

period of time that would be extended or accelerated and how the modified timeline would

facilitate compliance with this subpart.

(c) Reporting and requests for other information. During the covered period, recipients

shall provide to the Secretary periodic reports providing detailed accounting of the uses of funds,

all modifications to a State or Territory’s tax revenue sources, and such other information as the

Secretary may require for the administration of this section. In addition to regular reporting

requirements, the Secretary may request other additional information as may be necessary or

appropriate, including as may be necessary to prevent evasions of the requirements of this

subpart. False statements or claims made to the Secretary may result in criminal, civil, or

administrative sanctions, including fines, imprisonment, civil damages and penalties, debarment

from participating in Federal awards or contracts, and/or any other remedy available by law.

§ 35.5 Use of funds.

(a) In General. A recipient may only use funds to cover costs incurred during the period

beginning March 3, 2021, and ending December 31, 2024, for one or more of the purposes

enumerated in sections 602(c)(1) and 603(c)(1) of the Social Security Act, as applicable,





Page 226
including those enumerated in section § 35.6 of this subpart, subject to the restrictions set forth in

sections 602(c)(2) and 603(c)(2) of the Social Security Act, as applicable.

(b) Costs incurred. A cost shall be considered to have been incurred for purposes of

paragraph (a) of this section if the recipient has incurred an obligation with respect to such cost

by December 31, 2024.

(c) Return of funds. A recipient must return any funds not obligated by

December 31, 2024, and any funds not expended to cover such obligations by

December 31, 2026.

§ 35.6 Eligible uses.

(a) In General. Subject to §§ 35.7 and 35.8 of this subpart, a recipient may use funds for

one or more of the purposes described in paragraphs (b)-(e) of this section

(b) Responding to the public health emergency or its negative economic impacts. A

recipient may use funds to respond to the public health emergency or its negative economic

impacts, including for one or more of the following purposes:

(1) COVID-19 response and prevention. Expenditures for the mitigation and prevention

of COVID-19, including:

(i) Expenses related to COVID-19 vaccination programs and sites, including staffing,

acquisition of equipment or supplies, facilities costs, and information technology or other

administrative expenses;

(ii) COVID–19-related expenses of public hospitals, clinics, and similar facilities;

(iii) COVID-19 related expenses in congregate living facilities, including skilled nursing

facilities, long-term care facilities, incarceration settings, homeless shelters, residential foster

care facilities, residential behavioral health treatment, and other group living facilities;





Page 227
(iv) Expenses of establishing temporary public medical facilities and other measures to

increase COVID-19 treatment capacity, including related construction costs and other capital

investments in public facilities to meet COVID-19-related operational needs;

(v) Expenses of establishing temporary public medical facilities and other measures to

increase COVID-19 treatment capacity, including related construction costs and other capital

investments in public facilities to meet COVID-19-related operational needs;

(vi) Costs of providing COVID-19 testing and monitoring, contact tracing, and

monitoring of case trends and genomic sequencing for variants;

(vii) Emergency medical response expenses, including emergency medical transportation,

related to COVID-19;

(viii) Expenses for establishing and operating public telemedicine capabilities for

COVID-19-related treatment;

(ix) Expenses for communication related to COVID-19 vaccination programs and

communication or enforcement by recipients of public health orders related to COVID-19;

(x) Expenses for acquisition and distribution of medical and protective supplies,

including sanitizing products and personal protective equipment;

(xi) Expenses for disinfection of public areas and other facilities in response to the

COVID-19 public health emergency;

(xii) Expenses for technical assistance to local authorities or other entities on mitigation

of COVID-19-related threats to public health and safety;

(xiii) Expenses for quarantining or isolation of individuals;

(xiv) Expenses of providing paid sick and paid family and medical leave to public

employees to enable compliance with COVID-19 public health precautions;





Page 228
(xv) Expenses for treatment of the long-term symptoms or effects of COVID-19,

including post-intensive care syndrome;

(xvi) Expenses for the improvement of ventilation systems in congregate settings, public

health facilities, or other public facilities;

(xvii) Expenses related to establishing or enhancing public health data systems; and

(xviii) Mental health treatment, substance misuse treatment, and other behavioral health

services.

(2) Public Health and Safety Staff. Payroll and covered benefit expenses for public

safety, public health, health care, human services, and similar employees to the extent that the

employee’s time is spent mitigating or responding to the COVID-19 public health emergency.

(3) Hiring State and Local Government Staff. Payroll, covered benefit, and other costs

associated with the recipient increasing the number of its employees up to the number of

employees that it employed on January 27, 2020.

(4) Assistance to Unemployed Workers. Assistance, including job training, for

individuals who want and are available for work, including those who have looked for work

sometime in the past 12 months or who are employed part time but who want and are available

for full-time work;

(5) Contributions to State Unemployment Insurance Trust Funds. Contributions to an

Unemployment Trust Fund up to the level required to restore the Unemployment Trust Fund to

its balance on January 27, 2020 or to pay back advances received under Title XII of the Social

Security Act (42 U.S.C. 1321) for the payment of benefits between January 27, 2020 and

[INSERT DATE OF PUBLICATION IN THE FEDERAL REGISTER];







Page 229
(6) Small Businesses. Assistance to small businesses, including loans, grants, in-kind

assistance, technical assistance or other services, that responds to the negative economic impacts

of the COVID-19 public health emergency;

(7) Nonprofits. Assistance to nonprofit organizations, including loans, grants, in-kind

assistance, technical assistance or other services, that responds to the negative economic impacts

of the COVID-19 public health emergency;

(8) Assistance to Households. Assistance programs, including cash assistance programs,

that respond to the COVID-19 public health emergency;

(9) Aid to Impacted Industries. Aid to tourism, travel, hospitality, and other impacted

industries that responds to the negative economic impacts of the COVID-19 public health

emergency;

(10) Expenses to Improve Efficacy of Public Health or Economic Relief Programs.

Administrative costs associated with the recipient’s COVID-19 public health emergency

assistance programs, including services responding to the COVID-19 public health emergency or

its negative economic impacts, that are not federally funded.

(11) Survivor’s Benefits. Benefits for the surviving family members of individuals who

have died from COVID-19, including cash assistance to widows, widowers, or dependents of

individuals who died of COVID-19;

(12) Disproportionately Impacted Populations and Communities. A program, service, or

other assistance that is provided in a Qualified Census Tract, that is provided to households and

populations living in a Qualified Census Tract, that is provided by a Tribal government, or that is

provided to other households, businesses, or populations disproportionately impacted by the

COVID-19 public health emergency, such as:





Page 230
(i) Programs or services that facilitate access to health and social services, including:

(A) Assistance accessing or applying for public benefits or services;

(B) Remediation of lead paint or other lead hazards; and

(C) Community violence intervention programs;

(ii) Programs or services that address housing insecurity, lack of affordable housing, or

homelessness, including:

(A) Supportive housing or other programs or services to improve access to stable,

affordable housing among individuals who are homeless;

(B) Development of affordable housing to increase supply of affordable and high-quality

living units; and

(C) Housing vouchers and assistance relocating to neighborhoods with higher levels of

economic opportunity and to reduce concentrated areas of low economic opportunity;

(iii) Programs or services that address or mitigate the impacts of the COVID-19 public

health emergency on education, including:

(A) New or expanded early learning services;

(B) Assistance to high-poverty school districts to advance equitable funding across

districts and geographies; and

(C) Educational and evidence-based services to address the academic, social, emotional,

and mental health needs of students;

(iv) Programs or services that address or mitigate the impacts of the COVID-19 public

health emergency on childhood health or welfare, including:

(A) New or expanded childcare;







Page 231
(B) Programs to provide home visits by health professionals, parent educators, and social

service professionals to individuals with young children to provide education and assistance for

economic support, health needs, or child development; and

(C) Services for child welfare-involved families and foster youth to provide support and

education on child development, positive parenting, coping skills, or recovery for mental health

and substance use.

(c) Providing Premium Pay to Eligible Workers. A recipient may use funds to provide

premium pay to eligible workers of the recipient who perform essential work or to provide grants

to eligible employers, provided that any premium pay or grants provided under this paragraph (c)

must respond to eligible workers performing essential work during the COVID-19 public health

emergency. A recipient uses premium pay or grants provided under this paragraph (c) to respond

to eligible workers performing essential work during the COVID-19 public health emergency if

it prioritizes low- and moderate-income persons. The recipient must provide, whether for

themselves or on behalf of a grantee, a written justification to the Secretary of how the premium

pay or grant provided under this paragraph (c) responds to eligible workers performing essential

work if the premium pay or grant would increase an eligible worker’s total wages and

remuneration above 150 percent of such eligible worker’s residing State’s average annual wage

for all occupations or their residing county’s average annual wage, whichever is higher.

(d) Providing Government Services. For the provision of government services to the

extent of a reduction in the recipient’s general revenue, calculated according to paragraphs (d)(1)

and (d)(2).







Page 232
(1) Frequency. A recipient must calculate the reduction in its general revenue using

information as-of December 31, 2020, December 31, 2021, December 31, 2022, and December

31, 2023 (each, a calculation date) and following each calculation date.

(2) Calculation. A reduction in a recipient’s general revenue equals:
𝑛𝑛
�- 𝑡𝑡 �
𝑀𝑀𝑀𝑀𝑀𝑀 {[𝐵𝐵𝑀𝑀𝐵𝐵𝐵𝐵 𝑌𝑌𝐵𝐵𝑀𝑀𝑌𝑌 𝑅𝑅𝐵𝐵𝑅𝑅𝐵𝐵𝑅𝑅𝑅𝑅𝐵𝐵 ∗ (1 + 𝐺𝐺𝑌𝑌𝐺𝐺𝐺𝐺𝐺𝐺ℎ 𝐴𝐴𝐴𝐴𝐴𝐴𝑅𝑅𝐵𝐵𝐺𝐺𝐴𝐴𝐵𝐵𝑅𝑅𝐺𝐺) 12 ] − 𝐴𝐴𝐴𝐴𝐺𝐺𝑅𝑅𝑀𝑀𝐴𝐴 𝐺𝐺𝐵𝐵𝑅𝑅𝐵𝐵𝑌𝑌𝑀𝑀𝐴𝐴 𝑅𝑅𝐵𝐵𝑅𝑅𝐵𝐵𝑅𝑅𝑅𝑅𝐵𝐵𝑡𝑡 ; 0}

Where:

(i) Base Year Revenue is the recipient’s general revenue for the most recent full fiscal

year prior to the COVD-19 public health emergency;

(ii) Growth Adjustment is equal to the greater of 4.1 percent (or 0.041) and the recipient’s

average annual revenue growth over the three full fiscal years prior to the COVID-19 public

health emergency.

(iii) n equals the number of months elapsed from the end of the base year to the

calculation date.

(iv) Actual General Revenue is a recipient’s actual general revenue collected during 12-

month period ending on each calculation date;

(v) Subscript t denotes the specific calculation date.

(e) To Make Necessary Investments in Infrastructure. A recipient may use funds to make

investments in:

(1) Clean Water State Revolving Fund and Drinking Water State Revolving Fund

investments. Projects or activities of the type that would be eligible under section 603(c) of the

Federal Water Pollution Control Act (33 U.S.C. 1383(c)) or section 1452 of the Safe Drinking

Water Act (42 U.S.C. 300j-12); or,







Page 233
(2) Broadband. Broadband infrastructure that is designed to provide service to unserved

or underserved households and businesses and that is designed to, upon completion:

(A) Reliably meet or exceed symmetrical 100 Mbps download speed and upload speeds;

or

(B) In cases where it is not practicable, because of the excessive cost of the project or

geography or topography of the area to be served by the project, to provide service meeting the

standards set forth in paragraph (e)(2)(A) of this section:

(i) Reliably meet or exceed 100 Mbps download speed and between at least 20 Mbps and

100 Mbps upload speed; and

(ii) Be scalable to a minimum of 100 Mbps download speed and 100 Mbps upload speed.

§ 35.7 Pensions.

A recipient may not use funds for deposit into any pension fund.

§ 35.8 Tax.

(a) Restriction. A State or Territory shall not use funds to either directly or indirectly

offset a reduction in the net tax revenue of the State or Territory resulting from a covered change

during the covered period.

(b) Violation. Treasury will consider a State or Territory to have used funds to offset a

reduction in net tax revenue if, during a reporting year:

(1) Covered Change. The State or Territory has made a covered change that, either based

on a reasonable statistical methodology to isolate the impact of the covered change in actual

revenue or based on projections that use reasonable assumptions and do not incorporate the

effects of macroeconomic growth to reduce or increase the projected impact of the covered







Page 234
change, the State or Territory assesses has had or predicts to have the effect of reducing tax

revenue relative to current law;

(2) Exceeds the De Minimis Threshold. The aggregate amount of the measured or

predicted reductions in tax revenue caused by covered changes identified under paragraph (b)(1)

of this section, in the aggregate, exceeds 1 percent of the State’s or Territory’s baseline;

(3) Reduction in Net Tax Revenue. The State or Territory reports a reduction in net tax

revenue, measured as the difference between actual tax revenue and the State’s or Territory’s

baseline, each measured as of the end of the reporting year; and

(4) Consideration of Other Changes. The aggregate amount of measured or predicted

reductions in tax revenue caused by covered changes is greater than the sum of the following, in

each case, as calculated for the reporting year:

(i) The aggregate amount of the expected increases in tax revenue caused by one or more

covered changes that, either based on a reasonable statistical methodology to isolate the impact

of the covered change in actual revenue or based on projections that use reasonable assumptions

and do not incorporate the effects of macroeconomic growth to reduce or increase the projected

impact of the covered change, the State or Territory assesses has had or predicts to have the

effect of increasing tax revenue; and

(ii) Reductions in spending, up to the amount of the State’s or Territory’s net reduction in

total spending, that are in:

(A) Departments, agencies, or authorities in which the State or Territory is not using

funds; and







Page 235
(B) Departments, agencies, or authorities in which the State or Territory is using funds, in

an amount equal to the value of the spending cuts in those departments, agencies, or authorities,

minus funds used.

(c) Amount and Revenue Reduction Cap. If a State or Territory is considered to be in

violation pursuant to paragraph (b) of this section, the amount used in violation of paragraph (a)

of this section is equal to the lesser of:

(1) The reduction in net tax revenue of the State or Territory for the reporting year,

measured as the difference between the State’s or Territory’s baseline and its actual tax revenue,

each measured as of the end of the reporting year; and,

(2) The aggregate amount of the reductions in tax revenues caused by covered changes

identified in paragraph (b)(1) of this section, minus the sum of the amounts in identified in

paragraphs (b)(4)(i)-(ii).

§ 35.9. Compliance with Applicable Laws.

A recipient must comply with all other applicable Federal statutes, regulations, and

executive orders, and a recipient shall provide for compliance with the American Rescue Plan

Act, this Subpart, and any interpretive guidance by other parties in any agreements it enters into

with other parties relating to these funds.

§ 35.10. Recoupment.

(a) Identification of Violations – (1) In general. Any amount used in violation of §§ 35.6

or 35.7 of this subpart may be identified at any time prior to December 31, 2026.

(2) Annual Reporting of Amounts of Violations. On an annual basis, a recipient that is a

State or Territory must calculate and report any amounts used in violation of § 35.8 of this

subpart.





Page 236
(b) Calculation of Amounts Subject to Recoupment – (1) In general. Except as provided

in paragraph (b)(2), Treasury will calculate any amounts subject to recoupment resulting from a

violation of §§ 35.6 or 35.7 of this subpart as the amounts used in violation of such restrictions.

(2) Violations of Section 35.8. Treasury will calculate any amounts subject to

recoupment resulting from a violation of § 35.8 of this subpart, equal to the lesser of:

(i) The amount set forth in § 35.8(c) of this subpart; and,

(ii) The amount of funds received by such recipient.

(c) Notice. If Treasury calculates an amount subject to recoupment under paragraph (b)

of this section, Treasury will provide the recipient a written notice of the amount subject to

recoupment along with an explanation of such amounts.

(d) Request for Reconsideration. Unless Treasury extends the time period, within 60

calendar days of receipt of a notice of recoupment provided under paragraph (c) of this section, a

recipient may submit a written request to Treasury requesting reconsideration of any amounts

subject to recoupment under paragraph (b) of this section. To request reconsideration of any

amounts subject to recoupment, a recipient must submit to Treasury a written request that

includes:

(i) An explanation of why the recipient believes all or some of the amount should not be

subject to recoupment; and

(ii) A discussion of supporting reasons, along with any additional information.

(e) Final Amount Subject to Recoupment. Unless Treasury extends the time period,

within 60 calendar days of receipt of the recipient’s request for reconsideration provided

pursuant to paragraph (d) of this section, the recipient will be notified of the Secretary’s decision

to affirm, withdraw, or modify the notice of recoupment. Such notification will include an





Page 237
explanation of the decision, including responses to the recipient’s supporting reasons and

consideration of additional information provided.

(f) Repayment of Funds. Unless Treasury extends the time period, a recipient shall repay

to the Secretary any amounts subject to recoupment in accordance with instructions provided by

Treasury:

(i) Within 120 calendar days of receipt of the notice of recoupment provided under

paragraph (c) of this section, in the case of a recipient that does not submit a request for

reconsideration in accordance with the requirements of paragraph (d) of this section, or

(ii) Within 120 calendar days of receipt of the Secretary’s decision under paragraph (e) of

this section, in the case of a recipient that submits a request for reconsideration in accordance

with the requirements of paragraph (d) of this section.

§ 35.11 Payments to States.

(a) In General. With respect to any State or Territory that has an unemployment rate as

of the date that it submits an initial certification for payment of funds pursuant to section

602(d)(1) of the Social Security Act that is less than two percentage points above its

unemployment rate in February 2020, the Secretary will withhold 50 percent of the amount of

funds allocated under section 602(b) of the Social Security Act to such State or territory until the

date that is twelve months from the date such initial certification is provided to the Secretary.

(b) Payment of Withheld Amount. In order to receive the amount withheld under

paragraph (a) of this section, the State or Territory must submit to the Secretary at least 30 days

prior to the date referenced in paragraph (a) the following information:







Page 238
(i) A certification, in the form provided by the Secretary, that such State or Territory

requires the payment to carry out the activities specified in section 602(c) of the Social Security

Act and will use the payment in compliance with section 602(c) of the Social Security Act; and,

(ii) Any reports required to be filed by that date pursuant to this part that have not yet

been filed.


§ 35.12. Distributions to Nonentitlement Units of Local Government and Units of General

Local Government.

(a) Nonentitlement Units of Local Government. Each State or Territory that receives a

payment from Treasury pursuant to section 603(b)(2)(B) of the Social Security Act shall

distribute the amount of the payment to nonentitlement units of government in such State or

Territory in accordance with the requirements set forth in section 603(b)(2)(C) of the Social

Security Act and without offsetting any debt owed by such nonentitlement units of local

governments against such payments.

(b) Budget Cap. A State or Territory may not make a payment to a nonentitlement unit of

local government pursuant to section 603(b)(2)(C) of the Social Security Act and paragraph (a)

of this section in excess of the amount equal to 75 percent of the most recent budget for the

nonentitlement unit of local government as of January 27, 2020. A State or Territory shall

permit a nonentitlement unit of local government without a formal budget as of

January 27, 2020, to provide a certification from an authorized officer of the nonentitlement unit

of local government of its most recent annual expenditures as of January 27, 2020, and a State or

Territory may rely on such certification for purposes of complying with this subsection.

(c) Units of General Local Government. Each State or Territory that receives a payment

from Treasury pursuant to section 603(b)(3)(B)(ii) of the Social Security Act, in the case of an



Page 239
amount to be paid to a county that is not a unit of general local government, shall distribute the

amount of the payment to units of general local government within such county in accordance

with the requirements set forth in section 603(b)(3)(B)(ii) of the Social Security Act and without

offsetting any debt owed by such units of general local government against such payments.

(d) Additional Conditions. A State or Territory may not place additional conditions or

requirements on distributions to nonentitlement units of local government or units of general

local government beyond those required by section 603 of the Social Security Act or this subpart.




Dated:



_____________________________________

[ ]







Page 240
ATTACHMENT C
Potential Program Summaries
Allocation 1: $198,000,000

A. Community Investment - $118,000,000
B. City Operations - $70,000,000
C. Contingency for Future Needs - $10,000,000

Community Investment $118,000,000

Phoenix Arts, Business, and Employee Assistance Programs $36,000,000

Tuition Assistance and Wraparound Support - $10,000,000
Create a customized training program to provide tuition assistance and wraparound services to
Phoenix residents to promote training and job placement in high-growth, in-demand industries
and occupations while addressing barriers to accessing training and employment. This program
currently exists with Maricopa Corporate College (MCOR) additional funds would allow the City
to expand its current partnership with MCOR and would allow time to conduct a procurement
leveraging WIOA funds for customized training for in-demand occupations.

Workforce Training Facility and Training Program - $9,000,000
Program would seek to leverage funding from IDA, PCDIC, Maricopa County and the Arizona
Community Foundation to purchase and rehabilitate the old Kmart Building. Arizona State
University, Maricopa Community Colleges and WestMec would take over all ongoing operations
and maintenance. Facility would be used to create workforce training programs.

Micro and Small Business Assistance Programs - $8,000,000
Based on lessons learned from the CRF program, CED recommends combining the micro and
small business programs into one program. This would allow for a more efficient and less
bureaucratic process. Awards would be either $3K, $5k or $10k and would be based on the
number of employees. Funding will also be used to provide assistance to business that have
been impacted by COVID-19 and light rail development. For these businesses award amounts
would be 50% higher due to the double impact of COVID and light rail construction.

Nonprofit Arts and Culture Stabilization Grants - $2,750,000
The Nonprofit Arts and Culture Stabilization Grants would provide two-years of funding to help
Phoenix’s nonprofit arts and culture organizations manage their operations, personnel, and
programming as they welcome back audiences, guests, and patrons to their services. This two-
year program awards recovery grants to eligible Phoenix-based arts and cultural nonprofit
organizations of all sizes who demonstrate intent, commitment, and strategies to sustain well
beyond the COVID-19 pandemic. Organizations must have been in operation prior to March 1,
2020.

Small Business Workforce Program - $2,000,000
Program would provide assistance to small businesses (less than 100 employees) in Phoenix.
Staff would market workforce connections to small businesses through special visits, marketing,
social media, chambers and others. Funds would be used to assist business owners with
training and hiring a new workforce and retraining their existing workforce.

Page 241
Creative Industries Recovery Fund - $1,250,000
The Creative Industries Recovery Fund would provide one-time recovery grants to Phoenix-
based venues, galleries, and other for-profit creative industries that have a primary focus on the
presentation or production of arts and culture. Due to capacity restraints with new reopening
guidelines, these entities have been equally shuttered during the health crisis. Grant funds could
be used for operational, personnel, and capital purchases to help these businesses flourish
post-pandemic and welcome back audiences, patrons, and visitors. Businesses must have been
in operation prior to March 1, 2020.

Artists to Work - $1,000,000
The Artists to Work program would enable the city to contract artists to develop temporary
projects, installations, and performances. These commissions would reactivate a wide range of
public spaces, including parks, trails, community centers, and neighborhood areas not usually
defined or programmed as cultural spaces. The events could range from outdoor community
performances of music, opera, theater, poetry, etc., to temporary outdoor
installations/exhibitions of sculptures, paintings, and other forms throughout the city.

Arts Career Advancement Grants - $1,000,000
The Arts Career Advancement Grant program aims to enable the creation and delivery of
creative works of artists of all disciplines or arts workers whose careers have been impacted by
the COVID-19 pandemic. Grants would help these micro-businesses and entrepreneurs have
funding to grow their artistic skills or business. Funding could go towards enrolling in
professional development workshops or engage consultants and coaches to build administrative
and business skills, develop promotional materials such as electronic media kits with high-
resolution images, or participate in an exhibit, festival, vendor showcase, or artist residency.

Arts and Culture Internship Program - $750,000
The Arts and Culture Internship Program is a two-year program that would allow nonprofit arts
and culture organizations and for-profit creative industries the opportunity to hire full-time interns
for twenty weeks. The internships provide undergraduate students with meaningful on-the-job
training and experience working in the cultural sector. The program ultimately strengthens
Phoenix’s workforce by providing access to high-quality opportunities for college students of all
backgrounds to gain experience, understanding, and transferable skills relevant to careers in
and out of the arts, the creative economy, and engagement in public life.

Personnel/Technical Assistance/Professional Development Programs - $250,000
This funding would allow the Office of Arts and Culture to reallocate a current vacant position or
hire a new position to coordinate and spread the word about the work. It also includes funds for
continued technical assistance and professional development in financial sustainability,
business practices, and reopening strategies.

Mitigation and Care for Vulnerable Populations $30,500,000

*Denotes programs related to the City’s Homelessness Strategy

Funds are intended to be used to provide resources needed to properly address the needs of
persons experiencing or facing homelessness during the public health emergency, persons
suffering from mental and/or behavioral health conditions, veterans and seniors. A few
examples of how funds may be used are listed below:

*Homelessness and Mental Health- $10,500,000
This funding provides City Council with the resources needed to address a variety of
opportunities including but not limited to mental and behavioral health, rehabilitation centers,
and homelessness. These funds could also be leveraged with funds from other units of local
government and the non-profit community to provide regional solutions to these issues.



Page 242
HVAC Upgrades - $6,000,000
Funds would be used to purchase and install filtration systems to provide enhanced air cleaning
in community centers. Eight of the Parks and Recreation department’s community centers also
serve as co-located sites for senior centers.

Edison Impact Hub - $5,000,000
Funding to retrofit the historic children’s hospital from a vacant, dilapidated building to a
community services center that will provide medical offices and other services to the community.

*US Vets and Veteran Relief - $4,500,000
Funds would provide relief for Veterans experiencing or at risk of homelessness during the
pandemic. Many of our vets are more vulnerable to COVID-19 due to living conditions, age, and
chronic health complications. Funding could also provide additional operational support needed
by the US Vets Organization to transition into the property purchased earlier this year with
COVID Relief Funds.

*Summer Heat Respite - $3,000,000
Create a heat respite/cooling center to provide a place of respite during the summer for
individuals experiencing homelessness. The center would be operated May through September
for 7 days a week, during the warmest times of the day (9am-7pm) and provide guests with a
place to socially distance due to COVID-19 and include meals, outreach and other supports.
Funding would be used for a temporary shelter, insurance, utilities, tables and chairs, security,
janitorial services, bio-waste removal services, IT services, meals, water, and staffing.

*Replace Existing Case Management System (CMS) - $1,500,000
The City continues to receive emergency assistance funding related to COVID-19. A new CMS
will allow for creation of a user interface portal and public-facing dashboard thus creating
transparency in how the funding is being used as well as provide applicants with an opportunity
to see their case/application status online.

Households and Residential Assistance $24,000,000

*Denotes programs related to the City’s Homelessness Strategy

*Utility & Rent/Mortgage Assistance - $15,000,000
A portion of these funds will be used to provide residents with City water, sewer and trash,
electric, internet/broadband, natural gas utility and rent/mortgage assistance. Funds are
intended to be used on residents who don’t qualify for the City’s more restrictive $51M
Emergency Rent Assistance Program (ERA). A portion of funds will also be used to provide
landlord incentives as part of the Emergency Housing Vouchers program.

*Household Financial Assistance Fund - $8,000,000
Funds would be used to provide financial assistance to help low-to-moderate income families
with children. The intent of this funding would be to ensure that parents have access to quality
childcare and nutrition. Resources could also be used to provide mini-grants to Phoenix
childcare facilities in low-to-moderate census tracks for technology upgrades that could include
classroom screens, web-cam access, digital sign in/out software, childcare management
software, and/or general WiFi upgrades. Funds could also be used to provide childcare options
for hospitality workers at the airport.

Bus Card Subsidy Program - $1,000,000
Funds would be used to provide subsidies and fare assistance to residents that rely on public
transportation.




Page 243
Youth Sports, Recreation, Education and After-School $15,500,000

Citywide Broadband Project and Partnership with Phoenix College - $5,000,000
Funds would be used to continue building out the community broadband network project that
was initially approved by City Council using the Coronavirus Relief Fund. The project is a
partnership between the City, Phoenix College and others.

Wi-Fi Connectivity for Community Centers and Public Housing Properties - $2,500,000
Funding to provide access to internet connectivity in community centers and public housing
properties in an attempt to bridge the digital divide that impact communities during pandemic.

StartupPHX @ Burton Barr - $1,400,000
Funds will be used to provide a broader range of services to the community by expanding the
Hive @ Central. The expansion would include the addition of two meeting rooms, a graphics
station, and technical assistance for small business owners. For programming, funds would be
used to contract with a vendor to provide the Business Roadmap and MAPA Para Us Negocio
series for teens and adults. The contracted vendor would be responsible for curriculum
development and facilitating all sessions in English and Spanish.

College Depot Assistance for Students - $1,000,000
Funds will be used to purchase laptops and hotspots to loan out to students who have struggled
with staying connected to school during the pandemic. The program would loan selected
students a laptop and hotspot for the summer to help level the playing field in education. High
school students with a district issued device need to turn in their laptops at the end of the school
year and will not regain access to them until the school year resumes in August. This program
will allow students to continue skill building, summer job hunting, and virtual programs
throughout the summer.

Library Bookmobile for Underserved Areas - $700,000
The library department has several pieces of land for future library branches located in fast
growing areas. Since a bond program is a few years away, we propose purchasing a large
bookmobile that could be used to provide service from library property at 67tth Avenue and
Lower Buckeye.

PHXWorks at Burton Barr and Ocotillo - $600,000
Funds will be used to purchase laptops and hotspots to leverage resources and provide extra
services for the community. The library will partner with CED to establish a Job Services Center
in Burton Barr Central Library and at Ocotillo Library. Workforce laptops and hotspots will be
available for customers to check out for a 3-week check out period.

Parks After-School Programs - $500,000
Funds could be used to add free, year-round recreational programs during the after-school
hours of 3 to 6 p.m. at eight community centers. The eight sites for in-person programs are
Eastlake Community Center, Maryvale Community Center, South Mountain Community Center,
Sunnyslope Community Center, University Recreation Center, Longview Recreation Center,
Washington Activity Center and Desert West Community Center. Funds would be used to pay
part-time staff and contracted instructors to deliver various types of programs such as dance,
art, music, fitness and cooking.

Youth Sports League Grants - $500,000
Funds could be used to offer financial assistance or stipends to at-risk, underserved and low-
income youth to participate in youth sports and recreational leagues.




Page 244
Early Literacy Tutoring Support - $300,000
The library would use funds to partner with ASU’s America Reads tutoring program to provide
1:1 reading tutoring to emerging readers in 1st through 4th grade who lost ground due to the
pandemic. Tutoring would be provided by ASU students and the library will provide Wi-Fi
provisioned tablet computers to facilitate virtual tutoring as needed.

Library Technology, Capital and Staff Support - $3,000,000
Funds would be used to cover the costs of various technological and capital enhancements
identified by library staff including but not limited to online catalog enhancements, tablets and
hotspots for lending and onsite use, outdoor signage upgrades and automated materials
handler replacement at Mesquite Library.

Phoenix Resilient Food System $9,000,000
Economic Development and Innovation - $3,400,000
This portion of the Phoenix Food Initiative includes the following programs:
• Feed Phoenix Program – This program is a continuation of the CRF funded Feed
Phoenix Program. Under this program, the Local First Arizona Foundation
delivered over 80,000 meals.
• Worker Cooperative Sustainable Food System Business Incubator – This
program will focus on developing worker cooperatives for sustainable food
business enterprises through a collaboration with the private sector.
• Agri-Food Technology Grants – This program will provide funding and incentives
to encourage food system entrepreneurs and innovative food businesses to
expand or locate in Phoenix.

Equity and Inclusion - $2,400,000
This portion of the Phoenix Food Initiative includes the following programs:
• LISC Phoenix Funds to Feed Phoenix – This program is a continuation of the
CRF funded program that provides funding for community and grassroots
organizations.
• Urban Agriculture Fellowship – Provide funding for a one-year fellowship for high
school and college age students with local food producers with 60% for Black,
Indigenous, and persons of color participants.
• Council District Food Action Plans or Initiatives – The program would focus on
districts with food deserts, high food insecurity and hunger rates to identify
whether a council specific food plan would be feasible and desired or whether
more specific projects or initiatives would be preferred.

Local Food Consumption/Production - $1,500,000
This portion of the Phoenix Food Initiative includes the following programs:
• Farmland Preservation – In partnership with nonprofits and land trusts, assist in
the purchase and preservation of up 100 acres of land for agriculture in Phoenix.
• Backyard Food Production Pilot – Provide grant funding to 100 residents located
in food deserts for backyard gardens and community gardens using aquaponics,
raised beds, and other water conservative growing methods.

Food Banks and Pantries Support - $1,300,000
This funding would be used to provide resources for local food banks and food pantries to
provide food and other resources for struggling families. Staff will ensure broad engagement
with small, medium and large foodbanks and pantries ensuring outreach and emphasis with
smaller community-based food banks and food pantries.




Page 245
Resilient Food System - $200,000
This portion of the Phoenix Food Initiative includes the following program:
• Resilient and Sustainable Agriculture Projects – Provide grant funding to farms
for advancing technologies and methods that address growing food in our
changing climate.

Outreach and Support Staff - $200,000
This funding would be used provide advertising and outreach efforts to ensure funding allocated
under this program is fully maximized. Funding would be used to sponsor community events,
stakeholder meetings, and to produce digital and print advertisements. Funding would also be
used to hire two full-time positions for the next two fiscal years. These positions will manage and
monitor all of the activities in the Phoenix Sustainable Food Initiative.

Better Health Outcomes and Community Testing - $3,000,000
Funds will be used to provide resources needed to ensure resident COVID-19 testing and
vaccination efforts remain available through the duration of the public health emergency. Funds
could also be used to purchase PPE and other public health related materials for the community
as needed.




Page 246
City Operations $70,000,000

Infrastructure, Technology and Capital Needs - $40,000,000
Funds are intended to be used to provide resources needed to address capital needs.
Examples include purchasing spare ambulance units so that Fire has enough units in service
while units are being decontaminated after a service call. During the Great Recession the City
was forced to close its central stores warehouse and as a result during the height of the
pandemic staff used the empty convention center to warehouse materials. As that space is no
longer available, funds may be used to lease, buy or construct a warehouse to store PPE and
critical inventory. Funds may also be used to address other technology and capital projects
within the federal guidelines which include the rehabilitation of the 27th Avenue Recycling
Facility, converting to electric vehicles, and implementation of an Asset Management and a
Time and Labor System.

Revenue Replacement - $25,000,000
Funds will be used to replace lost revenue at the Convention Center and the Rental Car Facility.
Since last year, the Convention Center and the Rental Car Facility have lost over $70,000,000
due to the impact COVID has had on their book of business. It is likely that these areas will be
among the slowest to recover and revenue will continue to be weak. Both operations have an
annual debt service payment and the rental car facility was recently downgraded due to the
uncertainty of the tourism industry and the impact that will have on its future. The General Fund
serves as the financial backstop for the Convention Center so replacing lost revenue with ARPA
funds significantly reduces risk to the General Fund. Additionally, ARPA allows the City to offset
costs for trust fund expenses that are directly tied to COVID-19 expenses. For example, the City
has seen over $2.4 million in worker’s compensation related claims due to COVID-19 and it is
the City’s opinion these claims can be replaced with ARPA funds and would reduce the actuarial
impact to future City resources.

Administrative Oversight, Compliance and Outreach Efforts - $3,000,000
Funds are intended to be used to provide staffing necessary to support federal compliance
efforts. Staffing additions will also assist with enhancing community outreach to improve service
delivery and to increase transparency on city progress for all approved programs via an
enhanced website.

PPE/Cleanings/Sanitizing/Testing and Vaccine Distribution - $2,000,000
Funds will be used to provide to ensure staff have access to necessary PPE, cleaning and
sanitizing materials. Funds will also be used to ensure that workstations and common areas are
appropriately cleaned. Additionally, funds will be used to offset any additional expense incurred
to ensure that all city staff, family members and contractors have access to both vaccines and
COVID testing.




Page 247
Contingency $10,000,000

Contingency for Future Needs
A Reserve is proposed to preserve resources in case the federal government changes guidance
to allow the funds to be used in new areas of concern for the council or to supplement funding
for an approved program that exhausts its allocation of funds before more funding becomes
available. The Reserve would also be available to cover other unexpected COVID-19 expenses
that could occur later in the year.



Revised On:
5/13/2021 4:40 PM




Page 248