What the American Rescue Plan Means for Local Governments

March 31st, 2021

The latest COVID-19 relief package –  The American Rescue Plan –  provides $1.9 trillion in mandatory funding, program changes, and tax policies aimed at mitigating the continuing effects of the pandemic.

New! Watch a webinar, presented by the PA State Association of Boroughs, to learn more about the American Rescue Plan. (Posted 3/31/21)

The bill provides $130.2 bill to local governments in the U.S. including:

  • $65.1 billion for counties;
  • $45.6 billion for entitlement communities; and
  • $19.5 billion for towns with fewer than 50,000 people.
Pennsylvania is slated to receive a total of $13.7 billion including:
  • $7.2 billion for state government;
  • $2.8 billion for counties;
  • $2.3 billion for entitlement communities;
  • $936 million for non-entitlement communities; and
  • $279 million for Coronavirus Capital Projects
Click here for more information on the estimated allocation distribution breakdown by state, county and municipality. Click here for the borough estimated allocation which will be distributed through the state in two payments 12 months apart.

Funds can be used for:

  • Responding to the COVID-19 emergency and address its economic effects, including through aid to households, small businesses, nonprofits, and industries such as tourism and hospitality.
  • Providing premium pay to essential employees or grants to their employers. Premium pay couldn’t exceed $13 per hour or $25,000 per worker.
  • Providing government services affected by a revenue reduction resulting from COVID-19.
  • Making investments in water, sewer, and broadband infrastructure.
State and local governments cannot use the funds towards pensions or to offset, directly or indirectly,  revenue from a tax cut enacted since March 3, 2021.
Direct payments will be made in two disbursements – 1st  within 60 days of enactment and the  2nd, one year later.
States have 30 days to distribute payments to smaller non-entitlement municipalities that do not
receive direct allocations from the federal government.
Payments to non-entitlement municipalities are capped at 75 percent of their most recent budget as of January 27, 2020.

A full summary of the bill is available here from the National Conference of State Legislatures.