Signed into law on March 11, 2021, The American Rescue Plan Act of 2021 (“ARPA”) provides $350 billion in additional funding for state and local governments. Please click here for GFOA’s analysis of ARPA. The state funding portion is approximately $195 billion with $25.5 billion distributed equally among the 50 states and the District of Columbia and the remaining amount distributed according to a formula based on unemployment. Show The local funding portion is approximately $130 billion, equally divided between cities and counties. Localities will receive the funds in two tranches–the first after the U.S. Treasury certifies the proceeds to each jurisdiction and the second one year later. For cities, $65 billion is divided between jurisdictions that are Community Development Block Grant (CDBG) entitlement jurisdictions and those that are not. $45.5 billion of the $65 billion will be allocated to metropolitan cities utilizing a modified CDBG formula, and the remaining amount for jurisdictions that are non-entitlement CDBG, will be allocated according to population. For the non-entitlement jurisdictions, the amount will not exceed seventy- five percent of their most recent budget as of January 27, 2020. Additionally, non-entitlement jurisdictions proceeds will be allocated through the state for redistribution to local governments. For counties, the $65 billion will be allocated based on the county’s population. Counties that are CDBG recipients will receive the larger of the population or CDBG-based formula. Eligible uses of these funds include:
Restrictions on the uses of these funds include:
Funding must be obligated by the end of calendar year 2024 and expended by the end of calendar year 2026. As with previous COVID-19 relief packages, implementation will be an extensive process as new or updated guidance and FAQs are developed and released by the U.S. Treasury. For example, the legislation requires each jurisdiction’s executive to “certify” that the funds will be used for eligible purposes. That process is currently under development by the U.S. Treasury. GFOA will provide regular updates as information becomes available. If you have specific questions or need clarification, GFOA has launched an online portal to gather member questions to help shape engagement and solicit answers from the Administration. For many jurisdictions, the funding provided under ARPA is substantial and could be transformational for states and local governments in their pandemic rescue and recovery efforts. Elected leaders will need to decide how to best use the additional funding consistent with the ARPA requirements, which are very broad. Finance officers play a critical role in advising elected leaders on the prudent spending of moneys received under ARPA. Finance officers are best positioned to help ensure the long-term value of investments and financial stability of its government using this one-time infusion of resources. When considering how to best advise elected officials and plan for the prudent use of ARPA funds, we offer the following outline of Guiding Principles for the use of ARPA funds: GFOA American Rescue Plan Act Guiding PrinciplesTemporary Nature of ARPA Funds. ARPA funds are non-recurring so their use should be applied primarily to non-recurring expenditures.
ARPA Scanning and Partnering Efforts. State and local jurisdictions should be aware of plans for ARPA funding throughout their communities.
Take Time and Careful Consideration. ARPA funds will be issued in two tranches to local governments. Throughout the years of outlays, and until the end of calendar year 2024, consider how the funds may be used to address rescue efforts and lead to recovery.
The influx of funds will undoubtedly benefit state and local finances, and aid in the recovery from the budgetary, economic, and financial impacts of the pandemic. Rating agencies will evaluate a government’s use of the ARPA funds in formulating its credit opinion and, importantly, will consider your government’s level of reserves and structural budget balance, or efforts to return to structural balance, as part of their credit analysis. Finance officers will play a critical role in highlighting the need to use ARPA funds prudently with an eye towards long-term financial stability and sustainable operating performance. The funding provided under ARPA provides a unique opportunity for state and local governments to make strategic investments in long-lived assets, rebuild reserves to enhance financial stability, and cover temporary operating shortfalls until economic conditions and operations normalize. Which official certifies that the Texas budget is balanced?The comptroller determines the amount of revenue before the start of every session, and then certifies the budget is balanced afterwards. The lieutenant governor assists the Senate in making sure the budget is proposed, re-written and finalized.
Who is responsible for the Texas budget?The Governor and the LBB have budget execution authority to manage the state's appropriations while the Legislature is not in session. Budget execution authority permits the state to reallocate existing appropriations for fiscal emergencies that occur between legislative sessions.
Is Texas a balanced budget state?The Texas Constitution requires that Texas operate under a balanced budget. The state may only spend as much as it estimates it will receive in revenue during any fiscal biennium.
Is the Texas state legislature responsible for passing a balanced budget?Texas and West Virginia, by comparison, require the legislature to pass a balanced budget, but they do not require the governor's initial proposal to be balanced.
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