Federal COVID Relief Coming to Cities

Congress cleared on Wednesday the American Rescue Plan and President Joe Biden signed the measure on Thursday, fulfilling a key presidential campaign promise with party-line votes in each chamber. Major provisions of the $1.9 trillion package include additional stimulus payments, expanded tax credits, increased unemployment payments, additional funding for testing, and state and local government funding.

Kentucky cities may receive $850 million or more in federal assistance to recover from and respond to the COVID-19 public health emergency. Community Development Block Grant (CDBG) entitlement communities – Ashland, Bowling Green, Covington, Elizabethtown, Henderson, Hopkinsville, Lexington, Louisville and Owensboro – will receive funding directly from the U.S. Department of the Treasury. All other cities will go through Kentucky’s Department for Local Government (DLG).

Cities will receive half of their allocation this spring, with the other half coming at least a year later. Treasury must disburse funds to states within 60 days of enactment, and states must pass through local portions within 30 days of receiving the funds. Treasury and DLG will determine regulations and/or certification requirements in the coming weeks.

Go here to view preliminary, unofficial allocations by Kentucky city. Please note that these amounts continue to fluctuate and will likely change when Treasury sets the official allocations.

The American Rescue Plan states that cities shall only use the funds to cover costs incurred by December 31, 2024:

  1. To respond to the public health emergency of COVID-19 or its negative economic impacts, including assistance to households, small businesses and nonprofits, or aid to impacted industries such as tourism, travel and hospitality;
  2. To provide premium pay of up to $13 per hour to essential workers – those needed to maintain continuity of operations of essential critical infrastructure or other sectors determined by the governor – during the public health emergency or provide grants to eligible employers. This is in addition to wages the worker otherwise receives and may not exceed $25,000 for any eligible worker;
  3. For the provision of government services to the extent of the reduction in city revenue due to the COVID-19 public health emergency relative to revenues collected in the city’s most recent full fiscal year prior to the emergency (FY 2019); or
  4. To make necessary investments in water, sewer or broadband infrastructure.

In the coming weeks, Treasury officials will release guidance on how to use the funds based on these provisions. Unlike the Coronavirus Aid, Relief and Economic Security (CARES) Act, the American Rescue Plan will allow cities to use relief funds to replace lost revenue.