Initial guidance from the U.S. Treasury regulating uses of Local Fiscal Recovery Funds was the Interim Final Rule (IFR, which is no longer in effect) issued in summer 2021.

The IFR outlined four broad eligible expenditure categories, one of which was the Revenue Replacement category authorizing expenditures for the "provision of government services."

The IFR required a local government to use a detailed formula to calculate whether it experienced or will experience lost revenue growth over a 4-year period from '20 through '23.

In January 2022, U.S. Treasury issued the Final Rule, which is effective today and issued changes to how local governments can expend LFRF in the Revenue Replacement category.

The Final Rule added a new option called the Standard Allowance. This gives a local government the option to expend up to their full allotment of LFRF (up to a maximum of $10 million) in the Revenue Replacement category without having to demonstrate any actual lost revenue growth.

Though U.S. Treasury does not define "government services," wording in the 2022 SLFRF Compliance Supplement and Final Rule Overview indicates that this includes anything that a local government has state law authority to spend money on.

The UNC School of Government details its suggestions on what constitutes "government services," including general fund and enterprise fund expenditures, capital and operating expenditures, and even administrative expenditures, such as employee salaries and benefits.

U.S. Treasury's FAQs for these funds clarifies that only a subset of Uniform Guidance, 2 CFR 200, apply to expenditures of Revenue Replacement funds. This greatly reduces the administrative burden compared to having to comply with all Subparts of 2 CFR 200.

Any local government receiving less than $10 million in Local Fiscal Recovery Funds (almost all in the Piedmont Triad region) must submit an annual Project and Expenditure Report to Treasury by April 30. The next such report is due April 30, 2023.

U.S. Treasury has Compliance and Reporting Guidance and other resources helpful for reporting.

The Piedmont Triad Regional Council is a resource for all things ARPA and LFRF. Contact Adam Shull, Assistant Director of Regional Planning, at ashull@ptrc.org or call 336-904-0300.