The U.S. Treasury last week issued guidelines for state and local governments on how they can access their share of the $350 billion in COVID-19 aid for state, local, tribal, and territorial governments included in the American Rescue Plan Act (ARPA).

It was also announced the state of Wisconsin will receive $700 million less in ARPA funding than originally anticipated – from and an anticipated $3.2 billion to an actual $2.5 billion. In addition, the direct federal funding to the state will be split into two payments a year apart. The reduction in funding is due to improvements in the state’s unemployment rate, which has returned close to pre-pandemic levels.

Governor Tony Evers (D) who has full control over the allocation of the federal aid had planned to put $700 million toward the state’s ongoing response to the pandemic and $2.5 billion toward economic recovery. That will now need to be revisited with less funding coming into Wisconsin.

Evers, along with Wisconsin U.S. Senator Tammy Baldwin (D) has sent a letter to the Biden Administration asking Treasury to reconsider the split payment approach.

The newly released rules provide guidance on allowable uses of the federal relief funding. The federal government’s funding objectives for the relief aid includes:

• Support urgent COVID-19 response efforts to continue to decrease spread of the virus and bring the pandemic under control.
• Replace lost revenue for eligible state, local, territorial, and Tribal governments to strengthen support for vital public services and help retain jobs.
• Support immediate economic stabilization for households and businesses.
• Address systemic public health and economic challenges that have contributed to the inequal impact of the pandemic.

State and local governments may use these funds to:

• Support public health expenditures, by, for example, 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 and will bear the greatest health risks because of their service in critical infrastructure sectors.
• 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, recipients have broad flexibility to decide how best to use the funding to meet the needs of their communities.

For more information, please visit the U.S. Treasury website.