The American Rescue Plan Act of 2021 signed into law by President Biden on March 11 includes a number of provisions of importance to public power utilities including an additional $4.5 billion in funding for the Low Income Home Energy Assistance Program (LIHEAP).
Overall, the act provides roughly $1.9 trillion in direct aid to individuals, state and local governments, and businesses.
Emergency rental assistance
An additional $21.55 billion will be added to the $25 billion appropriated for the Emergency Rental Assistance Program created under the Consolidated Appropriations Ac of 2021. Under this program, states, counties, and cities can establish programs to help renting households with rent and utility payments.
Eligibility requirements for the additional funding are the same as for the original bill. As such, grantees must prioritize households below 50 percent of the area median income, or where one or more members of the household has been unemployed for 90 days or longer. Grantees have flexibility to devise additional eligibility criteria. However, of that $21.55 billion, $2.5 billion is allocated for high-need grantees.
An “eligible household” is defined as a renter household that meets the following criteria:
- Qualifies for unemployment or has experienced a reduction in household income, incurred significant costs, or experienced a financial hardship related to COVID-19;
- Demonstrates a risk of experiencing homelessness or housing instability; and
- Has a household income at or below 80 percent of the area median.
In determining a household’s income for purposes of this provision, grantees should consider either the household’s total income for calendar year 2020 or the household’s monthly income at the time of application for assistance. For household incomes determined using the latter method, grantees must re-determine income eligibility every three months. A household receiving other forms of federal housing assistance are not eligible to receive assistance under this section of the act.
Initial funding for this program was released by the Treasury Department in January but is on hold pending further guidance from Treasury. The initial $25 billion allocation is available through December 31, 2021. ARP funds are available through September 30, 2027.
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Homeowner Assistance Fund
The bill will allocate $9.961 billion to create a new Homeowners Assistance Fund. These funds can be used to help homeowners with mortgage payments and utility bills.
Funds will be allocated to states based on unemployment and the total number or mortgagors with mortgage payments that are more than 30 days past due, or mortgages in foreclosure.
Eligibility requirements for the program are different than for LIHEAP or the Emergency Rental Assistance Program.
Specifically, at least 60 percent of funding must go to homeowners having incomes equal to or less than 100 percent of the area median income for their household size or equal to or less than 100 percent of the median income for the United States. Relief is limited to owner-occupied households and each state will determine how much can go towards utility bills.
Funds will be administered by the Treasury Department and are available for use through September 30, 2025.
Extension of emergency unemployment relief
This section extends a Coronavirus Aid, Relief, and Economic Security Act provision that provides a 50 percent subsidy for costs incurred by governmental employers who provide unemployment benefits on a reimbursable basis, rather than via tax contributions. It also increases the subsidy to 75 percent beginning after March 31. The subsidy will remain available through September 6, 2021 at the 75 percent rate.
Payroll credits
In addition, the new law provides an extension and expansion of the paid sick and emergency family leave tax credits created in the Families First Coronavirus Response Act of 2020.
Because the requirement to provide such leave has expired, the bill is providing payroll tax credits for employers who voluntarily provide paid leave through the end of September 2021.
It also expands eligibility to state and local governments that provide this benefit. Because of the parliamentary constraints of budget reconciliation legislation, however, credits to employers will only be available prospectively from March 31, 2021, through September 30, 2021.
Additionally, in contrast to payroll tax credits authorized in 2020, which were authorized as a credit against Old-Age, Survivors, and Disability Insurance (OASDI) taxes, this credit will be against Hospital Insurance (HI) taxes.
Additionally, the bill increases the amount of wages for which an employer may claim the paid family credit in a year from $10,000 to $12,000 per employee. Paid sick time and paid family leave credits could be claimed for leave taken to obtain a COVID-19 vaccine or to recover from an injury, disability, illness, or condition related to a COVID-19 immunization.
Coronavirus state and local fiscal recovery funds
The bill provides an additional $350 billion in addition to the $150 billion appropriated for the Coronavirus Relief Fund in the CARES Act. This $350 billion is split into two buckets: (1) $219.8 billion will be appropriated to the Coronavirus State Fiscal Recovery Fund, and (2) $130.2 billion will be appropriated to the Coronavirus Local Fiscal Recovery Fund.
With respect to the coronavirus state fiscal recovery fund, $195.3 billion will be allocated to the 50 states and D.C, mostly allocated based on share of unemployed individuals in the last quarter of 2020 with a minimum of $500 million allocation per state.
Another $4.5 billion will be allocated to the U.S. territories of the Commonwealth of Puerto Rico, the U.S. Virgin Islands, Guam, the Commonwealth of the Northern Mariana Islands, and American Samoa and $20 billion will be allocated to tribal governments.
To receive the funds, a state, territory, or tribal government must provide the Secretary of the Treasury a certification specifying that the government requires the federal assistance to effectively carry out pandemic response and mitigation activities consistent with the requirements of the permitted uses of the funds.
The Secretary of the Treasury will be required to make payments within 60 days of receiving a state, territory, or tribal government’s certification.
Recipient governments can use funds only to:
- Respond to or mitigate the COVID-19 emergency or its negative economic impacts;
- Cover costs incurred as a result of the emergency; Replace revenue lost, delayed, or decreased as a result of the emergency, as determined based on revenue projections as of January 27, 2020; or
- Address the negative economic impacts of the emergency.
Recipient governments will be permitted to transfer funds to special-purpose units of state or local government.
With respect to the coronavirus local fiscal recovery fund, $45.57 billion will be allocated for metropolitan cities, distributed pursuant to the formula used to administer the Community Development Block Grant (CDBG), modified to replace “all metropolitan cities” with “all metropolitan areas.”
A total of $19.53 billion will be reserved for non-entitlement units of local government, generally defined as those with fewer than 50,000 inhabitants. The Secretary of the Treasury will be required to transmit payments to states within 60 days of enactment, and states will be required to transmit payments to non-entitlement units of local government within 30 days of receipt. This provision will ensure that non-entitlement units of local government receive payments under this act as expeditiously as practicable.
States will have no discretionary authority to change the amount of, or attach additional requirements to, such payments. Payments will be distributed by the state to non-entitlement units of local government based on proportionate population, but not to exceed 75 percent of the most recent budget for the non-entitlement unit of government as of January 27, 2020. Of any amount above this cap, half will be retained by the state and half will be reallocated to other non-entitlement units of local government in the state.
A total of $65.1 billion will be allocated to make payments directly to counties of the 50 states, D.C., and the territories, distributed proportionate to population based on the most recent data available from the Census Bureau.
If such data is not available, the state may base distribution on other data as appropriate. The Secretary of the Treasury must make payments within 30 days of receiving a county’s certification.
Urban counties will receive at least the amount they will receive if the sum were distributed to metropolitan cities and urban counties according to the CDBG formula.
Funds for counties that are not units of general local government will be paid to the state to be distributed to cities proportionate to population. D.C. will be considered a single county that is a unit of general local government.
To receive the funds, a local government county or metropolitan city must provide the Secretary of the Treasury a certification specifying that the government requires the federal assistance to effectively carry out pandemic response and mitigation activities consistent with the requirements of the permitted uses of the funds.
Recipient governments will be permitted to use funds only to respond to or mitigate the COVID-19 emergency or its negative economic impacts; to cover costs incurred as a result of the emergency, to replace revenue lost, delayed, or decreased as a result of the emergency, as determined based on revenue projections as of January 27, 2020 or to address the negative economic impacts of the emergency.
Recipient governments will be permitted to transfer funds to special-purpose units of state or local government.
