Local governments to receive $155 billion in new funding under the American Rescue Plan

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Yesterday, one of the largest economic relief packages in US history was passed. The $1.9 trillion American Rescue Plan is President Biden’s first major piece of legislation since his inauguration in January. Among many of its elements, including another round of stimulus payments, coronavirus testing, and vaccine deployment, the American Rescue Plan allocates $350 billion in emergency funding to state, tribal and local governments. This is a significant increase to states and municipalities who received $150 billion in funding from the $2 trillion CARES Act Provider Relief Fund under Donald Trump’s presidency.

The allocation of funds to state, tribal and local governments is intended to cover increased expenditures, replenish lost revenue and mitigate economic harm incurred from the pandemic up until December 21, 2024. Of the $350 billion, $130.2 billion is allocated to local governments under the “Coronavirus Local Fiscal Recover Fund”:

  • $65.1 billion for counties
  • $45.6 billion for metropolitan cities
  • $19.5 billion for towns with fewer than 50,000 people

Local governments can use this funding to adopt digital tools to deliver services more safely and efficiency. Additional transportation and infrastructure grants will also be made available to communities.

Both state and local governments have been impacted greatly by the pandemic with many municipalities across the country having to cut services, lay off employees and implement cost-saving measures to ensure balanced budgets. Following yesterday’s passing of the American Rescue Plan, the National League of Cities released a statement stating, “Municipal officials are working tirelessly to deliver critical services our hometowns need, despite rising budget shortfalls and ongoing uncertainty about the future of their finances. We are pleased that Congress has helped deliver the support and clarity they have been calling for since the pandemic began.”

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