Treasury broadens uses of relief aid for states, localities

The Biden administration is giving greater flexibility for local governments to spend virus relief funds. Above, a KB Home construction site last year in Simi Valley, Calif. MARK J. TERRILL/AP greater certainty from federal officials about what was allowed. The new rules could relieve that anxiety.

“I think we’re going to see in the next month or two a lot more spending, particularly by small local governments who had been sort of waiting out the time until this final rule came out,” Michael Wallace, legislative director for housing, community and economic development at the National League of Cities, said about the announcement last week.

Some local officials had complained the Treasury’s initial guidelines, issued last May, were too vague in some regards and too rigid in others. In addition to pressing the Treasury for changes, local government groups also had been lobbying Congress to intervene with relaxed criteria.

The Treasury said it was responding to the feedback by allowing “broader flexibility and greater simplicity in the program.”

“As the delta and omicron variants have illustrated, pandemic response needs will continue to evolve,” Deputy Treasury Secretary Wally Adeyemo said in a statement last week as the agency released its rules. “These funds ensure that governments across the country have the flexibility they need to vaccinate their communities, keep schools open, support small businesses, prevent layoffs, and ensure a long-term recovery.”

One of the most significant changes will let state and local governments claim up to $10 million of revenue losses during the pandemic without having to prove it. Federal money used to replace lost revenue comes with maximum flexibility, meaning it can go toward projects such as road repairs that would not otherwise be eligible. That $10 million threshold covers the entire allotment for many smaller cities and for about 70% of counties.

Local officials also had pushed for greater flexibility on infrastructure spending, which is generally limited to water, sewer and broadband internet.

The final rules allow money to be used for culvert repairs along roads and to rehabilitate dams and reservoirs that supply drinking water.