March 27, 2023 by Mike McCann
Two years ago this month, the American Rescue Plan Act (ARPA) was signed into Law. Today it appears to be doing what it was designed to do. The Treasury Department, White House, GFOA, NACo, and others have been reporting results at this important milestone.
ARPA was designed to accelerate the national recovery from the Covid-19 pandemic by supporting both the fight against the disease and against the economic costs of shutdowns, business slowdowns, and lost wages. The legislative language included emphasis on aid for disadvantaged populations, rural areas, small governments, and economic equity.
Congress and staff looked back at the federal response to the Great Recession in 2008-09 when crafting ARPA. The failure of inadequate measures to aid the nation’s recovery has been well documented, slowing the pace and scale of economic growth for a decade. The new law was intended to correct those failures by getting cash out rapidly across the country, and mandates to put it to work quickly and flexibly.
ARPA included funding to be distributed to every government in the country with wide latitude for local authorities to use the cash productively towards the most pressing needs of their communities. To balance this freedom of action with the legal and ethical requirements of good governance, the U.S. Treasury required extensive evidence-based reporting on funded projects and results. Especially significant for smaller governments, federal audit standards including the Single Audit and Uniform Guidance were not waived.
Working with a leading software firm, OpenGov.com, at that time, I was particularly focused on provisions in ARPA that allowed local governments to upgrade manual process or obsolete software with the much more robust and secure web-based software developed since the Great Recession. With their staff largely locked out of shuttered city hall offices, governments needed solutions that enabled their teams to work together, share data and collaborate efficiently from wherever they were sheltering.
The pandemic had another widespread impact; making people in and out of government more conscious of the unknown risks and instability looming in the future. Developing safer governance tools not dependent on city hall servers, became a sudden priority, together with the recognition that residents and businesses had already moved to Internet-based tools and communications. Web portals, social media, and live digital reporting all became important.
One particular Treasury rule was a key turning point for small governments. In a worthwhile attempt to simplify the complexity of federal reporting the rule allowed governments to use up to $10 million to replace revenues lost during the pandemic. Treasury waived requirements to heavily document the losses, and allowed the funds to be used for payroll and other general governmental purposes without detailed reporting.
This one change helped many of the smallest communities use ARPA to save their local governments and the residents and businesses they served from devastating cuts in services and government staffing. In small towns every staff position provides vital services. Cutting one police officer, sewer technician, or librarian can have wide reaching negative consequences.
ARPA has had a singular and positive effect. I have focused on its benefits to local governments, but that is just a small portion of the sweeping, even game-changing, impact it has had in main streets, schools, housing, public utilities, health care, and many other areas of our civil society.
I conclude with the thought that ARPA proves that country and our federal and local governments can still do important work, despite the well publicized conflicts and issues we all hear about every day.