Reminders for Use of American Rescue Plan Act – Local Fiscal Recovery Funds

​May 5, 2021

To: Municipal and County Clerks, Treasurers and Heads of Government

As local governments plan to receive American Rescue Plan Act – Local Fiscal Recovery Funds (LFRF), the Wisconsin Department of Revenue (DOR) would like to provide the following guidance. Local governments are expected to receive LFRF during 2021 and 2022 and will have until December 31, 2024 to spend the funds.

Allowable Uses

Local governments can use LFRF to cover the following costs incurred prior to December 31, 2024:

  • Respond to the coronavirus (COVID-19) pandemic or its negative economic impacts – including assistance to households, small businesses, and nonprofits, or aid to impacted industries such as tourism, travel, and hospitality
  • Replace revenues lost as a result of the public health emergency caused by the COVID-19 pandemic, for the purposes of providing government services – relative to revenues collected in the most recent full fiscal year prior to the emergency
  • Make necessary investments in water, sewer, or broadband infrastructure
  • Provide premium pay of up to $13 per hour per worker in addition to a worker's usual wage or remuneration (up to $25,000 in total for any single worker) for workers employed by the local government who perform essential work during the COVID-19 pandemic, or to provide grants to eligible employers that have eligible workers who perform essential work. The term "eligible workers" is defined as those workers needed to maintain continuity of operations of essential critical infrastructure sectors, as well as additional sectors designated by the chief executive officer of a local government as critical to protect the health and well-being of residents of the local government.
  • Transfer funds to private nonprofit organizations or public benefit corporations involved in the transportation of passengers or cargo, or special-purpose units of state or local governments
  • Transfer funds to the state where the local government is located

Not Allowed

Local governments cannot use LFRF to:

  • Deposit into any pension fund

    Note: The U.S. Department of the Treasury will provide additional guidance on allowable uses of LFRF and reporting requirements, and may also require repayment of LFRF if a local government fails to comply with the allowable uses. Until this additional guidance is provided, DOR cannot answer specific questions on the information above.

Impact to Shared Revenue

  • Receipt of LFRF and subsequent expenditures will have no impact to County and Municipal Aid, Utility Aid, Exempt Computer Aid, Personal Property Aid and Video Service Provider Aid
  • Receipt of LFRF and subsequent expenditures may impact municipalities (with a local tax rate exceeding five mills) that are eligible to file for the Expenditure Restraint Program (ERP)
  • ERP – requires municipalities to restrict the percentage increase of their general fund budget expenditures year-to-year
  • To avoid negatively impacting your ERP qualification – if LFRF are being used for a specific purpose, allocate and expend the funds from a special revenue fund
  • Note: If the funds are allocated and expended within your general fund budget, it will be considered for ERP and subject to your allowable percentage increase

Impact to Levy Limits

  • Each year, the starting point of your levy limit calculation is your prior year's actual property tax levy
  • Regarding levy limits, consider the following as your local government plans to use LFRF:
    • If your local government uses LFRF to fund expenses typically funded by property tax levy, it may result in a reduced property tax levy. Subsequently, your property tax levy limit will be reduced in the following year.
    • If your local government uses LFRF to pay off its general obligation debt, it may result in property tax levy fluctuations
    • If your local government implements additional operations resulting in ongoing expenses (beyond December 31, 2024) – your local government will need to identify an ongoing revenue source to fund the additional operations (ex: increase in property tax levy)
  • Note: A county/municipality may increase its levy limit via referendum. A town, with a population less than 3,000, may increase its levy limit via special resolution.

Impact to Tax Incremental Finance

Reminder – See prior DOR communications regarding LFRF on our Municipal and County Official News web page – including our April 21, 2021 email on LFRF Pre-Award Requirements.

We hope you find this information helpful. The federal government will continue to provide updates on the Treasury website. DOR will continue to share this information as timely as possible.

If you have questions, contact us at