January 27, 2022
To: Municipal Clerks and Treasurers, County Clerks and Treasurers, and Heads of Government
The U.S. Department of Treasury (Treasury) recently published the
Final Rule for the American Rescue Plan Act (ARPA) – State and Local Fiscal Recovery Funds (SLFRF). As you know, recipients may use ARPA SLFRF for "government services" in an amount equal to their revenue loss due to the COVID-19 public health emergency.
More Spending Flexibility
Under Treasury's final rule, you can use up to $10 million in revenue loss (not more than your award amount) for government service expenses, offering flexibility and fewer reporting requirements.
One of the highlights of the
Final Rule is that Treasury developed a standard allowance, assuming up to $10 million in revenue loss for each recipient. This means recipients can use up to $10 million (not to exceed their award amount) to fund "government services."
Note: No Wisconsin non-entitlement unit of government (NEU – typically municipalities with a population less than 50,000) was allocated more than $10 million
- There is no longer a need for Wisconsin NEUs to manually calculate their revenue loss using the Revenue Loss Calculator
Any service traditionally provided by a government (unless Treasury stated otherwise).
Common examples (not all-inclusive):
- Construction of schools and hospitals
- Road building and maintenance and other infrastructure
- Health services
- General government administration, staff and administrative facilities
- Environmental remediation
- Providing police, fire and other public safety services (including purchase of fire trucks and police vehicles)
Note: Restrictions do apply, as outlined on pgs. 41-42 of the
Overview of the Final Rule
We encourage you to use ARPA SLFRF wisely to have a lasting impact within your community. If you use the funds for government services, avoid violating and/or negatively impacting your qualification status for the Wisconsin state programs listed below.
- Wisconsin counties and municipalities are subject to property tax levy limits under state law (sec.
66.0602, Wis. Stats.)
- 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 community plans to use ARPA SLFRF:
- If your community implements additional operations resulting in
ongoing expenses (beyond the ARPA SLFRF performance period) – your local government must identify an
ongoing revenue source to fund the additional operations
Example: A village uses ARPA SLFRF to hire two new police officers. After utilizing its ARPA SLFRF, the village must increase its property tax levy to permanently fund the new positions.
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.
- If your community uses ARPF SLFRF 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.
Example: A town uses ARPA SLFRF to fund firefighting operations typically funded by property tax levy, reducing its actual property tax levy by $35,000. In the following year, the starting point for the town's levy limit calculation will be reduced by $35,000.
- As a reminder, ARPA SLFRF is a one-time allocation distributed over two years. It is not an ongoing source of revenue so carefully consider this when planning for the future of your community.
- Wisconsin municipalities with a local tax rate exceeding five mills are eligible for the Expenditure Restraint Program (ERP), which requires them to restrict their general fund budget percentage increase year-to-year to receive ERP aid
- As provided in our
May 5, 2021 communication – if ARPA SLFRF is allocated and expended within your general fund budget, it is considered for ERP and subject to your allowable percentage increase
- To avoid negatively impacting your ERP qualification – allocate and expend ARPA SLFRF from a special revenue fund if the funds are being used for a specific purpose/project
Note: Receipt of ARPA SLFRF and subsequent expenditures have no impact to county and municipal aid, utility aid, exempt computer aid, personal property aid and video service provider aid
- Email Treasury – SLFRP@treasury.gov
- Visit Treasury's
- Contact us – DORLocalRecoveryFunds@wisconsin.gov