COVID-19 Supplemental Appropriations Package Remains Stalled Over Title 42 Disagreement

Following a two-week congressional recess, negotiations continued this week on a bipartisan $10 billion COVID-19 supplemental appropriations package. In a victory for CSAC, the agreement includes the text of the State, Local, Tribal, and Territorial Fiscal Recovery, Infrastructure, and Disaster Relief Flexibility Act (S. 3011/H.R. 5735). The bipartisan bill, championed by Senators Alex Padilla (D-CA) and John Cornyn (R-TX), provides additional ARPA Fiscal Recovery Fund expenditure flexibility to counties and other entities.

It should be noted that the legislation would be offset, in part, by rescinding $887 million from the Local Assistance and Tribal Consistency Fund. The Fund, which was created under ARPA and has yet to be implemented by the Treasury Department, provides two years of general fiscal aid to revenue sharing counties (public lands counties) and tribal governments. The supplemental spending bill would cut the county share from $1.5 billion to $826.4 million. The tribal share of the Fund would be reduced from $500 million to $278.2 million.

For its part, CSAC recently sent a letter to the California congressional delegation expressing support for the inclusion of the Padilla-Cornyn legislation in the COVID package. It also expresses significant concerns with the proposed cut to the Local Assistance and Tribal Consistency Fund and calls on Congress to remove the offset from the measure.

While the legislation has bipartisan support in both chambers, congressional leaders have been trying to break a weeks-long stalemate centered around the Biden administration’s repeal of a pandemic-related restriction on border crossings. The health order, referred to as “Title 42,” has prevented any unauthorized travel into the U.S. and effectively blocked migrants from making claims of asylum at the border. In advance of the order’s expiration on May 23, the Department of Homeland Security (DHS) this week released a border and immigration enforcement plan detailing how it will manage increased border crossings when the restrictions end.

For their part, GOP lawmakers and some Democrats are demanding consideration of an amendment to the COVID spending bill that would require the Biden administration to keep the order in place. Democratic leaders, on the other hand, have thus far tried to avoid such a vote. Further complicating matters, a federal judge recently issued a restraining order that temporarily blocks the Biden administration from phasing out Title 42 for at least the next two weeks. If and when the temporary injunction is put in place, it will block DHS from executing its plan until after the health restrictions end. While the details have yet to be finalized, the Biden administration is expected to comply with any order the court issues.

Treasury Releases Updated FAQs on State and Local Fiscal Recovery Fund

On April 27, the Treasury Department published a set of answers to frequently asked questions (FAQ) related to the State and Local Fiscal Recovery Fund. The Recovery Fund was authorized by the American Rescue Plan Act (ARPA) and provides a total of $7.7 billion in direct, flexible COVID-19-related fiscal relief to California’s counties. The FAQs, which are designed to help recipients understand and apply the final rule, addresses many of the questions received by the Department since the rule was released on January 6, 2022. Treasury anticipates updating this document as additional guidance is developed.

It should be noted that the Final Rule took effect on April 1, 2022 and provides additional clarity and flexibility for state, local, tribal and territorial governments. Among other revisions, the Final Rule allows counties to use up to $10 million in ARPA Recovery Funds for the provision of government services without having to go through a complicated revenue loss calculation (referred to as the so-called “standard allowance” option). If a county chooses to calculate actual revenue loss according to Treasury’s formula, they may do so on a calendar or fiscal year basis and must adjust actual revenue totals for the effect of tax cuts and tax increases that are adopted after January 6, 2022, to more accurately reflect pandemic-related revenue loss.

In addition, counties that received ARPA recovery funds must submit a Project and Expenditure report to Treasury by April 30. The report should cover the period from the award date up to March 31, 2022. These periodic reports provide Treasury with financial and current performance information on ARPA recovery fund projects. The Department has also released a Project and Expenditure Report User Guide that provides counties with a step-by-step tutorial on the reporting portal. This resource includes details on the information Treasury seeks for some programmatic questions as well as questions counties can expect for each project.