Agenda - Council Work Session - 03/08/2022

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Federal Register/Vol. 87, No. 18/Thursday, January 27, 2022/Rules and Regulations 4429 information regarding permissible and in the User Guide: Treasury's Portal extraordinary payment if it reduces a offsets only if it had also reported for Recipient Reporting(User Guide), liability incurred prior to the start of the covered changes that were in excess of which addresses the particular content COVID-19 public health emergency and the de minimis and had reported a net and form of required reporting. Treasury occurs outside the recipient's regular reduction in tax revenue. Treasury will will continue to issue updated guidance timing for making the payment.At the provide additional guidance and prior to each reporting period clarifying same time,however,as suggested by the instructions on the reporting any modifications to requested report comment Treasury received,a payment requirements at a later date. content and will continue to consider made at the regular time for pension As discussed in section Regulatory how reporting can best support contributions may very well be an Analyses of this Supplemental transparency and accountability while extraordinary payment,for example,if it Information,Treasury maintains that the minimizing recipient administrative is larger than a regular payment would final rule does not have federalism burden. Further,as discussed in the have been. Such a payment would be a implications within the meaning of section Remediation and Recoupment, restricted use. Executive Order 13132 (Federalism, Treasury may address potential August 4, 1999). In the ARPA,Congress violations of this final rule based on Public Comment:Other commenters requires states and territories to repay both information submitted from asked which pension contributions are the Secretary for amounts used in recipients,either through quarterly permitted. violation of the prohibition on using reports or self-reporting, and from other Treasury Response:To be an eligible SLFRF funds to offset reductions in net sources of information(e.g., information use of SLFRF funds,a use must(1)be tax revenue,and it authorizes the submitted from the public). eligible under one of the eligible use Secretary to issue regulations to carry categories and 2 not contravene an of out this limitation and other 2. Deposit Into Pension Funds g ( ) y requirements of the statute. Section 6(b) Background:Subsection 602(c)(2)(B) the applicable restrictions on uses of re q funds. Some pension contributions may of Executive Order 13132 contemplates of the Social Security Act provides that be eligible because they both fit within that certain regulations will be required "[n]o State or territory may use funds an eligible use category and do not by statute,as is the case with the made available under this section for contravene the restriction on deposits interim final rule and the final rule,in deposit into any pension fund. are not an which case section 6(b)(2)(B)'s Similarly, subsection 603(c)(2) of the into pension funds (i.e.,they requirement to include a federalism Social Security Act provides that"[n]o extraordinary payment of an accrued, unfunded liability). For example, summary impact statement in the metropolitan city,nonentitlement unit Supplementary Information to the of local government,or county may use payroll and covered benefits for public regulation does not apply. funds made available under this section health and safety staff responding to Notwithstanding the above,Treasury for deposit into any pension fund." COVID-19 are an eligible use of funds to respond to the public health and has engaged in efforts to consult and For purposes of this restriction on work cooperatively with affected state, pension deposits,the interim final rule negative economic impacts of the local,and Tribal government officials defined deposit to mean "an pandemic;routine pension and associations in the process of extraordinary payment of an accrued, contributions as part of an employee's developing the interim final rule. unfunded liability."The interim final regular covered benefits are permissible rule also specified that a deposit does under that eligible use category. Reporting Transparency not include routine contributions made Public Comment:Several commenters as part of a payroll obligation,such as B. Other Restrictions on Use of Funds argued that information supporting the the normal cost component of a pension 1.Debt Service and Replenishing net tax offset calculation should be contribution or the component that Financial Reserves publicly available. Some of these consists of amortization of unfunded commenters requested that reporting be liabilities calculated by reference to the The SUPPLEMENTARY INFORMATION to made available in a machine-readable employer's payroll costs. The interim the interim final rule provided that debt format,and others advocated that final rule applied the restriction on service is not an eligible use of funds recipient governments disclose this pension deposits to all recipients. either to respond to the public health information on their local budget Public Comment:Several commenters emergency or its negative economic agency's website. These commenters observed that the statutory restriction on impacts or as a provision of government argued that making information deposits into pension funds does not services to the extent of revenue loss.365 regarding tax changes publicly available apply to Tribal governments. The interim final rule also provided that would increase transparency and Treasury Response:In response, replenishing financial reserves (e.g., accountability.Further,several Treasury is clarifying in the final rule rainy day funds) is not an eligible use commenters suggested that Treasury that the pension restriction does not of funds either to respond to the public provide a mechanism for citizens to apply to Tribal governments. health emergency or its negative register their concerns about particular Public Comment:Treasury also economic impacts or as a provision of tax actions. received a comment expressing concern Treasury Response:As discussed in that the interim final rule permitted 365"[G]overnment services would not include other sections,reporting requirements recipients to make a larger than usual interest or principal on any outstanding debt promote transparency and pension contribution,so long as the instrument,including,for example,short-term accountability for the general public and timing of that contribution aligns with revenue or tax anticipation notes,or fees or constituents of recipient governments to the historical timing of contributions. issuance costs associated with the issuance of newdebt.For the same reasons,government services understand how state,local,and Tribal Treasury Response:The interim final would not include satisfaction of any obligation governments have used SLFRF funds. rule prohibited the use of SLFRF funds arising under or pursuant to a settlement agreement, Since the publication of the interim from the ARPA to make extraordinary judgment,consent decree,or judicially confirmed final rule,Treasury issued payments,and the SUPPLEMENTARY debt restructuring in a judicial,administrative,or regulatory proceeding,except if the judgment or supplementary reporting guidance in INFORMATION to the interim final rule settlement required the provision of government the Compliance and Reporting Guidance said that a payment would be an services."86 FR 26796-97(May 17,2021).