Agenda - Council Work Session - 03/08/2022

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4432 Federal Register/Vol. 87, No. 18/Thursday, January 27, 2022/Rules and Regulations first payment would receive their operating budget,including its general Commenters addressed how a locality second half payment within 12 months. fund and other funds,as of January 27, was classified as an NEU or Similarly, some recipients requested 2020."The interim final rule further metropolitan city, deviations between clarification on whether they could provided that states and territories must Treasury's allocation calculations and obligate second tranche funds before permit NEUs without formal budgets as earlier estimates from other sources, receipt or use second tranche funds for of January 27, 2020 to self-certify their treatment of unincorporated areas, costs incurred prior to receipt. most recent annual expenditures as of sources for population data,and Treasury Response:The final rule January 27, 2020 for the purpose of Treasury's allocation of NEU funding to maintains the approach in the interim calculating the 75 percent budget cap. states and territories based on the final rule with two modifications. As Further,the interim final rule population of a state and territory described in the interim final rule, prohibited states and territories from outside of its metropolitan cities. Two splitting payments for most states placing additional conditions or commenters proposed that Treasury provides consistency with payments to requirements on distributions to NEUs provide an appeal process for localities local governments and encourages states beyond those required by the statute, that were not identified on the List of to adapt their use of funds to the interim final rule,or Treasury's Local Governments used by states and developments that arise in the course of guidance and from offsetting any debt territories as part of the process in the economic recovery. Moreover, owed by such NEUs against such which a state or territory determines the SLFRF funds may be used for costs distributions. eligibility of an NEU in accordance with incurred during the period of Commenters predominantly focused Treasury guidance, or for Minor Civil performance.Recipients may use their on the definition of an NEU's budget for Divisions (MCDs)that were denied jurisdiction's budgeting and purposes of calculating the 75 percent funding as part of a facts-and- procurement practices and laws to budget cap,NEU allocations and circumstances test undertaken by a determine how and when second eligibility,and the prohibition on states weak-MCD state. tranche funds may be obligated. and territories imposing additional Treasury Response:Neither the The final rule makes two adjustments conditions or requirements in the NEU interim final rule nor the final rule for operational purposes. First,the final distribution process. addresses eligibility or allocations rule provides that Treasury expects to Definition of NEU Budget issues, and comments on these topics make all second tranche payments to are outside the scope of this rulemaking. states available beginning 12 months Public Comment:Commenters These questions are addressed in other from the date that funding was first suggested that Treasury provide greater Treasury guidance,including the made available by Treasury(May 10, clarification on the definition of an Guidance on Distribution of Funds to 2021)regardless of when each NEU's "most recent budget"for Non-entitlement Units of Local individual state submitted its initial purposes of the 75 percent budget cap Government and Non-entitlement Unit certification.This should increase calculation. Treasury provided updated of Local Government Definitional and clarity and consistency on the timing of guidance on its interpretation of the 75 Data Methodology guidance documents second tranche payments for both states percent budget cap on June 30, 2021, available on Treasury's website.373 and Treasury. Second,also to ease and a commenter suggested that Because Treasury interpreted the recipient states' administrative burden, Treasury incorporate such updated definition of an NEU 374 in accordance the final rule strikes a requirement from interpretation into the SUPPLEMENTARY with the statute and established an NEU the interim final rule that states must INFORMATION of the final rule. distribution process in May 2021,the certify for their second tranche Treasury Response:Consistent with final rule does not incorporate an payments and file all required reports at the Update on Interpretation for the 75 appeals process regarding the least 30 days prior to the date on which Percent Budget Cap Calculation definitions or the facts-and- their second payment is made available. published on June 30, 2021,372 the circumstances test used for eligibility The final rule simply requires that states SUPPLEMENTARY INFORMATION of the final determinations. certify for their second tranche payment rule defines an NEU's budget for and file all required reports before purposes of calculating the 75 percent Prohibition on Additional Conditions or budget cap as its total annual budget, Requirements in the NEU Distribution receiving their second tranche payment, Process with no 30 day wait period required. including both operating and capital expenditure budgets,in effect as of Public Comment:One commenter B.Payments to Nonentitlement Units of January 27, 2020.The guidance also expressed support for Treasury's Local Government(NEUs)and Units of gives states and territories flexibility to prohibition on states and territories Local Government(UGLGs) Within Non- provide further guidance to their NEUs UGLG Counties to operationalize the 75 percent budget 373 The Guidance on Distribution of Funds to The interim final rule established cap. Given the variance in local Nonentitlement Units of Local Government can be requirements related to distributions of financial accounting,this updated found at this link:https:llhome.tFeasury.govl SLFRF funds b states territories to definition will better facilitate states' system/files/136/NEU Guidance.pdf.The y es an err Nonentitlement Unit of Local Government NEUs and UGLGs within non-UGLG and territories' distribution of SLFRF Definitional and Data Methodology can be found at counties. Specifically,the interim final funds to NEUs. this link:https:llhome.treasury.gov/system/files/ 136/NEU Methodology.pdf. rule provided that the total distribution Allocations and Eligibility 374 Treasury has interpreted NEU to generally to an NEU cannot exceed 75 percent of include both incorporated places and MCDs with the most recent budget for the NEU(the Public Comment:Many commenters active functioning governments,subject to the state 75 percent budget cap); a requirement provided feedback on specific allocation determining,in the case of weak-MCD States,that set forth in section 603(b)(2)(C)(iii) of calculations and eligibility of local a weak MCD has the legal and operational capacity governments for NEU funding. to accept SLFRF funds and provides a broad range the Social Security Act.The interim g g of services that would constitute eligible uses under final rule SUPPLEMENTARY INFORMATION ARPA.More details can be found in the defined the NEU's budget for purposes 372 Treasury's Update on Interpretation for the 75 Nonentitlement Unit of Local Government Percent Budget Cap Calculation can be found at: Definitional and Data Methodology,available at of calculating the 75 percent budget cap https://home.treasury.gov/system/files/136/NEU- https://home.treasury.gov/system/files/136/NEU as the NEU's"most recent annual total Update-75-Percent-Budget-Cap.pdf. Methodology.pdf.