Agenda - Council - 09/13/2022 - Laserfiche WebLink

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the amount of spending cut and only reductions in spending above the amount of SLFRF funds spent on the department, agency, or authority would count. This approach allowing only spending reductions in areas where the recipient government has not spent SLFRF funds to be used as an offset for a reduction in net tax revenue aims to prevent recipient governments from using SLFRF funds to supplant state or territory funding in the eligible use areas, and then using those state or territory funds to offset tax cuts. Such an approach helps ensure that SLFRF funds are not used to "indirectly" offset revenue reductions due to covered changes. Department, agency, or authority. Public Comment: Several commenters supported the interim final rule's approach to considering spending cuts at the department, agency, or authority level, on the basis that this approach is supported by the statutory language prohibiting SLFRF funds from being used to "directly or indirectly" offset a reduction in net tax revenue. On the other hand, some commenters argued that the methodology for identifying offsetting spending cuts was too restrictive; specifically, that measurement at the agency or department -level may not adequately account for the size and various programs that could occur in one agency or department. One commenter argued that recipient governments should instead be permitted to consider spending cuts on a more granular sub -unit of a department but noted that this additional flexibility would come at the cost of transparency and clarity. Treasury Comment: Treasury recognizes that some recipients may vary in their budgeting processes, with some budgeting on a department level and others budgeting at more or less granular sub -units of government. Relying on spending at a department, agency, or authority level allows recipient governments to report how SLFRF funds have been spent using reporting units already incorporated into their budgeting process. 334