American Rescue Plan Signed Into Law; What it Means for Ohio

On March 11, the American Rescue Plan Act of 2021 (ARPA) was signed into law. The nearly $2 trillion stimulus package builds upon the CARES Act that was enacted nearly a year ago, as well as the CARES Act 2 which was enacted in December.

Below is a breakdown of what is included in the historic relief program. Be sure to check back as GOPC will be providing more information about specific sectors of the relief bill as more details become available.

State & Local Aid

Provides $350 billion to help states, counties, cities and tribal governments cover increased expenditures, replenish lost revenue and mitigate economic harm from the COVID-19 pandemic.

State and local government recipients could use the funds to cover costs incurred by Dec. 31, 2024. The funds would be distributed in two tranches, with 50% delivered no later than 60 days from the date of enactment, and the remainder delivered no earlier than one year later. States would have to distribute funds to smaller towns within 30 days of receiving a payment from the department. States that miss the deadline would have to pay back any undistributed funds. A town cannot receive more than 75% of its budget as of Jan. 27, 2020. The Treasury Department could also withhold up to half of a state or territory’s allocation for as long as 12 months based on its unemployment rate and require an updated certification of its funding needs.

Governments can use the funds to respond to the COVID-19 emergency and address its economic effects, including through aid to households, small businesses, nonprofits, and industries such as tourism and hospitality. Further, the funds can to:

  • Provide premium pay to essential employees or grants to their employers. Premium pay couldn’t exceed $13 per hour or $25,000 per worker.

  • Provide government services affected by a revenue reduction resulting from COVID-19.

  • Make investments in water, sewer and broadband infrastructure.

State and local governments cannot use the funds towards pensions or to offset revenue resulting from a tax cut enacted since March 3, 2021.

State and local governments could transfer funds to private nonprofit groups, public benefit corporations involved in passenger or cargo transportation, and special-purpose units of state or local governments.

Direct Relief to Citizens

Provides another round of direct payments of $1,400 for individuals, $2,800 for joint filers, and $1,400 for each qualifying dependent. Full payments will be provided to anyone with an income of $75,000 or less ($150,000 for married couples). The payments would begin to phase out for individuals with an adjusted gross income (AGI) of $75,000 ($150,000 for couples) and would be zero for AGIs of $80,000 ($160,000 for couples) or more. Heads of households will receive the full amount if they earned up to $112,500, and it will phase out completely at $120,000.

Dependents would include full-time students younger than 24 and adult dependents.

Payments would be based on 2019 or 2020 tax returns. The Treasury Department could provide payments to individuals who have not filed based on return information available to the department.

You can check the status of your direct relief payment via the IRS website.

Housing Aid

The bill appropriates $27.4 billion in emergency rental assistance, including:

  • $21.55 billion for emergency rental assistance via Corona Relief Funds (remains available through September 30, 2027, if obligated by October 1, 2022).

  • $5 billion for emergency housing vouchers (funds available through September 30, 2030).

  • $750 million for tribal housing needs

  • $100 million for rural housing

The bill also makes $5 billion available to assist people who are homeless with immediate and long-term assistance (emergency housing vouchers) with funds available until September 30, 2030. There is a further $9.96 billion for a homeowner’s assistance fund (including $100 million for housing counseling via NeighborWorks America).

The first 40 percent of funding for emergency rental assistance will be provided within 60 days of enactment of ARPA.

Small Business Aid

ARPA will make $7.25 billion available for the Paycheck Protection Program (PPP) in the form of forgivable loans. This is on-top of the already existing $284 billion that remains from the December stimulus package. The deadline to apply for PPP loans has not changed, however, and remains March 31, 2021.

More not-for-profits are eligible for the PPP by creating a new category called “additional covered nonprofit entity,” which are those not-for-profits listed in Sec. 501(c) of the RIC code other than 501(c)3, 501(c)4, 501(c)6, or 501(c)19 organizations. These groups are eligible for loans if:

  • The organization does not receive more than 15% of receipts from lobbying activities

  • The lobbying activities do not compromise more than 15% of activities

  • The cost of lobbying activities of the organization did not exceed $1 million during the most recent tax year that ended prior to February 15, 2020

  • The organization does not employ more than 300 people

Larger 501(c)3 organizations and veterans’ organizations that employ more than 500 people and 501(c)6 organizations, domestic marketing organizations, and additional covered not-for-profit entities that employ more than 300 employees per physical location are also eligible for PPP loans under the bill.

ARPA also provides $15 billion for targeted Economic Injury Disaster Loan (EIDL) advance payments. Funds from Targeted EIDL Advances shall not be included in the gross income of the person who receives the grant and that no tax deductions will be denied, no tax attribute reduced, and no basis increase denied due to the exclusion of the grant funds from gross income.

The bill specifically provides funds to businesses located in low-income communities that have no more than 300 employees and that have suffered an economic loss of more than 30%, as determined by the amount that the entity's gross receipts declined during an eight-week period, between March 2, 2020 and Dec. 31, 2021, relative to a comparable eight-week period immediately preceding March 2, 2020.

$25 billion in the ARPA will be provided for restaurants, bars, and other eligible providers of food and drink. This will allow for grants equal to the pandemic-related revenue loss of the eligible entity, up to $10 million per entity, or $5 million per physical location. The grants are calculated by subtracting 2020 revenue from 2019 revenue. Entities are limited to 20 locations.

$1.25 billion for shuttered venue operators such as movie theaters or concert venues.  

$175 million to create a "community navigator" pilot program to increase awareness of and participation in COVID-19 relief programs for business owners currently lacking access, with priority for businesses owned by socially and economically disadvantaged individuals, women, and veterans.

Transportation & Infrastructure Aid

ARPA provides $30.5 billion for grants to transit agencies for use for operating expenses, including payroll and personal protective equipment costs. Of that funding, $26.1 billion will be awarded for Urbanized Area Formula Grants to aid transit services in urbanized areas, and $2.21 billion for urban and rural area grantees that require additional assistance due to the pandemic. $1.7 billion will be made available for Capital Investment Grants; $281 million in operating assistance formula grants for states to support rural transit agencies in areas with fewer than 50,000 people, and $100 million will support intercity bus services to support essential connections in rural areas.

More information about ARPA can be found online courtesy of the National Council of State Legislators (NCSL). A title-by-tile summary of the bill can be found here (provided by U.S. Senate Democrats).

 

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