In letter to Treasury, congressional delegation calls for changes in ARPA rules

The Massachusetts congressional delegation sent a letter to the U.S. Department of the Treasury yesterday calling for the final rules governing expenditures under the American Rescue Plan Act to reflect circumstances that are unique to Massachusetts.

The letter addresses ARPA’s revenue loss category and identifies calculation complications related to education aid under the Student Opportunity Act, grants from the Massachusetts School Building Authority, and local debt exclusions for capital projects.

The letter resulted from discussions with the MMA, and the effort was co-led by U.S. Sen. Edward Markey and Congressman Jake Auchincloss. Every member of the state’s congressional delegation signed the letter, which was addressed to Treasury Secretary Janet Yellen.

“Massachusetts has distinct systems for funding public education that have distorted cities’ and towns’ calculations of revenue loss for ARPA reimbursement,” the letter states. “If counted as part of COVID-19 related revenue losses, the once-in-a-generation investments in education [under the Student Opportunity Act] will falsely offset COVID-19-related revenue losses reimbursable under ARPA.”

The letter continues: “Many Massachusetts municipalities received increased earmarked revenue through Chapter 70, MSBA grants, and debt service exclusions after the ARPA Baseline Revenue Year. Those increases are expected to continue throughout the ARPA reimbursement period. During the same time period, municipalities are contending with downturns in revenue from traditional sources available for critical government services, including public safety and public works. Because of the timing of these long-needed, vital investments to correct the state’s underfunding of education or to support debt service payments for necessary capital projects, municipalities are reporting they cannot calculate any lost revenue for 2020 and future ARPA years if the additional funds are counted as ‘intergovernmental transfers’ or Actual General Revenue as specified in Treasury’s Interim Final Rule.

“We urge you to clarify in the final rule that these earmarked funding streams should not be included in municipalities’ calculations of revenue loss.”

Finally, the letter asks the Treasury to hold one or more public virtual events, in collaboration with the delegation, for Massachusetts municipal leaders to learn how to navigate the implementation of ARPA “and to achieve ARPA’s full intended benefits at the local level.”

The Treasury issued a 151-page “interim final rule” shortly after the ARPA was signed into law in March. Since that time, the Treasury has been working on the final set of rules.

• View the congressional delegation’s letter to the Treasury