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Cities want to relax federal aid spending rules

The American Rescue Plan, the comprehensive COVID-19 relief law that President Joe Biden and congressional Democrats championed, is the reason why one project is moving forward and not the other. It is a massive federal aid program that pumps billions of dollars into the states and local governments.

The U.S. Treasury Department has developed rules that allow some governments more freedom to spend the money how they wish. The new swimming pool is open and the rehabilitation of the pier is OK, at least for the moment.

Local officials have been pushing back against similar disparities across the country, urging Treasury to relax its rules before the program moves forward.

Wade Kapszukiewicz (the mayor of Toledo in Ohio) stated that "Otherwise they are penalizing cities because of the pandemic and not providing them relief."

The issue is the $350 billion that states, counties, and cities received as part of the huge COVID-19 relief bill Biden signed back in March. This money will be used to support their finances, pay for ongoing costs associated with fighting the virus, and to invest in long-term projects that can strengthen communities for many years. Although the Treasury made the funding available in May, cities and states have been slow to spend it.

The Treasury guidelines allow governments to choose from over 60 subcategories of spending money. These include COVID-19 vaccines, premium pay for some workers, housing aid and grants to businesses.

One category is unique for its flexibility. Federal aid can be used by governments that have lost revenue to pay for almost any service, as long as they are not unable to use the federal income. This means that they can use the federal aid to pay for roads, recreation centers, and piers, which may not be possible otherwise.

Liz Bourgeois, spokesperson for the Treasury, stated that the plan gives governments the resources and flexibility to avoid cuts, hire and retain workers, provide essential service and emerge from the pandemic more powerful. Democratic congressional leaders have also praised the Treasury’s flexibility in guidance.

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