Skip to main content Skip to footer

American Rescue Plan


Signed into law by President Biden on March 11, 2021, the American Rescue Plan (ARP) allocated $1.9 trillion to COVID-19 relief and economic recovery. Cities and towns in North Carolina directly received more than $1.3 billion in funds to be invested in the continued growth of those towns and communities.

Case Studies & Local Infrastructure

ARP in Action

Learn how towns are investing ARP funds in order to support and grow their towns, plus how towns can address local infrastructure needs.

Municipal Accounting Services

NCLM Service Lines

Through a combination of robust in-house staff and a network of statewide partnerships, NCLM is prepared to assist your municipality with a number of service lines designed to directly impact your town's accounting needs. Our service lines range from financial conversions to securing needed grants and from protecting digital assets to sharing the story of how your town is wisely investing funds.

Let's Chat

Contact Us

Have questions about eligible expenses, reporting requirements, or anything else ARP related? Please reach out to us.

The American Rescue Plan

What is it?

Since March 2020, cities and towns across North Carolina have dealt with a financial crisis caused by no action of their own, but rather by a deadly, global pandemic. Health measures, lockdowns, an inability to gather—these consequences of COVID-19 produced an economic fallout that has impacted all areas of our state. Thread through every cancelled event and empty street is a story of financial hardship, for residents, business owners and local governments alike.

​Cities' and towns’ coffers rely heavily on sales tax and occupancy tax—two revenue sources that were hit the hardest by the pandemic. As health precautions and rising unemployment hindered normal economic activity, less money changed hands, and less sales tax was collected; travel and tourism severely diminished, and less occupancy tax was collected.

This revenue is not excess. It is critical, and used to provide the key public services that our residents rely on: public safety, infrastructure, water, and more. As our citizens struggled through the pandemic, our municipalities suffered as a result. And as our municipalities suffered, our citizens were harmed even more.

This issue has been the top priority for the North Carolina League of Municipalities for 12 months. Led by local leaders across the state, we held regular educational sessions on how to adjust and persevere through the pandemic. Resources and updates were shared with members on a weekly—sometimes daily—basis, and with a grassroots effort, we advocated to both state and federal leaders on the need for assistance. Our mayors wrote op-eds. Our councilmembers contacted policymakers. And our League, as a whole, made abundantly clear the significant damage that would be done to our citizens and our state if assistance was not provided.

​Thanks to you, the members of the League, our voices were heard.

​With the passage of the American Rescue Plan on March 11, 2021, direct assistance will be provided to cities and towns for the first time since the onset of COVID-19. On this site, we detail what that means, what money can be expected, and what it can be used for. We also provide guidance and educational resources, ensuring that our municipalities make the most of this relief, not just to recover from a painful year, but to thrive for many years to come.

Once again, to all of our cities, towns, leaders and officials—thank you.

Summaries of the American Rescue Plan bill are provided below:

In addition to direct funding, the ARP provides specific funding for:

  • Agriculture and nutrition programs, including extending SNAP and the Pandemic EBT program to keep families fed through the pandemic;

  • Schools and institutions of higher education to safely reopen schools, address learning loss, and support students and staff, including support for broadband for students;

  • Child care to help sustain child care providers and expand child care assistance to 857,000 children;

  • COVID-19 vaccinations, testing, treatment, and prevention, especially for hard to reach communities and areas;

  • Mental health and substance-use disorder services;

  • Emergency rental assistance, homeowner assistance, and other housing programs to help families pay rent, mortgages, and utilities;

  • Transit agencies to prevent layoffs of transit workers and prevent severe cuts to transit services that essential workers and the general public rely on.

  • Multiemployer pension plans;

  • Small business assistance, including specific programs for restaurants and live venues;

  • Support for health care workers, transportation workers, federal employees, veterans, and other targeted populations;

  • International and humanitarian responses and;

  • Tribal government services.

The bill also includes provisions that:

  • Extend enhanced unemployment benefits through September, providing an additional $300 per week on top of all state unemployment benefits;

  • Provide direct economic impact payments of $1,400 per eligible individual and $2,800 for couples making up to $150,000 per year. Eligible families will also receive an additional $1,400 payment per child and adult dependent, amounting to $5,600 for an average family of four;

  • Expand the Child Tax Credit and the Earned Income Tax Credit

  • Provide premium assistance for certain health insurance coverage; and

  • Require coverage, without cost-sharing, of COVID-19 vaccines and treatment under Medicaid and the Children's Health Insurance Program (CHIP).

ARP: Frequently Asked Questions

Specific questions about North Carolina municipalities? Contact us.

Cities and towns can now use up to $10 million of ARP funds towards general government services under a new “standard allowance” for revenue replacement. The update was announced by U.S. Treasury in its State and Local Fiscal Relief Fund (SLFRF) final rule published Jan. 6. 

The regular salary and benefits  for public safety, public health, health care, human services, and similar employees can be funded with ARP to the extent that they are completing work directly related to the public health response. The allowed use of funds is under the “respond to public health emergency” eligible funding category in the U.S. Treasury guidance.

Premium pay is in addition to an employee’s regular salary and benefits. In recognition of the health and safety risks of essential workers who have been and continue to be relied on to maintain continuity of operations, ARP funds can also be used to provide premium pay. Essential workers are those whose work involves regular in-person interactions or regular physical handling of items that were also handled by others. The allowed use of funds is under the “premium pay” eligible funding category in the U.S. Treasury guidance.

To the best knowledge of both the N.C. League and the N.C. Office of State Budget and Management, Council approval is not a requirement of the American Rescue Plan. However, it may be required by the rules of your local government. Thus, it is included in the checklist to ensure that funds are received in a timely manner, should that step be needed in your city or town. 

Treasury interprets the most recent budget as the NEU's most recent annual total operating budget, including its general fund and other funds, as of January 27, 2020. 

Funds are subject to any pre-existing limitations of Federal statue and regulations. Funds cannot be used as a non-Federal match for other Federal programs that restrict the use of Federal funds to meet matching requirements.

Treasury’s Final Rule provides guidelines and principles for determining the types of programs and services that funding can support. The guidance creates the "standard allowance" for revenue replacement, and provides examples of allowable uses that recipients may consider. Within the categories of eligible uses, recipients have broad flexibility to decide how best to use this funding to meet the needs of their communities.

No, but it is essential that you have a way to track the expenditure and use of these funds separately from all other funds you manage, including any other Coronavirus Relief Funds you have already received. The U.S. Department of Treasury is already advising that most of the provisions of the Uniform Guidance (2 CFR Part 200) apply to the Coronavirus Local Fiscal Recovery Funds program, including the Cost Principles and Single Audit Act requirements. NCPRO is compiling more information and guidance, and the Treasury will make its Assistance Listing available at for detail on the specific provisions of the Uniform Guidance that do not apply to this program.

City-by-City Funding

Metro Cities received their funds directly from the U.S. Treasury. Non-entitlement units (NEUs) received their funds through the state of North Carolina. More information can be found on our U.S. Treasury Guidance page. 

Additional distribution data has been provided by the National League of Cities

Eligible Expenditures

How to spend these appropriations will be a key question for our municipalities over the next several years. Certain spending categories, such as water and wastewater infrastructure, have broad eligibility. Others are less clear. 

Below, we will provide clarity on eligible expenditures as information becomes available. 

Note: For towns receiving $10 million or less through the ARP, the entirety of your funding can now be qualified as replacement revenue due to the "standard allowance" created in Treasury's Final Rule. View our Replacement Revenue section below.

Use of funds:

  1. 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.

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

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

  4. Make investments in water, sewer and broadband infrastructure.

Restrictions of Funds:

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


Transfer Authority

  • 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, but only as allowed under state law and state constitutional provision.

Cities and towns can now use up to $10 million of ARP funds towards general government services under a new “standard allowance” for revenue replacement. The update was announced by U.S. Treasury in its State and Local Fiscal Relief Fund (SLFRF) final rule published Jan. 6, 2022.

Please note that recipients must still diligently track and report all ARP expenditures, despite the increased eligibility. Reporting and accounting requirements previously established by Treasury remain in place. Those guidelines can be found in the Reporting Compliance section.

The standard allowance serves as a significant development to one of the ARP’s four eligible spending categories: the replacement of lost revenue due to COVID-19 emergency. Previously, SLFRF recipients needed to calculate revenue loss through a provided formula that compared present economic data with pre-pandemic data. If a revenue shortfall could be proven using that calculation, that amount could then be used flexibly towards general government functions not otherwise eligible under the ARP, such as roads and public safety.

From the SLFRF Interim Rule:

… the Act provide(s) recipients with broad latitude to use the Fiscal Recovery Funds for the provision of government services. Government services can include, but are not limited to, maintenance or pay-go funded building of infrastructure, including roads; modernization of cybersecurity, including hardware, software, and protection of critical infrastructure; health services; environmental remediation; school or educational services; and the provision of police, fire, and other public safety services. (p60, Interim Rule)

That formula, however, proved restrictive for many municipalities, who found that they could use little or none of their ARP funds towards that spending category. Treasury acknowledged this feedback in the final rule (p240), noting that many comments on the interim rule highlighted the difficulty in applying the formula. The incorporation of the standard allowance removes those difficulties, and provides local governments with a set amount eligible to address revenue replacement, no calculation required. 

That formula, however, proved restrictive for many municipalities, who found that they could use little or none of their ARP funds towards that spending category. Treasury acknowledged this feedback in the final rule (p240), noting that many comments on the interim rule highlighted the difficulty in applying the formula. The incorporation of the standard allowance removes those difficulties, and provides local governments with a set amount eligible to address revenue replacement, no calculation required. 

From the SLFRF Final Rule:

Recipients may elect a “standard allowance” of $10 million to spend on government services through the period of performance. 

Under this option, which is newly offered in the final rule Treasury presumes that up to $10 million in revenue has been lost due to the public health emergency and recipients are permitted to use that amount (not to exceed the award amount) to fund “government services.” … All recipients may elect to use this standard allowance instead of calculating lost revenue using the formula below, including those with total allocations of $10 million or less. Electing the standard allowance does not increase or decrease a recipient’s total allocation. (p9, Overview)

The standard allowance is an alternative to the originally provided formula. Recipients may still choose to apply the formula, should the calculated amount be greater than $10 million. 

This update provides significant opportunities for North Carolina local governments. For the more than 500 municipalities receiving $10 million or less, the entirety of their American Rescue Plan funds can now be considered replacement revenue, open to any of the eligibilities allowed under that category. 

If you have any questions, please contact us at

This category offers broad flexibility and clear eligibility. It also stands as an area of significant need in North Carolina.

ARP Infrastructure Report

The League encourages municipalities to consider investment into water and wastewater infrastructure. This recommendation is made understanding the constraints of the ARP and the realities of North Carolina’s existing infrastructure challenges. Making investments in infrastructure represents one of the most likely paths to a lasting funding legacy.

The need, the eligibility, and the potential, all covered in-depth in our ARP Infrastructure Report.

NCLM Research Strategist Tammy DePhillip has detailed this spending category in our ARP blog, and you can read that full post here.

Key points covered:

  • What is the intention of this spending category?

  • What is considered premium pay?

  • Who is eligible for premium pay?

  • How is premium pay calculated?


Read More | Premium Pay: Who is Eligible and For How Much?

Full texts, overviews, explainers and updates are available on our U.S. Treasury Guidance Page

Compliance and Reporting Guidance

Recipients of ARP/SLFRF distributions must abide by U.S. Treasury's reporting and compliance responsibilities, which have been previously clarified in detail in the next tab over: Compliance and Reporting Guidance.

For NEUs, those reporting requirements should be met using this Treasury Portal. NEUs will confirm accounts, designate reporting roles, and submit required agreements and supporting documentation to Treasury. Deadline is April 30, 2024, and will cover March 3, 2023 to March 21, 2024.


Registration and Login

There are two options for logging in, and Please note, if you have not yet registered with either service, the League recommends over for convenience and a less onerous registration process. However, both are secure and legitimate.

Treasury Portal User Guide

Available in PDF form here.

The U.S. Treasury updated the below document on Feb. 28, 2022 to reflect the changes in flexibility made by the Final Rule published Jan. 6, 2022. 

Coronavirus State and Local Fiscal Recovery Funds Guidance on Recipient Compliance and Reporting Responsibilities."

U.S. Treasury Guidance

The U.S. Treasury’s breakdown of key changes, originally published via press release, can be read below:

  1. Treasury has expanded the non-exhaustive list of uses that recipients can use to respond to COVID-19 and its economic impacts – ensuring states and localities can adapt quickly and nimbly to changing public health and economic needs. This includes clarifying that recipients can use funds for certain capital expenditures to respond to public health and economic impacts and making services like childcare, early education, addressing learning loss, and affordable housing development available to all communities impacted by the pandemic.

  2. Treasury has expanded support for public sector hiring and capacity, which is critical for the economic recovery and in maintaining vital public services for communities.

  3. Treasury has streamlined options to provide premium pay for essential workers, who bear the greatest health risks because of their service in critical sectors.

  4. Treasury has broadened eligible water, sewer, and broadband infrastructure projects – understanding the unique challenges facing each state and locality in delivering clean water and high-speed broadband to their communities.

  5. Treasury has greatly simplified the program for small localities – many of whom have received a historic federal investment in their communities through this program – including through the option to elect a standard allowance for revenue loss rather than calculating revenue loss through the full formula.

The U.S. Department of the Treasury on May 10, 2021 issued interim formal guidance to implement the Coronavirus State Fiscal Recovery Fund and the Coronavirus Local Fiscal Recovery Fund established under the American Rescue Plan Act.

That announcement can be read here, and the interim rule document is linked here and can be downloaded here.

Though a Final Rule has been published Jan. 6, 2022, the Interim Final Rule will remain in effect until April 1, 2022. Funds used consistently with the interim rule are in compliance with the State and Local Fiscal Relief Fund (SLFRF) program. This document will stay published to serve as a record of the implementation of SLFRF. 

Guidance from the State of North Carolina

N.C. Treasurer Guidance on Reporting, Auditing of ARP Funds

Updated May 28, 2022

Receiving and holding funds:

  • We don’t see the need to open a separate bank account for these funds unless it is the only way the unit has to track the receipts and expenditure of the ARPA funds. If an entity can track both the revenue and expenditures within its accounting system without using a separate bank account, we believe that is acceptable.


Accounting points

  • Do not comingle ARPA funds with CVR/CARES Act funds!

  • ARPA funds cannot be used to build reserves. If an entity has unexpended ARPA funds at June 30, 2021 (and many of you will), it is likely best to put those funds in a Special Revenue Fund. If the funds will be spent on enterprise activities (utility infrastructure for example) they can be recorded directly in the Enterprise Funds. It is probably not a good idea to record the funds in the General Fund, because it could be construed as attempting to build reserves, and it will skew your revenue and expenditure trend information for your General Fund.

  • At this time, it appears that the guidance states these funds are granted with eligibility requirements. As such, any unspent funds at year end will be recorded as a liability (not a deferral). We are awaiting additional guidance on this topic.

  • Another area we are seeking more information on is the treatment of investment earnings. State statute requires that investment earnings are restricted in the same nature as the grant funds. ARPA guidance seems to say that if funds are comingled, the investment earnings are unrestricted. Only if they are not comingled are they restricted to the same purpose as the grant. Again, we are awaiting more guidance on this topic.


Auditing Points

  • There is no reason to believe these funds will not be subject to single audit and yellow book requirements. However, it is important to remember that the thresholds for these audits is based on funds expended, not funds received. With some restraint, local entities that had not expected to be subject to yellow book or single audit requirements for 2021 can manage those expectations by not spending ARPA funds by June 30, 2021 in amounts that would exceed the threshold, including all other Federal and/or State grant funds.


Budgeting Points

  • ARPA funds must be appropriated before they are obligated. Units that intend to obligate any of these funds on or before June 30, 2021, must amend their budgets to include the funds. Units that do not plan to obligate these funds on or before June 30, 2021, can likely get by without amending their 2021 budgets.

  • An option that many local governments may want to consider is to budget ARPA funds in a Grant Ordinance, allowed by G.S. 159-13.2, which can be established for a grant that covers both capital and operating funding. The budget spans the life of the grant rather than a given fiscal year.

  • All units that are receiving ARPA funds must ensure that the funds are included in the 2021-2022 budget, either in the original ordinance, or added with an amendment on or after July 1, 2022. Budgets must be in place before the funds are obligated!


General Guidance

  • The UST has revised the deadline for expending ARPA funds to 2026, as long as the funds are obligated by 2024. This should give units some breathing room on their decision making with regards to these funds. It is not likely that local governments will see this level of federal aid again for many years. Units need to be thoughtful about how the funds are spent, not only to ensure compliance with the restrictions on the funds, but also to ensure they are put to their highest and best use. There will likely be multiple opportunities to leverage local dollars with State dollars for needs such as infrastructure. In addition, there are other sources of funds for purposes such as education, transportation, and affordable housing. Units should consider all available sources of funds before committing to spend their local dollars. This will require some patience by local officials but should lead to more informed decision making.

  • Many units are asking questions about the restrictions on these funds, and we encourage units to seek guidance before spending the money. ARPA funds cannot be used to fund general operations or to provide for general capital needs. ARPA funds will be subject to audit, and units can expect to be required to repay funds that are not spent in accordance with the restrictions. Again, units have several years over which to spend these funds and there likely will be opportunities to leverage funds to achieve more significant outcomes. Please plan strategically and thoughtfully! 

With the launch of the American Rescue Plan's Coronavirus State and Local Fiscal Recovery Funds program on May 10, 2021, CDBG cities in N.C. will now be able to request funding directly from the U.S. Treasury. The 26 cities that can request funding directly from the federal government are identified in this document (link).

All other municipalities in N.C. will receive their funds through the state of North Carolina. To receive that funding, those non-CDBG cities will required to complete several pre-funding steps. 

​The North Carolina Pandemic Recovery Office has created a checklist for non-CDBG cities and towns to follow to ensure that the funding process proceeds quickly and seamlessly. That checklist can be downloaded here (link)

​With questions, please visit our ARP: What is it? page. If additional assistance is needed, please reach out to us at Questions about the Vendor Electronic Payment Form should be directed to N.C. PRO at

PLEASE NOTE: We have been made aware of scams targeting our members. DUNS and SAM registration is free through the federal government and resources are available to assist you if need be. You do not need to pay to register your town with the federal government.