How Federal Funding in 2021 and Beyond Will Support State and Local Governments

In March 2021, the U.S. Congress took action to address the problems currently faced by American citizens, businesses, and government as a result of the ongoing pandemic situation by passing the American Rescue Plan Act of 2021. Together with the proposed American Jobs Plan, these initiatives have and will allocate hundreds of billions in funding for public infrastructure projects at the state and local level.

What is the American Rescue Plan Act?

The American Rescue Plan Act of 2021, aka COVID-19 Stimulus Package, is a federal initiative to provide much-needed funding to state and local governments to help mitigate the extraordinary costs and economic damage that have resulted from the ongoing Covid-19 pandemic.

Through this Act, some $350 billion in federal funding has been approved for distribution to the states and the District of Columbia. Each State and the District of Columbia will receive at least $500 million, and a separate some $130 billion will be distributed to local governments based on their economic population, which can be used to:

• Address public health and economic needs related to the Covid-19 pandemic
  
• Pay premium salaries to essential workers who are working during the pandemic
  
• To provide basic government services where the provision of services has been negatively impacted by loss of revenue due to the pandemic
  
• To make investments in water, sewer, or broadband critical infrastructure.

While these funds are subject to certain restrictions (they cannot be deposited into pension funds, for example), local governments can use the funds to offset tax reductions in the region if they believe it is necessary to stimulate the economy. These funds have an expenditure deadline of December 31, 2024.

K-12 Funding

The American Rescue Plan Act provides $122.7 billion for government agencies to support K-12 programs for the next three and a half school years, including for the purchasing of supplies to clean and sanitize facilities; educational technology and software; providing mental health services to faculties and students; school repairs that contribute to the reduction of viral transmission and maintenance or replacement of equipment to improve indoor air quality in schools.

Coronavirus Capital Projects Fund

$10 billion has been allocated to this initiative, which can provide an additional $100 million per state to pay for critical capital projects that enable and improve work, education, and health monitoring in response to the pandemic, including remote work options.

Construction provisions

The American Rescue Plan Act has also set aside funds for multiple construction and transit-related programs including:

• $30.5 billion for Federal Transit Administration grants
  
• $25 billion for the revitalization of restaurants, including to fund the construction of outdoor seating areas
  
• $8.5 billion for healthcare providers to pay for temporary structures and retrofitting of existing facilities
  
• $1.8 billion for coronavirus genomic sequencing and surveillance, and the construction of facilities to support these initiatives
  
• $600 million for tribal governments to construct, upgrade or renovate healthcare facilities.

The American Jobs Plan

This ambitious $2 trillion plan, currently under negotiation, is expected to invest heavily in federal, state and local infrastructure, covering critical areas such as water and sewer systems, roads, bridges and highways, communications and broadband networks and much more. Some of the specific initiatives include:

• Delivery of clean drinking water, a strengthened electric grid, and high-speed broadband internet access to all Americans, including in rural areas
  
• The construction and retrofitting of more than two million homes and commercial structures, the modernization of schools and child-care facilities, and upgrades to veterans’ hospitals and federal buildings
  
• Creating jobs and raising wages for essential home care workers
  
• Investing in the manufacturing sector, Research and Development and securing U.S. supply chains
  
• Creating new initiatives to ensure more goods and materials are produced in America and that workers have the opportunity to join unions and pursue collective bargaining agreements.

What’s more, the current administration has requested that Congress invest heavily in existing roads, bridges, ports, airports and mass transit systems, including passenger and freight rail services.

Taken together, it’s clear that these major investments in the foundations of America, both now and in the years to come, will help the country thrive as it continues to recover from the devastation of the Covid-19 pandemic.

Looking into future government spending

With the American Rescue Plan Act and, depending on the outcome, the American Jobs Plan, a potential significant increase in bid opportunities is very high. These bid opportunities will most likely be from school districts, also improvements to parks, and potential resumption of construction and repair projects.

Find out how BidNet Direct can help your government organization today!