The Department of the Treasury’s State and Local Fiscal Recovery Program final ruling issued last week details how Native American tribes can access the $20 billion of American Rescue Plan funds, including a revenue loss allowance of $10 million and a broader list of capital expenditures and additional funds for tribal development districts.
The $10 million revenue loss allowance permits recipients to choose between a standard amount of revenue loss or complete a full revenue loss calculation. Tribes that select the standard allowance are permitted to use those funds for government services, with “streamlined reporting requirements,” the regulation said.
“Households and communities served by Tribal governments are presumed to be disproportionately impacted by the public health and negative economic impacts of the pandemic, thereby allowing Tribal governments to provide them with a wide range of services without requiring additional analysis,” the regulation said.
The final rule clarifies that recipients can use funds for capital expenditures that support an eligible COVID-19 public health or economic response, and are exempt from the usual requirement of having to complete a written justification for such investments.
Examples of those investments could include affordable housing, childcare facilities, schools, and hospitals, among many others.
The final rule also attempts to simplify the administrative components of small businesses operated by tribal governments or operated on tribal lands, meaning businesses may receive loans or grants to mitigate financial hardship, technical assistance and a broader set of capital expenditures, “from rehabilitation of commercial properties to support for microbusinesses,” the regulations said.
Treasury also includes tribal development districts, or the commercial centers for tribal hospitality, gambling, tourism and entertainment industries in its list of impacted industries, thus making them able to receive aid.
The final rule also provides a wider list of options for recipients to restore and support public sector workers, with such initiatives as hiring up to 7.5% above pre-pandemic workforce levels, providing funds to employees that saw pay cuts or furloughs and additional funds for avoiding layoffs and providing retention incentives.
Premium pay was also identified in the final rule, broadening the share of eligible workers who can receive premium pay without a written justification.
Like with other muni issuers, the final rule
Tribal governments won’t be affected by the so-called “Tax-Cut Ban” provision, which is serving as a conduit for Republicans to challenge the Biden Administration’s guidance at the state level.
“The so-called Tax-Cut Ban is being challenged in court by numerous (mostly red) states with some success. If upheld, I think the rule will have a greater direct impact on state & local governments than it will on tribal governments,” said Townsend Hyatt, partner and leader of the Indian Tribal Finance practice at Orrick.
“As a practical matter, tribal governments don’t tax their members for budgeting and spending purposes,” he added. “The concept of ‘cutting taxes’ and filling the gap with ARPA money would seem to have less relevance in Indian country.”
The final rule is set to take effect on April 1, 2022.
