2021 COVID Stimulus Package

American Rescue Plan Act Guidance

Monday, May 10, 2021, The U.S. Treasury Department issued guidance on Monday which established limits on the $350 billion in direct aid to States and Municipalities issued in the American Rescue Plan. The money was allocated to help state and local governments shore up budget deficiency created by the COVID-19 economic crisis and to reinvest in economic recovery.

The state funding is allocated based on each state’s unemployment rate in the past year. Massachusetts is set to received $5,286,067,526.40. Massachusetts will receive the money in a lump sum almost immediately. Local governments will receive half the money this May and the second half next year. States have broad flexibility and discretion to use the funds within specified categories of eligible use.

  • Public Health- by funding COVID-19 mitigation efforts, medical expenses, behavioral healthcare, and certain public health and safety staff
  • Address Negative Economic Impacts- including economic harms to workers, households, small businesses, impacted industries, and the public sector
    • Delivering assistance to workers and families, including aid to unemployed workers and job training, as well as aid to households facing food, housing, or other financial insecurity. In addition, these funds can support survivor’s benefits for family members of COVID-19 victims.
    • Supporting small businesses, helping them address financial challenges caused by the pandemic and making investments in COVID-19 prevention and mitigation tactics, and providing technical assistance. To achieve these goals, recipients may employ this funding to execute a broad array of loan, grant, in-kind assistance, and counseling programs to enable small businesses to rebound from the downturn.
    • Speeding the recovery of the tourism, travel, and hospitality sectors, supporting industries that were particularly hard-hit by the COVID-19 emergency and are just now beginning to mend. Similarly impacted sectors within a local area are also eligible for support.
    • Rebuilding public sector capacity, by rehiring public sector staff and replenishing unemployment insurance (UI) trust funds, in each case up to pre-pandemic levels. Recipients may also use this funding to build their internal capacity to successfully implement economic relief programs, with investments in data analysis, targeted outreach, technology infrastructure, and impact evaluations.
    • Replace Lost Public Sector Revenue-using this funding to provide government services to the extent of the reduction in revenue experienced due to the pandemic
    • Premium Pay for Essential Workers- offering additional support to those who have borne and will bear the greatest health risks because of their service in critical infrastructure sectors; and,
    • Water, Sewer, and Broadband infrastructure- making necessary investments to improve access to clean drinking water, support vital wastewater and stormwater infrastructure, and expand access to broadband internet.

States cannot use the money to offset operating expenses and then cut taxes. If a state does cut taxes, it will have to demonstrate to the Treasury Department that it offset that lost revenue with spending cuts or another source of revenue that does not include the fiscal recovery funds. The treasury reserves to right to claw back money it deems improperly spent. States can also not deposit ARPA dollars into pension funds or rainy-day funds. More information is available on the Treasury’s Website.

Policy Watch

Stimulus checks

$1,400 checks for individuals making less than $75,000 annually, $150,000 for married couples, and a phased-out amount for people with higher incomes. Payments would phase out at $80,000 for individuals and $160,000 for married couples. Children and adult dependents would be eligible for the full $1,400.

Unemployment payments

$300 a week through September 6, 2021, with the first $10,200 of the benefits for 2020 nontaxable for those making under $150,000.

Vaccines and testing

$8.75 billion to federal, state, local, territorial, and tribal public health agencies for distributing, administering, and tracking vaccinations, with some funds specially dedicated to making sure the vaccination process reaches underserved communities.

Vaccine development

$20 billion going to federal biomedical research for a vaccine and therapeutic manufacturing and procurement; $3 billion for a strategic national stockpile of vaccines and $25 billion would be spent on testing, contact tracing, and reimbursing hospitals for lost revenue related to the pandemic.

Tax credits for children

For one year only - Increase the $2,000 Child Tax Credit to $3,000, set the credit at $3,600 for parents of children under age 6, and make parents of 17-year-olds eligible. It would also make the credit fully refundable, so low-income households would get the full benefit, no matter how little they earn.

Student loan forgiveness

Student-loan forgiveness free from income taxes for 2021-2025.

Minimum-wage increase

$15/hour minimum wage not included.

Schools

$130 billion in funds for K-12 schools to reduce class sizes, improve social distancing, improving ventilation, and provide more PPE.

Healthcare

Expands eligibility for subsidies to purchase insurance to people of all incomes and caps the maximum premium at 8.5% of a person’s income. It also takes steps to lower, or even zero out, premiums for people making less than 150% of the federal poverty line.

Medicaid

Encourages the expansion of Medicaid by having the federal government pay for new recipients. Employees who lose their jobs or lose benefits because of working fewer hours qualify for 100% Cobra health-insurance subsidies.

Other

Federal workers, including postal workers, take as many as 600 hours of emergency paid leave related to Covid-19. The restaurant industry will receive $25 billion in relief targeted at small and midsize restaurants and chains.

"The Road to Economic Recovery"

— State and federal governments continue to pass measures and issue orders to address the medical and economic fallout from the COVID-19 issue.

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