Expanded use of ARPA funds may be tucked into defense bill

Issuers pushing for expanded use of pandemic aid may see the measure wrapped into a larger bill and come up for vote as early as Wednesday.

Governments would be able to tap unused COVID-19 relief funds for infrastructure, transportation and disaster relief under a bipartisan bill that the Senate passed unanimously in late October and has since languished in the House.

On Monday, a group of 30 issuer organizations, including the US Conference of Mayors and the National Association of Counties, renewed their push for the House to take up the legislation in a letter sent to House Speaker Nancy Pelosi and Minority Leader Kevin McCarthy.

Now, the bill may be wrapped in the larger National Defense Reauthorization Act, which House Majority Leader Steny Hoyer put on the schedule this week for a vote. The NDAA could come up for vote before the House Rules Committee as soon as Wednesday, said Eryn Hurley, deputy director for NACo’s Government Affairs Department.

“It does make sense to look at the NDAA since it’s one of the last major legislative vehicles of the year,” Hurley said. “We were already collecting signatures last week for a final push prior to the end of the year,” she said, adding that nothing is set in stone. “It’s very fluid right now.”

Congress has several high-profile items on its agenda before it recesses for the year. The House is now expected to remain in session until Dec. 20 after the Speaker extended its schedule by a week. In addition to the NDAA, Congress needs to manage the debt ceiling, which Treasury Secretary Janet Yellen has said the U.S. could hit as soon as Dec. 15. In the Senate, Majority Leader Chuck Schumer has said he wants to pass Build Back Better in the next two weeks.

The ARPA flexibility bill began as an amendment to the Infrastructure Investment and Jobs Act before morphing into its own legislation, called the State, Local, Tribal and Territorial Fiscal Recovery, Infrastructure, and Disaster Relief Flexibility Act.

Currently ARPA funds are restricted by guidance that, on the infrastructure side, permits the dollars to be used mainly for maintenance, pay-go spending for new infrastructure or water and sewer projects.

The new measure would broaden that to include transportation, infrastructure and government services. Newly eligible uses would include a wide variety of surface transportation projects ranging from national highway programs, the TIFIA loan program, nationally significant freight and highway projects and the Territorial and Puerto Rico Highway Program. The funds could also be used for a variety of transit-related projects, Community Development Block Grants, and disaster relief, according to NACo.

The bill would cap the amount of funds that a recipient could use for the newly eligible activities at the greater of $10 million or 30% of a government’s ARPA allocation.

The bill would “build on the IIJA by giving state and local governments the flexibility to use ARPA funds to invest in infrastructure immediately while the IIJA is implemented over the next several years,” said the Dec. 6 letter to the House leaders.

“This new legislation would provide much-needed flexibility in state and local ARPA funds and would neither mandate funds be used in any particular way nor increase overall federal appropriations. This bill would also cap infrastructure investments to ensure funds are not diverted from the ongoing public health emergency,” the letter said.