Here's What You Need to Remember: CNBC lists legal uses for the money by state and local governments as “supporting public health expenditures, addressing the negative economic impact caused by Covid-19, replacing lost public-sector revenue or investing in water, sewer and broadband infrastructure.”

The Treasury Department earlier this week officially launched the Coronavirus State and Local Fiscal Recovery Funds, a $350 billion fund allocated by the American Rescue Plan stimulus package back in March. It also laid out rules as to how states and local governments can spend the money, and what they can and can’t do.

“Today is a milestone in our country’s recovery from the pandemic and its adjacent economic crisis. With this funding, communities hit hard by COVID-19 will able to return to a semblance of normalcy; they’ll be able to rehire teachers, firefighters and other essential workers — and to help small businesses reopen safely,” Treasury Secretary Janet L. Yellen said in the department’s official statement.

Treasury’s website for the program lists, in addition to “Coronavirus State and Local Recovery Funds,” such as the Homeowner Assistance Fund, the Coronavirus Capital Projects Fund, the State Small Business Credit Initiative, and the Emergency Rental Assistance program.

The guidelines that came along with the release have led to some controversy, however, according to a Reuters report Wednesday.

The rules, Reuters said, “could further antagonize states seeking to cut taxes this year, according to analysts.”

For instance, the stimulus money cannot legally be used to subsidize new state tax cuts. This has led several states, including Ohio and Missouri, to sue the federal government, although Missouri’s suit against Treasury was dismissed last week by a judge.

CNBC lists legal uses for the money by state and local governments as “supporting public health expenditures, addressing the negative economic impact caused by Covid-19, replacing lost public-sector revenue or investing in water, sewer and broadband infrastructure.”  The rule also does not allow states to deposit the money from the stimulus into state pension funds.

"The federal government can adopt guard rails to ensure that states don't backfill their own spending reductions with federal aid dollars and use the savings to adopt tax cuts, but by imposing restrictions at a department level, the Treasury rule functionally makes almost all spending cut-financed tax reductions off limits,” Jared Walczak, vice president of state projects at the Tax Foundation, told Reuters.

“Every state and city are different,” Deputy Treasury Secretary Adewale “Wally” Adeyemo told reporters Monday, per CNBC. “In the coming days and weeks, Treasury’s Office of Recovery Programs will work hand-in-hand with governors, mayors, members of Congress and other local officials to answer any questions and ensure funds are making it to communities as soon as possible.”

The Biden Administration’s next priorities include the American Jobs Plan and American Families Plan, which will concentrate on infrastructure, as well as encouraging education and paid family leave.

Stephen Silver, a technology writer for The National Interest, is a journalist, essayist and film critic, who is also a contributor to The Philadelphia Inquirer, Philly Voice, Philadelphia Weekly, the Jewish Telegraphic Agency, Living Life Fearless, Backstage magazine, Broad Street Review and Splice Today. The co-founder of the Philadelphia Film Critics Circle, Stephen lives in suburban Philadelphia with his wife and two sons. Follow him on Twitter at @StephenSilver. This article first appeared last year.

Image: Reuters.