The U.S. Treasury has released initial guidance for the Coronavirus State and Local Fiscal Recovery Fund (CSLFRF). The CSLFRF is the $350 billion pot of funding provided in the COVID-19 American Rescue Plan Act signed into law in March that includes water and sewer infrastructure as an eligible use.

These funds will flow directly to States, cities, counties and non-entitlement communities. Special-purpose units of local government like a regional sewer system will not receive direct funding allocations; however, a state, territory, local or Tribal government may transfer funds to a special-purpose unit of government.

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Per the authorizing legislation, these funds can be used for several broad categories: to respond to the COVID-19 public health emergency and its economic impacts; to provide premium pay to essential workers; to augment state and local revenues lost as a result of the pandemic relative to revenues collected in the most recent full fiscal year prior to the emergency; and to make necessary infrastructure investments in water, sewer, and broadband. Importantly, water and sewer investments supported by these funds do not have to be tied to COVID-19 costs/impacts.