ImpactAlpha, July 2 – The American Rescue Plan Act of 2021 channels nearly $20 billion in economic relief to small, mostly rural towns. New guidance from the Treasury Department will help them get the funds from state capitals more quickly, rather than only through reimbursements.
Alabama’s HOPE Credit Union and Black Belt Community Foundation pressed for the change after seeing many small towns struggle to cover upfront costs of personal protective equipment to access last year’s CARES Act aid. The two organizations devised a workaround that fronted funds to local governments via recoverable grants that municipalities could pay back once they were reimbursed by the state.
The reimbursement policy, adopted by several Southern states, including Alabama and Louisiana, “widened gaps between resource-rich communities and those with less,” the Hope Policy Institute concluded in a recent analysis.
“While states were not required to make these funds available on a reimbursement basis, many chose to run the programs in this manner, leaving behind the very communities that would have benefited the most from relief funds,” said the institute’s Diane Standaert.
“This is yet another reminder that policy makers must always intentionally create systems and policies that support equity and justice so that all people,” she added, “especially those most in need, are not left behind.”