Under the Coronavirus State and Local Fiscal Recovery Funds Program (SLFRF), the first subcategory under which to apply for aid is “Replacing Lost Public Sector Revenue.” Local governments may apply for a grant equal to the amount of funds that they lost from the federal government due to the far-reaching impacts of COVID-19. Then, a local government can use these funds for any service traditionally performed by the government, from construction of schools and hospitals to environmental remediation. The Department of the Treasury provides a set of guidelines through which to determine a local government’s revenue loss under the guidelines of SLFRF. This article simplifies the process so that your government can apply for SLFRF grants under this subcategory.
The first of the two options to determine revenue loss is referred to as the “standard allowance” per the Final Rule of the SLFRF. Rather than spending long hours calculating exact revenue loss, this choice allows governments to choose one lump-sum payment of $10 million, no matter their size or loss (this option functions very similarly to a standard deduction when filing taxes). For governments that do not have the capacity to undertake calculating their actual revenue loss per the guidelines below, this is a wonderful option. Likewise, for smaller governments, the option of $10 million is advantageous as it might provide more funds than originally lost from public sector revenue due to COVID-19.
The second option is to calculate the actual revenue loss that your government experienced, using the formula provided in the Final Rule. Per the provided guidelines, revenue loss will be calculated across four points in time: in 2020, 2021, 2022, and 2023. The actual date at which revenue loss is calculated can be December 31 of each year or the beginning of each respective fiscal year—the choice is up to the government calculating. Once the dates for calculation are selected, there is a four-step process to calculate actual revenue loss.
Base year revenue x ( 1 + growth adjustment)𝑛12
Calculating actual revenue loss when looking into attaining SLFRF funding would be advantageous for governments whose actual revenue loss exceeds $10 million (the standard allowance), meaning that they would be eligible for an award of a greater sum.