Clarification of Rules for Remote Meetings Under State Level State of Emergency: No More Waiting 24 Hours After Public Hearings!

At the beginning of the pandemic, a new statute regarding remote meetings– GS 166A-19.24— provided a roadmap for managing government business. Public officials have learned so much about how to do things differently. Shout out to all of you who have pivoted in so many new directions, to keep people safe and healthy, and keep the government moving.  The new rules for remote meetings, summarized in my blog post here, have worked well but they also raised a few questions. Luckily, several local government attorneys proposed some clarifying changes. [Special thanks to Mujeeb Shah-Khan (Monroe City Attorney) for shepherding the project.]  Three changes were ratified by the legislature and signed by the Governor in Session Law 2021-35 (House Bill 812). This blog summarizes the changes, which will become effective July 1, 2021, and apply to remote meetings held on or after that date. Read more »

American Rescue Plan Act of 2021 (ARP): Accepting Funds, Budgeting & Cash Management

UPDATED June 18, 2021 to provide additional information on investment proceeds of ARP Funds, based on a June 17 update from US Treasury.

As detailed here and here, the federal American Rescue Plan Act (ARP) provides significant funding for NC local governments. (These funds are also referred to as Coronavirus State and Local Fiscal Recovery Funds, CSLFRF, CLFRF, or Fiscal Recovery Funds.) Many counties and municipalities over 50K population (metropolitan municipalities) have already received their first tranche of funds directly from the federal government, which comprises one-half of their total allocation. (For counties and metropolitan municipalities who have not yet applied, you may do so here.) All other municipalities, referred to as nonentitlement units of local government or NEUs, should receive their first distribution from the state within the next month or so, which also will comprise one-half of their total allocation. The NC Pandemic Recovery Office (NCPRO) has important guidance for local governments, including a checklist of items to complete in anticipation of receiving the ARP funds. They also are compiling and addressing frequently asked questions here. The US Treasury has addressed NEU distribution FAQs here.

Local government officials have many questions about when they’ll receive their funds and how much, for what purposes may they spend the monies, and what contracting, reporting, auditing, and other compliance requirements apply. Unfortunately, we do not yet have all the answers from the federal government. The good news is that local officials do not have to rush to spend the funds. According to the US Treasury’s Interim Final Rule interpreting the ARP, local governments have until December 31, 2024, to obligate the ARP monies and until December 31, 2026, to expend all the funds. As an immediate matter, though, local officials need to know how to accept the funds, what to do with the cash, and how to budget the monies under state law. Those are the topics of this post. Read more »

American Rescue Plan: Local Government Funding for Affordable Housing Development

The federal American Rescue Plan Act of 2021 (ARP) established Coronavirus State and Local Fiscal Recovery Funds (“FRF”), which will be distributed to state and local governments for the purpose of responding “to the public health emergency with respect to the Coronavirus Disease 2019 (COVID–19) or its negative economic impacts, including assistance to households, small businesses, and nonprofits, or aid to impacted industries such as tourism, travel, and hospitality” (Part 8, Subtitle M of ARP). The amounts to be distributed are substantial. The U.S. Department of Treasury (“Treasury”) lists the county-by-county distributions here and the allocations for “entitlement” cities here.

The Interim Final Rule, promulgated by Treasury and codified at Part 35 of Subtitle A of Title 31 of the Code of Federal Regulations, recognizes “a broad range of eligible uses” for FRF, and offers local governments “flexibility to determine how best to use payments.” Although the rule is still “interim” and therefore leaves some details to be finalized, public officials are beginning to plan how they will utilize the infusion of funding. This post is designed to inform those initial planning discussions at the local level, and it will be updated when/if the “interim final rule” is revised.

UPDATE: In an “explainer” on the Interim Final Rule, Treasury confirmed that “Funds used in a manner consistent with the Interim Final Rule while the Interim Final Rule is effective will not be subject to recoupment.”

There are many possible uses of FRF, ranging from premium pay for essential workers, to water, sewer, and broadband infrastructure. One particular category of potential FRF-eligible activities has generated a good deal of interest and questions from public officials: 31 C.F.R. 35.6(b)(12)(ii)(B) authorizes FRF to be used for “[d]evelopment of affordable housing to increase supply of affordable and high-quality living units.” Read more »

Implementing the ARPA COBRA Subsidy and Claiming Your Tax Credit

BACKGROUND: COBRA HEALTH INSURANCE CONTINUATION COVERAGE

When an employee separates from service, whether voluntarily or involuntarily, or has work hours reduced to the extent that the employee no longer qualifies for participation in the employer’s group health plan, the Consolidated Omnibus Budget Reconciliation Act (COBRA) requires employers—both public and private–to allow the employee (and beneficiaries) to continue their coverage under the plan for eighteen months if the employee pays the premium (actually 102% of the cost of the premium).  COBRA continuation coverage applies in a few other circumstances that are not relevant to this discussion.

COBRA requires only the continuation of health insurance coverage; it does not require the employer to continue to pay the premiums for coverage. The employee pays the premium.  But that’s where the APRA makes its big change.  The employee, from April 1 through September 30, does not have to pay the premium. Read more »

We Don’t Prorate in Our State (Well, Sometimes We Do)

How many taxpayers have asked you this question: “Can I get a partial refund on my property taxes if I sell the property in the middle of the year?”  The short answer is normally, “No, we don’t prorate property taxes.”  But that’s not the complete answer.

Under the Machinery Act (the odd name for the portion of North Carolina General Statutes Chapter 105 that governs local property taxes), property taxes are a bit like pregnancy; property is either taxable for the full year or it’s not taxable for any of the year. There is usually no in-between.

The are only three situations in which taxes are prorated based on the number of months the property is taxable: Read more »

IRS Issues Guidance on COBRA Premium Assistance

On May 18, 2021, the Internal Revenue Service published Notice 2021-31, Premium Assistance for COBRA Benefits. This 41-page document makes clear that in the case of fully-insured health plans, the IRS will treat the employer as the entity providing the premium credit and the employer will be the entity entitled to the tax credit for the premium assistance. The language of the American Rescue Plan Act implied that fully-insured employers would not be entitled to the tax credit and that only insurers and self-insured employers would be entitled to the tax credit. That was the interpretation provided by the author in a previous blog post. Look for a new blog post summarizing the IRS guidance sometime during the week of May 24th.

American Rescue Plan Act of 2021: Funding Updates for NC Local Governments

AMENDED May 14, 2021: Note that the post has been updated to provide more information on why a local government’s governing board must vote to accept the federal grant. There also have been a number of upload glitches, but this should reflect the final version. I apologize for any inconvenience.

As detailed in a previous post, the federal American Rescue Plan Act of 2021 (ARP) includes substantial aid for state and local governments. See Part 8, Subtitle M—Coronavirus State and Local Fiscal Recovery Funds of H.R. 1319 American Rescue Plan Act of 2021. This post includes some important updates about the funding process and expenditure parameters. (Note that many entities refer to these provisions as the Coronavirus State and Local Fiscal Recovery Funds, CSFRF, CLFRF, or Fiscal Recovery Funds. For consistency with my previous post, I refer to them as ARP Funds. All of these references are to the same federal grant funds.) Read more »