The federal American Rescue Plan Act (ARPA) of 2021, passed in March, 2021, providing nearly $2 trillion of funding to all states for projects to support public health expenditures; to provide premium pay for essential workers; to reestablish lost government services; and to invest in water, sewer, and broadband infrastructure. Montana received about $930 million in ARPA funds; however, the act imposed limitations on the states’ use of the funds. It specifically prohibits a state from using the funds to offset a reduction directly or indirectly in tax revenue.
ARPA was passed while the 67th Montana Legislature was in session. At that time, Montana legislators had proposed bills to lower tax rates and to offer tax credits and deductions. If these bills were passed unchanged, they could have jeopardized Montana’s ARPA funding. In an effort to keep the ARPA funds, these bills were amended to include an ARPA Savings Clause.