FILE - Tennessee state flag

The Tennessee state flag flies.

(The Center Square) – Tennessee’s Financial Stimulus Accountability Group set out its plan Wednesday for spending the first half of more than $3.7 billion in American Rescue Plan federal COVID-19 relief.

The spending will include $1.35 billion on sewer-and-water infrastructure and $500 million on broadband expansion.

The other $1.875 billion in what the committee is calling the Tennessee Resiliency Plan will be discussed at September’s meeting. It will fund local government technical support, health capital projects, public health and economic relief.

“There has been a lot of work done to develop this strategy,” Gov. Bill Lee said before adding an important part of making sure the spending is productive is “how we can develop a plan so we can work with (local governments) and be collaborative.”

An essential part of that process will be matching-fund grants with local governments for sewer-and-water infrastructure and broadband spending and the local support program.

The state will use funds to create an eight-week training program on ARPA spending for local governments. The program will include updated guidance from the U.S. Treasury, best practices on using the federal funds and a monthly call with the public to solicit questions.

Local governments in Tennessee are set to receive $2.28 billion in ARPA funds with $516 million going to metro cities, $1.326 billion headed to counties and $438 million headed to smaller municipalities called non-entitlement units. The money for the last group will pass through the state treasurer before being distributed. The first two groups will receive the funds directly from the federal government.

The ARPA money must be spent or assigned by Dec. 31, 2024, with an extension to have the funds spent by Dec. 31, 2026, for infrastructure projects, or the funds must be returned.

Tennessee’s plan involves $1 billion in formula-based sewer and water grants for local governments, along with $350 million in state strategic priorities and competitive grants. To start the process, the state will be looking for local governments to complete a comprehensive inventory of the infrastructure in place so the matching funds can be used on the most important projects and in the most efficient way possible.

The first phase of the broadband infrastructure program will involve $400 million in grants for broadband providers, with applications due this fall and the awards being determined next spring. The other $100 million will be spent on broadband adoption initiatives. A second phase of broadband work targeting any remaining gaps in access will have applications due next summer.

The grant programs are aimed at joining state funds with local ARPA funds to effectively spend the money collectively. The state expects $438 million in local government funds to be spent on local sewer-and-water projects and $125 million added to state spending on broadband infrastructure.

The “state will provide a template and direction for local planning to help locals maximize funds in a deliberative manner,” according to the committee’s plan.

The goal of the collaboration is to provide consistency in reporting and spending processes between local entities to help them avoid audit issues in their use of the money, along with leveraging funds sent to each to complete the most important projects.

Tennessee expects additional guidance from the U.S. Treasury by Sept. 10 in order to determine the best division and use of the remainder of its funds.