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AS OF JUNE 24, 2021 <br />14 <br /> <br />3.5. What is the formula for calculating the reduction in revenue? <br /> <br />A reduction in a recipient’s General Revenue equals: <br /> <br />Max {[Base Year Revenue* (1+Growth Adjustment)(nt12)] - Actual General Revenuet ; 0} <br /> <br />Where: <br /> <br />Base Year Revenue is General Revenue collected in the most recent full fiscal year prior <br />to the COVD-19 public health emergency. <br /> <br />Growth Adjustment is equal to the greater of 4.1 percent (or 0.041) and the recipient’s <br />average annual revenue growth over the three full fiscal years prior to the COVID-19 <br />public health emergency. <br /> <br />n equals the number of months elapsed from the end of the base year to the calculation <br />date. <br /> <br />Actual General Revenue is a recipient’s actual general revenue collected during 12-month <br />period ending on each calculation date. <br /> <br />Subscript t denotes the calculation date. <br /> <br />3.6. Are recipients expected to demonstrate that reduction in revenue is due to the <br />COVID-19 public health emergency? <br /> <br />In the Interim Final Rule, any diminution in actual revenue calculated using the formula <br />above would be presumed to have been “due to” the COVID-19 public health emergency. <br />This presumption is made for administrative ease and in recognition of the broad-based <br />economic damage that the pandemic has wrought. <br /> <br />3.7. May recipients use pre-pandemic projections as a basis to estimate the reduction in <br />revenue? <br /> <br />No. Treasury is disallowing the use of projections to ensure consistency and <br />comparability across recipients and to streamline verification. However, in estimating <br />the revenue shortfall using the formula above, recipients may incorporate their average <br />annual revenue growth rate in the three full fiscal years prior to the public health <br />emergency. <br /> <br />3.8. Once a recipient has identified a reduction in revenue, are there any restrictions on <br />how recipients use funds up to the amount of the reduction? <br /> <br />The Interim Final Rule gives recipients broad latitude to use funds for the provision of <br />government services to the extent of reduction in revenue. Government services can <br />include, but are not limited to, maintenance of infrastructure or pay-go spending for