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COVID-19 Federal Legislation

 

CARES Act Coronavirus Relief Fund Not Enough to Support Local Government Reopening and Recovery

Federal Legislation 

H.R. 6201 - Federal- Families First Coronavirus Response Act (FFCRA) - This new law creates mandatory paid leave conditions. Passed by both Houses and signed by President Trump.

 

STATE AND LOCAL FUNDING BILLS AS OF 5.18.2020

Bills recently introduced

Name of the bill: SMART Act

Bill Introduced by: Senators Menendez and Senator Cassidy

Here is what it does:

  • The bill allocates $500Bn overall, with $20Bn reserved for Tribal governments. The funds can be used until exhausted. There is a minimum allocation: each state will receive no less than $2Bn
  • There are three tranches
  • Tranche 1: Population. $160Bn is sent to the states by population. The states hold onto 2/3 of the money and 1/3 of the money is passed through to municipalities and counties. 50 percent of the 1/3 goes to counties. 50 percent goes to municipalities.
    • The payments to municipalities will be based on a population ratio of a municipality’s total population to the population of all municipalities in the state.
    • The formula for the state’s allocation is the total population of the state to the total population of U.S.
  • Tranche 2: Infectious rate. $160Bn is sent to the states based on the state’s infection rate of COVID-19 ON June 1, 2020 divided by the total of all COVID-19 cases in all states on such date.
    • The state would keep 2/3 of the funds
    • 1/3 of the funds would be passed though to counties and municipalities
      • 50 percent would go to municipalities
      • 50 percent would go to the counties
        • The payments to municipalities will be based on a population ratio of a municipality’s total population to the population of all municipalities in the state.
  • Tranche 3: Lost revenue. $160 billion is used for lost revenue.
    • The state will receive a relative portion of $160Bn based on the formula
      • The payments to each state will be based on the ratio of the state’s revenue loss to the total revenue loss for all states.
        • Revenue loss is defined as the amount by which “taxes or other sources for the State for calendar year 2019” exceeds those for calendar year 2020 as certified by the Governor of that state.

Use of Funds

  • The funds can be used to cover
    • Necessary expenditures due to COVID-19 including expenditures necessary to meet the non-Federal share contribution requirement of any public assistance that is provided under the Robert T. Stafford Disaster Relief and Emergency Assistance Act (42 U.S.C. 5121 et seq.) on the basis of a disaster or emergency declaration that is related to the COVID-19 pandemic
    • Not accounted for in the most recent budget
    • Were incurred during the period from March 1, 2020 to December 31, 2020
    • For expenditure in calendar year 2020, 2021, or 2022 that the State, Tribal government, or unit of local government would otherwise be unable to make because of decreased or delayed revenues.
  • Limitation
    • May not be used to for pension funds.

Why it is important:

This bill is the first, bipartisan effort post-HEROES Act in the Senate. It has three Republican and three Democrats on the bill for the introduction, with the possibility of adding more cosponsors soon.


Name of the bill: HEROES Act

Bill introduced: House Democrats

Here is what it does:

  • The bill includes $375 billion for local governments.
  • $131.25 billion is allocated to CBDG entitlement cities. 
  • $87.5 billion of the overall allocation to entitlement cities is paid within 30 days of enactment of the bill. 
  • $43.750 billion is paid not earlier than April 15, 2021, but not later than May 3, 2021.
  • Non-entitlement areas
  • $56.250 billion is be allocated to states so the money can be passed through to non-entitlement areas of a state. 
  • Two-third of the allocation for non-entitlement areas are distributed within 30 days of the bill’s passage. 
  • The remainder of the fund shall be disbursed between April 15, 2021, but not later than May 3, 2021. 
  • If the state does not pay the applicable amount to non-entitlement areas, the Treasury shall pay the applicable amounts. 

Why is this important:

This bill provided significant funding for local governments. However, as written, the bill is a non-starter with the Senate and White House.


Name of the bill: Coronavirus Relief Fund Flexibility for State and Local Government Act

Bill Introduced by: Senator Kennedy of Louisiana

Here is what it does:

  • Use CARES Act funding for operating expenses unrelated to the coronavirus.
  • Continue using these funds until they are expended.  (Currently, state relief funds expire on Dec. 30, 2020 and States are required to send unused funds back to the U.S. Treasury.)
  • However, this package does prevent the money from being used for pension funds.

Why is this important:

  • This is a recognition by Kennedy, a conservative senator, that the CARES Act funds do not go as far as they could.
  • The problem is this bill sets up the argument that no more money needs to be expended. The thinking is that the federal government appropriated $150 billion and all of this money should be used before any more money is allocated.

Name of the bill: Coronavirus Relief Fund Flexibility Act

Bill introduced by: Sens. Shelley Moore Capito, Republican of West Virginia; Dan Sullivan Republican of Alaska; Sheldon Whitehouse Democrat of Rhode Island; Lisa Murkowski Republican of Alaska; Angus King, Independent of Maine; and Kevin Cramer Republican of North Dakota.

Here is what the bill does:

  • The legislation would allow for revenue replacement for shortfalls resulting from the pandemic. The legislation would apply retroactively to the enactment of the CARES Act.

    Why it is important

  • This is another bill, this one bipartisan, from states that did not have a eligible unit of local government – a city or a county.
  • This shows growing awareness on the part of Senators that the CARES Act funds need to used for revenue shortfalls, which is a major problem.

    Name of the bill: Direct Support for Communities Act

    Bill introduced by: Schumer, Gillibrand, and U.S. Representatives Antonio Delgado, Democrat, and Lee Zeldin, Republican

    Here is what the bill does:

  • Of the portion allocated for cities, towns, and villages, 70% would go to Community Development Block Grant (CDBG) entitlement communities using the CDBG formula through the Department of Housing and Urban Development (HUD) to allocate the funding.
  • The remaining 30% for cities, towns, and villages would be send to states, which would be required to sub-allocate the entire amount within 30 days to all non-entitlement communities in the state based on population.

    Why is this important:

  • This is a bipartisan, bicameral bill provides the formula that we had been fighting for.
  • It has the leader’s blessing behind it

  • Bill introduced by: Representatives Cindy Axne (D-IA) and Peter King (R-NY)

    Here is what the bill does:


 

Name of the bill: Coronavirus State and Local Financial Assistance Act

  • The legislation would create a new $500 billion grant program to support state and local governments that have lost revenue due to COVID-19 and necessary social distancing precautions they’ve taken.

    Why it is important

  • I think this bill is useful to generate more bipartisan support, reinforce higher ask of $500 billion, and keep momentum growing.  Its focus on lost revenues helps minimize McConnell/conservatives’ claims that democratic jurisdictions are bad stewards of spending funds.

    Name of the bill: The FLEX Act

    Bill introduced by: Representatives Don Bacon (R-Neb.)

    Here is what the bill does:

  • The legislation provides flexibility in the CARES Act so funds can cover lost revenue.

    Why it is important

  • This bill had 7 Dems and 5 GOP members on it, making it one of the first bills we supported that has bipartisan support.

Other things of note

  • Dear colleague by Nita Lowey
    • The letter outlines the formula from the Schumer bill.
    • It is important that she endorsed this formula as she is the House Approps. Chairwoman.

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