A bipartisan group of U.S. Senators announced Monday afternoon their emergency $908 billion COVID-19 relief legislation
, which includes up to a five percent state set-aside in state/local government relief for special districts.
The two-part legislative package is based on framework the group released two weeks ago. The proposal includes a $748 billion bill for a variety of COVID-19 response programs, which is formally drafted as the “Bipartisan COVID-19 Emergency Relief Act of 2020.” A separate, more contentious $160 billion draft bill for state/local government relief, titled the “Bipartisan State and Local Support and Small Business Protections Act,” is tied to COVID-19 liability protections for businesses. An agreement is yet to be reached.
How the “Coronavirus Local Community Stabilization Fund” Would be Divided
The state/local relief proposal would establish a Coronavirus Local Community Stabilization Fund with $8 billion reserved for tribes. The remaining $152 billion would be handled as follows:
- S. Treasury would allocate funding to states based on a formula: Two-thirds distributed based on state revenue losses and one-third based on states’ proportion of the nation’s population.
- Regardless, states will be allowed a minimum of $500 million.
- There is no cap on how much a single state may receive, subject to overall appropriation limits.
- States will not be allowed to use any relief monies to boost pension funds.
- States would use 60 percent of monies received under this program for their own use.
- Up to 5 percent of the states’ portion would be allocated to “special-purpose public entities in the state that perform essential public health and safety functions related to the COVID-19 pandemic.”
- Governors would distribute the remaining 40 percent of their states’ total allocation to counties and cities (20 percent to counties, 20 percent to municipalities) based on:
- Localities’ proportion of the state population
- Localities’ proportion of overall revenue loss
- A combination of both the above, consistently executed across the state. This is aimed to ensure no region within a state is disproportionately benefited or short-changed.
NOTE: Regarding the Meaning of Entities Providing “health and safety functions”
CSDA is engaged with its National Special District Coalition partners, national HR 7073/S. 4308 support coalition members, and congressional and regulatory stakeholders to seek clarification and additional guidance on the meaning of "health and safety functions." This remains uncertain at this moment. Any news on this particular part of the text will be shared as it develops.
How Much States Could Receive and Timeline of Distribution
Should the proposal become law, Treasury would distribute relief funds to states in three phases. The timeline:
- Within 30 days of the bill becoming law: the full one-third population-based state allocations would be made. A second disbursement based on state tax revenue losses in the second and third quarters of 2020 compared to the same quarters in 2019 would also be determined. The U.S. Census Bureau’s Quarterly Summary of State and Local Tax Revenue will guide revenue loss payment amounts. A 1.48 multiplier would be applied to the census figures. Adjustments would be made to a state’s allocation depending on how much it spent to meet non-federal cost share requirements of FEMA’s Pandemic Public Assistance program and whether the state had made adjustments to its tax law. Overall disbursements could total $90 billion in this first phase.
- No later than June 1, 2021: a second round of revenue loss-based disbursements would be made using the first phase’s methodology but would be determined by comparing revenue figures from the fourth quarters of 2019 and 2020 plus the difference between the first quarters of 2020 and 2021. Funding would be capped at $142 billion of the overall program appropriations to ensure funding for one final round of $10 billion to states, which would be determined using data for the second quarter in 2021 that the Census Bureau would release by September 1, 2021.
The deadline to expend Coronavirus Relief Fund monies would also be extended to December 31, 2021. The current deadline under the CARES Act is December 30, 2020.
The Political Context and Likelihood of Passage
Lawmakers involved in the negotiations point directly to disagreements on liability protection as the reason for the split in the proposals, leading to some pessimism on whether state/local relief funding will be included with any legislation that moves prior to the end of the year. This, as Congress faces a Friday deadline to pass a $1.4 trillion omnibus Fiscal Year 2021 appropriations bill – legislation to which both House Speaker Nancy Pelosi, D-Calif., and Senate Majority Leader Mitch McConnell, R-Ky., have said they would like to see COVID relief attached. McConnell still has not stated a support position for the $908 billion legislation.
Prospects are Better for the Larger $748 Billion Emergency Response Bill
The bipartisan group set aside more agreeable policies in a separate bill, which may move at a faster pace than state/local relief.
Relevant highlights of the $748 billion emergency response package:
- 16-week extension of enhanced pandemic unemployment assistance at $300 per person. Current enhanced pandemic assistance expires on December 26.
- $300 billion in additional Paycheck Protection Program (PPP) funding, which would include expanding program eligibility to 501(c)(6) organizations.
- $45 billion for airlines, airports, bus transit, Amtrak and other public transit entities.
- $35 billion for the Healthcare Provider Relief Fund.
- $25 billion in rental assistance, used from the Coronavirus Relief Fund, along with a one-month eviction moratorium extension.
- $16 billion for COVID-19 testing, tracing, vaccine development and delivery.
- $12 billion for economic assistance to low-income and minority communities in response to economic impacts stemming from the pandemic.
- 15 percent increase in Supplemental Nutrition Assistance Program (SNAP/food stamps) benefits for four months.
- An undetermined amount of funds for U.S. Department of Agriculture Rural Development water and wastewater programs.
Click here for a full summary of programs and funding levels included in the larger bill.
This bipartisan effort will continue to develop throughout the week. CSDA continues to engage with its national support coalition partners and all involved members of each congressional delegation. More information will be posted on CSDA’s Advocacy News and COVID-19 community forums. Contact Cole Karr at colek@csda.net for more information.
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