Last Friday, the president signed into law House Bill 748, the “Coronavirus Aid, Relief, and Economic Security Act.” In it, the Federal government authorized more than $2 trillion in emergency relief aid for individual taxpayers, businesses, public health institutions, and state and local governments. We’ve looked through the bill to see where local governments might find some relief from the impact of the pandemic response and have identified a number of potential avenues.
The bill itself is little more than a list of authorizations for various expenditures with qualifications and formulas to determine where the money flows. There is still plenty of work to be done to create the mechanisms for distributing the money. Most of the appropriations are required to be invested on impacts related to the Coronavirus pandemic, although there are exceptions.
From what we see in the bill, there are a number of avenues for local governments and school districts to receive funds, both as pass-throughs from other agencies or as grants from specific programs, using pre-existing processes.
Below are areas of the bill that contain potential funding opportunities for counties, cities and school districts.
State, Tribal, and Local Governments
The bill sets aside $150 billion in direct aid for government agencies outside the federal government, $8 billion of which is reserved for tribal governments and $3 billion for territories, which includes the District of Columbia.
States will receive a pro-rata share of the remaining $139 billion, based on population, with a floor of $1.25 billion. Local governments (counties, municipalities, or other subdivisions below the state level) with a population in excess of 500,000 can receive direct payments from the Federal government, which will be deducted from the state’s total allotment.
To receive the funds, the local government will have to certify that the funds will be used for:
- Necessary expenditures to address the impacts of COVID-19,
- Items not in the current annual budget, and
- Costs incurred between March 1 and December 30, 2020.
For local governments under 500,000 population, it will be up to each State government to determine how any funds will be passed through.
COVID-19 Response Efforts
There is an additional $274 billion in the bill for various departments that may supply funding directly to local governments or community members. Most simply increase the funding to existing programs, which will make it easier for local governments with experience in these areas to access funding. The ones that look most promising are:
- Increasing the amount available under the State and Local Law Enforcement Assistance program by $850 million.
- Adding $100 million to the Assistance to Firefighters Grants for the purchase of personal protective equipment.
- Providing funding for the Commodity Assistance Program of $450 million.
- Adding $1.5 billion to Economic Development Assistance Funds under the Public Works and Economic Development Act.
- Boosting the Education Stabilization Fund, which will be made available through State grants to local education agencies and higher education institutions, by $30.8 billion.
- Providing direct aid to local food systems, including farmers markets, restaurants and schools, of $9.5 billion.
- Appropriating $10 billion as Grants-In-Aid for Airports, of which $100 million is earmarked for general aviation airports for any purpose that they normally can use airport revenues for.
- Adding $25 billion to Transit Infrastructure Grants.
- Providing an increase to Homeless Assistance Grants of $4 billion, half of which will be distributed to current grantees under the 2020 formula.
- Adding $20.5 million to the Rural Business Program Account.
- Increasing money for rural distance learning, telemedicine and broadband by $25 million.
- Boosting the Child Nutrition Programs budget by $8.8 billion.
- Setting aside $15.5 billion for the Supplemental Nutrition Assistance Program.
- Furnishing the Army Corps of Engineers an additional $50 million for operation and maintenance activities and $20 million for expenses.
- Increasing funding to the Department of the Interior’s Water and Related Resources program by $12.5 million.
- Adding $400 million to the Election Security Grants program.
- Supporting FEMA by appropriating an additional $44.5 million in operating costs and adding $45 billion to the Disaster Relief Fund. While most amounts are restricted to COVID-19 response only, $15 billion of the disaster funds are for any purpose allowed under the original authorizing act.
- Increasing Emergency Management Performance Grants by $100 million.
- Adding $200 million to the Emergency Food and Shelter Program.
- Giving the Department of Agriculture $34 million in funding for the National Forest System and $7 million for Wildland Fire Management.
- Providing $1.5 billion in funding to the CDC to support grants or cooperative agreements with states and localities for various disease-related activities, including mitigation, communication, and preparedness and response activities.
- Adding $250 million to Certified Community Behavioral Health Clinic Expansion Grants.
- Boosting suicide prevention programs with an additional $50 million.
- Setting aside $955 million for Aging and Disability Services Programs, including nutrition services, support services for family caregivers, and other activities authorized by the Older Americans Act of 1965.
- Providing independent living centres that have received grants an additional $85 million.
- Adding an additional $350 million for Migration and Refugee Assistance.
- Beefing up the Essential Air Service and Rural Improvement Fund by $56 million.
Children and Families Services Programs
The bill provides significant increases to a number of key programs, including $3.5 billion to Payments to States for Child Care and Development Block Grants, $1.9 billion to Children and Families Services Programs (includes Head Start), and $900 million for the Low Income Home Energy Assistance program.
Some rules have been changed as well, to benefit local government. For instance, the time to expend funds under the Children and Families Services Programs carry over for the next two fiscal years. For participants in the Head Start Act, the same ratios will be applied to the new $750 million in funding, which should streamline that process.
Other money in this section is earmarked for:
- $500 million for operating supplemental summer programs.
- $45 million for Family Violence Prevention and Services formula grants.
- $25 million for the Runaway and Homeless Youth Act.
- $45 million for child welfare service.
Community Development Block Grants
The bill includes $5 billion for the Community Development Fund, which was created by the Housing and Community Development Act of 1974. A key provision is that up to $2 billion be distributed to entitlement communities in states based on 2020 formulas within the next 30 days. Another $1 billion is earmarked for States for entitlement and non-entitlement communities, based on public health needs and the impact of COVID-19. The remainder will be distributed taking into account the number of cases compared to the national average and other indicators of housing and economic disruptions.
Other allocations in this area include:
- $1.3 billion for Tenant-Based Rental Assistance, $850 million of which is available for administrative and other expenses of public housing agencies for section 8 programs and $400 million for section 8 renewal funding allocations.
- $1 billion in Project-Based Rental Assistance.
- $685 million for the Public Housing Operating Fund.
- $65 million for Housing Opportunities for Persons with AIDS.
- $50 million for Housing for the Elderly programs.
- $15 million for Housing for Persons with Disabilities.
A total of $30.8 billion has been set aside for education, although the precise breakdown of where those funds will be used is not contained in the bill. Generally, additional funding will be allocated to the States in the Elementary and Secondary School Emergency Relief Fund based on the current formulas, 90% of which must be awarded as sub-grants to local education agencies. Likewise, the Governor’s Emergency Education Relief Fund will also be increased for pass-throughs to local agencies. Safe Schools and Citizenship Education programs will receive an additional $100 million for cleaning and disinfecting schools affected by the virus, as well as offset some distance learning costs.
Other Possible Benefits
There are a number of items that appear to affect local governments in the bill. They include:
- Section 2103 Emergency Unemployment Relief for Governmental Entities and Nonprofits provides funding from the Federal government to States that is restricted to reimbursing governmental entities and nonprofits for amounts paid into the State unemployment fund.
- Section 2302 provides for permissible delays in paying employer payroll taxes until December 30, 2020.
- Employers will be able to apply a credit for any emergency paid sick leave against payroll taxes.
- Reauthorization of the Healthy Start Program.
- Section 3608 allows for deferment of minimum annual contributions of single-employer retirement plans.
- Extension of the Sexual Risk Avoidance Education Program, Personal Responsibility Education Program, and Temporary Assistance for Needy Families Program.
- Increasing funding for community health centres to $4 billion.
- Public Health and Social Services Emergency Fund expenditures may include some local grants, out of a total of $27 billion.
- The Veterans Health Administration will receive $14.4 billion for medical services, $2.1 billion for medical community care, $100 million for medical support and compliance, and $606 million for medical facilities.
In addition to areas where local governments and school districts could see direct impacts, there are a number of provisions that have an affect on their communities.
Hospitals, community health centres and other public health agencies will see an influx of $153.5 billion to address needs during the pandemic. Although no specific amount is cited in the bill, there is a potential for county and regional public health departments to see relief through grants to local partners. There was also an emphasis on supporting medical services for rural and underserved areas.
The support for individuals and businesses, which accounts for three-quarters of the potential spending in the bill, will have a residual effect on local government revenues as well. By bolstering taxpayers’ ability to make ends meet and supporting businesses, we will hopefully experience less bankruptcies, foreclosures and unemployment than if nothing had been done.
Small businesses, in particular, may be helped in ways that directly impact local government revenues. There’s a setaside of $10 billion for emergency grants and $350 billion in additional Small Business Administration loans. For the loans, any amounts applied to maintaining payroll or rent can be forgiven, if workers remain employed through the end of June 2020. Additionally, $6 billion has been allocated to cover up to six months of loan payments on existing SBA loans. Several other loan programs are cited in the bill that could help small businesses as well.
In the short term, this may support higher sales tax revenues than otherwise would have been realized if more businesses were forced to close down. Longer term, property values may be less impacted, as will construction projects already underway. This isn’t to say that there won’t be significant impacts, just that the relief will help mitigate the severity of them.
Taken as a whole, there’s a number of funding sources that will be available to help mitigate local government spending and losses due to COVID-19 in the bill.