By Erlinda Doherty
Nine months after the last significant tranche of coronavirus relief aid was provided to states in the Coronavirus Aid, Relief, and Economic Security Act (CARES Act), the House proposed a new $350 billion Coronavirus Relief Fund (CRF) Tuesday night that would permit state revenue replacement in addition to other COVID-related expenses.
Sixty percent, or $195.3 billion, would be allocated to states and Washington, DC, while 40%, or $130.2 billion would be distributed to local governments.
If enacted, this bill would allow the new CRF funds to “replace revenue that was lost, delayed or decreased as determined based on projections of the government as of January 27, 2020, as a result of such emergency address negative economic impacts of such emergency.”
This is significant as states had not been given the flexibility to use funds for this purpose in previous iterations of federal COVID relief despite universal agreement that states were experiencing serious revenue losses due to the shutdown of the economy to mitigate the spread of the pandemic.
Also critical is the ability for states to use the funds until expended, unlike the original CRF regulations which originally imposed a Dec. 30, 2020, deadline which hampered states ability to use the funds effectively.
States and D.C. would receive an estimated minimum of $500 million from the first $25.5 billion, with allotment of the remaining $169 billion based on each state’s share of unemployed workers from the last three months.
Local governments—split evenly between cities and counties—would get about $130 billion. Tribal governments would receive $20 billion and U.S. territories would get $4.5 billion. The proposed formula is intended to provide a more targeted approach to funding, while providing additional relief to local governments disproportionately affected by the slowdown in the economy.
The House Committee on Government and Oversight will mark up the bill this Friday and Republicans are expected to push back on some of the measures. NCSL will continue to advocate for the economic needs of states as we wade through the final months of the pandemic. Read the proposal text.
Erlinda Doherty is committee director in NCSL’s State-Federal Relations Program.