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Apr 24

Locals Looking for Support and Flexibility in Next Federal COVID Bill

Posted on April 24, 2020 at 10:20 AM by Legislative Staff

When Congress passed the Coronavirus Aid, Relief, and Economic Security Act - $2.2 trillion CARES Act - it included a $150 billion State and Local Stabilization Fund. Minus funding for U.S. Territories, and autonomous Tribal Governments, about $139 billion is being distributed to the States, for their own use (55%) and for redistribution to ‘qualifying’ local governments (45%). 

The State of New Jersey is slated to receive $3.444 billion. Of that total, a minimum of $1.894 Billion is earmarked for State use. The balance, $1.550 billion, COULD be distributed to ‘qualifying’ local government.  

Sadly, Section 601(g)(2) of the CARES Act included an incredibly limited definition of:

“LOCAL GOVERNMENT—The term ‘unit of local government’ means a county, municipality, town, township, village, parish, borough, or other unit of general government below the State level with a population that exceeds 500,000.”

Based on that definition that includes a population threshold, zero New Jersey municipalities and only nine of our State’s counties are qualified for this funding. Even those around the country that did qualify are finding the funding of limited use. Regarding that, the Act says: 

 ‘‘(d) USE OF FUNDS.—A State, Tribal government, and unit of local government shall use the funds provided under a payment made under this section to cover only those costs of the State, Tribal government, or unit of local government that— 

‘‘(1) are necessary expenditures incurred due to the public health emergency with respect to the Coronavirus Disease 2019 (COVID–19); 

‘‘(2) were not accounted for in the budget most recently approved as of the date of enactment of this section for the State or government; and

 ‘‘(3) were incurred during the period that begins on March 1, 2020, and ends on December 30, 2020.’’

Yesterday, the U.S. Treasury released official guidance. These funds can only be used to fund extraordinary costs, caused by COVID-19. These must be costs over and above funding included in each entity’s current operating budget. They cannot be used to cover revenues not collected, as a result of the financial impact of the coronavirus on taxpayers.

It is worth noting that the CARES Act also increased appropriations for a number of Federal Grant programs. These include: DOJ Byrne–Justice Assistance Grants; Firefighter Grants; Emergency Food and Shelter Grants; HUD Community Service Block Grants; Domestic Violence Grants; Homeless Assistance Grants; Mental Health and Addiction Services Grants; Aging and Disability Services Grants; and others. Each of these has its own restrictions on use of funds and criteria for qualification.

Our federal partners at the National League of Cities (NLC) have been hard at work to secure support for funding for all of America’s municipalities, and for greater flexibility in the use of that aid. New Jersey Congressman Tom Malinowski was one of the first to recognize that new legislation was needed. He became a lead sponsor of the Coronavirus Community Relief Act (CCRA - H.R. 6467), which would provide $250 billion of support to all the municipalities, and counties, left out of the CARES Act Stabilization Program. 

By our rough estimates, based on population, every New Jersey municipality would get a share of about $4.59 billion, if the CCRA becomes law.

In order for any bill to pass both Houses and be signed by the President, some limits on fund usage would be needed, but sponsors of the CCRA recognized that the CARES Act limits were inappropriate. This is how the CCRA deals with use of funds.

‘’(d) Use of funds.—A unit of local government shall use the funds provided under a payment made under this section to cover only those costs of the unit of local government that—

“(1) are costs that— 

“(A) are reasonably deemed by the unit of local government to be necessary; and

“(B) directly or indirectly involve, relate to, are, have been, or will be incurred due to, or are, have been, or will be a response to circumstances caused by, the public health emergency with respect to the Coronavirus Disease 2019 (COVID–19); and

“(2) were incurred during the period that begins on March 1, 2020, and ends on December 30, 2020.’’

This language should give a municipality appropriate and reasonable flexibility to use funding to address costs that ‘…directly or indirectly involve, relate to, are, have been, or will be incurred due to, or are, have been, or will be a response to circumstances caused by…’ the virus.

Joining Congressman Malinowski as cosponsors of H.R. 6467 are New Jersey Representatives Josh Gottheimer, Mikie Sherrill, Albio Sires, Jeff Van Drew, and Bonnie Watson Coleman. Senator Cory Booker will be introducing a companion bill in the Upper House.

We sincerely appreciate their advocacy, and we thank our partners at NLC for their work on our behalf.

Contact: Jon Moran, Senior Legislative Analyst, jmoran@njlm.org, 609-695-3481 x121. 

Tag(s): CARES Act