On February 5, 2021, both the House and Senate passed a budget resolution paving the way for the next coronavirus relief package. Although various committees of jurisdiction are still in the process of drafting and negotiation the different pieces, the total package the Biden Administration is calling for amounts to $1.9 trillion. Regarding additional state and local aid, the initial expectation is that $350 billion will be allocated – although similar to previous relief debates, providing the additional aid remains a point of contention. GFOA urges members to reach out to their congressional delegation at this critical time to stress the importance of additional support needed by state and local governments. Click here for the bill the House Committee on Oversight will be considering later this week that includes state and local aid. Click here for a quick summary of the bill's fiscal aid provisions - Please note, details are subject to change as committees in both chambers still need to markup the bills.
Opponents of providing state and local aid claim that funding provided in previous relief packages remain unspent. The ranking members of the House Ways and Means and the House Oversight Committee recently sent letters to Treasury Secretary Yellen and Treasury OIG Delmar to request details on Treasury's disbursement and recipient use of the funds provided by the Coronavirus Relief Fund.
In response to these concerns, GFOA, on the same day the budget resolution was adopted, sent a letter to every congressional office emphasizing the findings from its October 2020 report CARES Act – Coronavirus Relief Fund: The Prime Recipient Perspective. The report highlighted that while Congress’ swift action provided in the CARES Act for state and local governments helped to mitigate the impact of the COVID-19 pandemic, there was a broad agreement on the need for additional support.
Here are some highlights of the report’s findings:
- An overwhelming 91 percent of respondents stated they would benefit from additional federal aid. Unrestricted aid was requested to offset revenue losses as well as the need for more assistance past December 30. Hard hit sectors such as in-person service and travel continue to need assistance well into 2021. Additional aid would help cover increased costs of providing services in a COVID-19 environment.
- Three-quarters of the respondents found the restrictions on the use of CRF funds, such as the inability to use funds on lost revenue to be their biggest challenge. Respondents consistently expressed that while some economic sectors revived, others continued to suffer, including “main street” businesses. Respondents stated that the fund’s inflexibility and restrictions on the use of funds were preventing state and local governments from making the most of the federal assistance in meeting essential needs of their residents – in direct conflict with the spirit of the CARES Act.
- The vast majority of recipients stated in August 2020 that 75-100 percent of their funds had already been committed to purchasing eligible goods or services, or “obligated,” by the end of 2020. US Treasury Office of the Inspector General has yet to publish the December 2020 audit of Coronavirus Relief Fund spending activity. In August, 82 percent of the surveyed prime recipients noted that the funds would be fully spent by December 30, 2020.
GFOA members should reach out and urge their Senators and Representatives to support state and local aid in the next relief package. Click the button below for a template letter to send to your delegation members.
- Publication date: February 2021