A Network of the National Association of State Treasurers
Policy Update:

Additional Details on Potential Bipartisan Deal on State and Local Aid Emerge

U.S. Capitol Building in Washington, D.C.
Brian Egan, Policy Director, NAST

A bipartisan group in Congress released additional details on what a potential Emergency COVID Relief package could would look like this afternoon.  The package would include many of the provisions we reported on the other week — including a 16-week extension of $300 per week in Federal Pandemic Unemployment Compensation (FPUC), a second round of Paycheck Protection Program loans, and $160 billion in flexible state and local aid. 

It is important to note that the package’s inclusion of state and local aid appears to be contingent on the concurrent inclusion of liability protections for employers.  The full package is accordingly being split into two bills — one encompassing areas of consensus (PPP, unemployment relief, etc.) and the other focusing on liability and state and local aid. It remains unclear whether deals can be reached on any front. Furthermore, if the bills are separated it is possible state and local aid and business liability may be punted into the next Congress. 

Details from today’s press event, however, included distribution methods and guardrails for the $160 billion in state and local aid. Tribal governments would receive $8 billion of the fund, and the remaining $152 billion for states would be distributed as follows: 

  • 1/3 would be distributed to states based on their proportion of the U.S. population 
  • 2/3 would be distributed based on the proportion of each state’s revenue loses relative to the total revenue losses of all states nationwide
  • Each state entitled to a minimum of $500 million

The timing of the funding would be distributions across three traches:

  • First tranche would be dispersed within 30 days of enactment and would include the population based funding. In addition, needs-based funding that tracks actual revenue losses incurred by state and local governments from April 1, 2020 to September 30, 2020 relative to the same period in 2019. 
  • Second tranche would be dispersed by June 1, 2021 and would include the needs-based funding that tracks revenue loss incurred by state and local governments from October 1, 2020 to March 31, 2021 relative to the same period in 2019.
  • Third tranche would be a $10 B set-aside to be dispersed based on the proportional revenue losses of each state from April 1, 2021 to June 30, 2021 relative to the same period in 2019.

Governors must distribute 40 percent of the state’s funding to local governments but will choose how:

  • Proportional population 
  • Proportional revenue loss
  • Combination of both

Other provisions include and guardrails include:

  • Extending the deadline for spending CARES Act Coronavirus Relief Fund Aid on COVID-19 related expenses until December 31, 2021.
  • Guardrails that would prohibit the use of these funds to cover enhanced pension obligations and a prohibition on the expansion of public pension benefits while receiving funds. 

“Core” Bill ($748 billion)

Second Bill ($160 billion for state, local and tribal aid)

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