In our previous CARES Act blog post, we broke down the stimulus bill that brought over $2 trillion to citizens and businesses (if you haven’t seen that post yet, you can read it HERE). Now we’re going to focus on the $150 billion chunk that was dedicated directly to state, territorial, and tribal governments, including the specific areas that money has been funneled into after making it all the way down to the local level.
CARES Act allotments to state and local governments have not been immediately available to all governments equally. Funds have been slow to make their way into government coffers. Read on to find out how funding was distributed
Laws passed at the federal level often end up affecting each state differently. In this case, different states received different amounts of CARES Act money based on population (see the Center on Budget and Policy Priorities’s estimated funding table below).
As for how the states have been spending this money? Well, let’s start with the guidelines. According to the National Conference of State Legislatures (NCSL), states are only allowed to spend the money on expenses that:
The U.S. Department of the Treasury has issued guidance on eligible expenses, but questions and concerns regarding what constitutes the word “eligible” in the varying contexts of each state has led to spending reservations. A big concern is that money spent on ineligible expenses may have to be repaid to the federal government. One of the biggest disappointments associated with CARES Act funding is that funds cannot be used to backfill lost state revenues, which is often one of the most common state needs.
What does the process of deciding where the money goes look like in each state? And how is the money being spent?
There has been some conflict over who gets the final say, like in New Hampshire where House Democrats challenged the power of Governor Chris Sununu (R) to spend the state’s funds without legislative review or approval (this challenge was later dismissed). The majority of states have had their executive and legislative branches working together to figure out where funds go. In fact, almost all 50 states and territories have created or proposed oversight measures to monitor the CARES Act funds. See the state-by-state chart HERE.
As for how the state and local CARES Act money is being spent, let’s categorize -
Interestingly enough, states are not required to share state funding with their cities, states, and various other municipalities, though most have made efforts to assist their local bodies through programs that provide money for or reimburse expenses related to the crisis.
One of the biggest concerns for state and local governments is to remain in compliance with the three spending guidelines. One of the most difficult to comply with is the fast end-of-year time limit to spend the allotted funds. The Act states that “On Dec. 30, 2020, unused funds will revert to the federal government.”
Take the city of Ford, Kansas for example. The city of Ford has recently begun construction on a new city administration building. Their city clerk, Penny McAllister, says the upgrade is necessary and that necessity is a direct by-product of COVID-19 because the current one is, “an old school building with no windows, ventilation or enough spacing needed to ensure safety in a pandemic.”
“Quite frankly, to try to retrofit a 1950s school building to make it up to COVID standards or any other disease pandemic that might come along would cost millions of dollars.” said McAllister. “We try to be fiscally responsible for a small town. The best cost-effective (way) would be to build a new building.”
The city estimates the total cost of the new building to cost $245,000. The problem lies both in Kansas’s hesitancy to define the building as COVID-necessitated and the state’s concern over the end-of-year deadline. As of now the plans are going through, but there is still a worry of a cancellation coming down from the state-level.
A sudden chunk of funding to any local and state government can be daunting. What do you spend it on? What takes priority? One of the most resourceful uses of this funding is to bring outmoded or outdated systems up-to-date. This can mean everything from finally implementing a comprehensive 311 service to modernizing your public records processes with public records software.
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