Senators Aim to Give States, Cities Greater Flexibility with COVID-19 Relief Funds
Legislation prohibits use of federal resources for shortfalls, expenses unrelated to the pandemic
U.S. Senators Dan Sullivan (R-Alaska), Sheldon Whitehouse (D-R.I.), Lisa Murkowski (R-Alaska), Shelley Moore Capito (R-W.Va.), Angus King (I-Maine), and Kevin Cramer (R-N.D.) yesterday introduced the Coronavirus Relief Fund Flexibility Act, legislation that would allow the federal relief funds provided to local governments in the Coronavirus Aid, Relief, and Economic Security (CARES) Act to be used to replace revenue shortfalls resulting from the pandemic. The legislation would apply retroactively to the enactment of the CARES Act.
“I’ve spoken with many Alaska mayors, city council members, legislators and local officials who are asking whether they can use the CARES Act’s substantial resources to shore up the revenue losses incurred by our communities through no fault of their own,” said Senator Sullivan. “The CARES Act clearly intends these relief dollars to help local governments struggling financially as a direct result of the pandemic. However, federal relief dollars should not be used to bail out governments that have mismanaged their finances for years with irresponsible decisions unrelated to this current global crisis. I want to thank my Senate colleagues for joining me on this commonsense statutory clarification that will give greater certainty to local governments across the country.”
“The pandemic has wreaked havoc on state budgets in Rhode Island and across the country, as revenues have dried up and tax deadlines have been delayed,” said Senator Whitehouse. “Our commonsense bipartisan proposal would clarify that states have the flexibility to use CARES Act resources where they are needed most, including replacing revenue shortfalls caused by the virus.”
“Alaska has done a great job mitigating the health consequences of this pandemic so far, but the economic consequences are just beginning. State and local governments are facing a huge decline in revenue. For example, we’re seeing extremely negative impacts in the energy and tourism sectors as a result of this public health emergency and know other industries are fearful of what’s to come, like our fishing sector,” said Senator Murkowski. “It is important that the federal government provide flexibility to local governments, so the funds can be spent where it is most impactful during this crisis.”
“Throughout this pandemic, I’ve been in regular contact with Governor Justice, county commissioners, mayors, and other state and local officials about the challenges they are facing in these uncertain times,” Senator Capito said. “One of those challenges is the lost revenue that the state, counties, and cities are experiencing because of this emergency, which has caused a real strain on their budgets. This bipartisan bill is a smart, commonsense solution that fixes this problem by providing state and local governments with the flexibility to use money that has already been appropriated through the CARES Act to replace these lost revenues. Doing so, will help state and local governments in West Virginia and across the country get over the hump of lost revenue and allow them to continue providing the essential services.”
“As a former governor, I know just how vital state and local government services are to communities across the country, especially at this time: these are the people dealing directly with the pandemic’s health threats or processing much-needed economic benefits,” said Senator King. “The pandemic’s economic fallout has drastically reduced tax revenue for state and local government, creating unexpected deficits and leaving these governments with the choice of raising taxes or firing essential personnel; neither of these options is acceptable. That is why the federal government must provide relief to ensure communities have the resources they need to weather this pandemic.”
“We designed the CARES Act to provide relief for the financial impact of the COVID-19 pandemic, and the Coronavirus Relief Fund Flexibility Act better aligns the implementation of these appropriated funds with that intent,” said Senator Cramer. “While I appreciate the Administration’s focus on preventing state and local governments from using funds to make up for years of poor financial decisions, Governor Burgum manages our state’s finances very well and I trust him to use this money wisely.”
Under the CARES Act, states, tribes, and municipalities have access to $150 billion in relief funding. The U.S. Treasury Department issued guidance restricting these resources from being directed toward revenue shortfalls. The Coronavirus Relief Fund Flexibility Act aims to clarify the matter and ensure these recipients can proceed with their pandemic recovery efforts, including keeping vital first responders on the payroll.
