Coalition calls for local flexibility for money from Coronavirus Relief Fund

By Mississippi Center for Public Policy
April 14, 2020

Mississippi Center for Public Policy is part of a coalition of state-based organizations calling on Congress to provide state and local governments with greater flexibility to use money from the Coronavirus Relief Fund.

The letter reads:

The CARES Act established a $150 billion Coronavirus Relief Fund to assist state and local governments combat the Coronavirus Disease 2019 pandemic. Under the Act, each state will receive at least $1.25 billion plus an additional amount based on population, with a portion of the money allocated to local governments within the state.

As written, however, the fund provides little actual relief for state budgets but instead all but compels them to devise new spending that can be attributed to the Coronavirus Disease 2019 (COVID-19).

Congress needs to address this unintended outcome quickly by providing states and local governments the flexibility to use money from the Coronavirus Relief Fund 1) to offset lost tax and fee revenue that would otherwise have paid for ordinary operating expenses between March 1 and December 30, or 2) to provide one-time tax relief to individuals and businesses to revive the local economy.

Unlike the federal government, most states and local governments must balance their budgets. New costs associated with the Coronavirus outside of Medicaid (covered by the Families First Act) and education (covered in the Education Stabilization Fund) would not come close to the full amount appropriated except through budgetary gluttony. Billions of dollars in tax and fee revenue, however, have been lost and cannot be recovered. We ask Congress to allow states the ability to use their Relief assistance in the most prudent and least disruptive way possible.


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