The CARES Act was signed into law on March 27, creating the Coronavirus Relief Fund (CRF), a $150 billion relief fund for states, territories, tribes, and local governments. Of the 19,000 cities, towns, and villages in the United States, only 36 municipalities, each with more than 500,000 residents, were provided direct assistance under the CRF. Those 36 municipalities with populations over 500,000 received about $7.9 billion of the $150 billion. For these cities, towns and villages, the Coronavirus Relief Fund has been a lifeline for maintaining the uninterrupted operation of services in extremely challenging circumstances. The majority of the 19,000 municipalities below the 500,000 population threshold were excluded from a guaranteed minimum level of assistance.
The National League of Cities (NLC) recently acknowledged the work of the U.S. Department of the Treasury to provide stronger direction to the states to share funds received under the CRF with cities, towns and villages. The Frequently Asked Questions (FAQs) issued on May 28, encourages states to pass-through payments to America’s communities with a population below 500,000. While this is an important step forward, it is not enough. Without direct appropriations to cities, we fear that funds for these municipalities will never reach their intended targets. According to the CDC, there had been 3,038 deaths due to COVID-19 from the start of February to the week the CARES Act was passed. As of June 13, 2020, there have been 101,291 total deaths as a result of COVID-19, equivalent to the population of Davenport, IA. More than two months after the passage of the CARES Act, 22 states have still not issued plans to pass any money through to thousands of local governments, and four states have authorized or plan to transfer the money to counties and have excluded any direct funding to municipal governments.
NLC recognizes the Treasury’s efforts on sharing funds in the CARES Act, but additional direct funding to communities is an absolute necessity if we wish to maintain the millions of jobs and livelihoods in America’s cities, towns, and villages; support essential services at a local level in every state during the nation’s ongoing health crisis; and facilitate reopening and economic recovery.
NLC is continuing to monitor how federal grant dollars, including CRF, are being awarded to municipalities, and how this funding is helping cities respond to the COVID-19 pandemic.
State Transfers of Coronavirus Relief Funds as of June 12, 2020
There is little consistency in how local governments with populations under 500,000 may access the Coronavirus Relief Funding from the states. There is also concern that some states may not make any of the funding available to local governments. Twenty–four states have authorized or are working on legislation to transfer some of the CRF funding to local governments. As of June 16, the total amount of local governments (municipal and county) with populations under 500,000 may receive from state allocations of the CRF is estimated to be about $8.15 billion. Four states have authorized or planning to authorize the transfer of $2.4 billion to county governments BUT have excluded any direct funding to municipal governments: FL, HI, NC, and MO.
The interactive map below shows states that are working to allocate funds to local governments.
Twenty-two states have yet to announce if they plan to authorize the allocation of a portion of the Federal CRF they received to local government.
Local Governments Need A New Lifeline
Local governments across the nation are in urgent need of a new lifeline to prevent the interruption of essential operations and services; and to keep emergency responders, sanitation workers, building and repair crews, and others on the job.
Unfortunately, the Coronavirus Relief Fund is insufficient to meet to the growing need for support at the local level, and additional federal intervention is warranted. As a result of the challenging fiscal conditions caused by the COVID-19 pandemic and the unanticipated costs of shuttering and reopening communities and small businesses, NLC estimates local budget shortfalls of over $360 billion between 2020 and 2022, with $134 billion in revenue losses for 2020 alone.
Local governments know the federal government cannot make up for every loss of revenue. Instead, they are seeking a critical lifelife to avoid last resort options, such as indefinite cuts to services at a time when communities need them most, permanent layoffs of municipal employees who comprise a large share of America’s middle class and canceling capital projects that will further impact local employment, business contracts and overall investment in the economy. There is a real possibility that the very cities, towns, and villages that have helped ensure stability throughout this crisis, will go from being an essential part of America’s recovery to becoming a serious drag on it.
We stand ready to work together on bicameral, bipartisan legislation that provides fair and appropriate levels of assistance to all cities, towns, and villages, while including the kinds of guardrails members of Congress will need to be confident that taxpayer funds are appropriately spent. Right now, the funding that communities are seeing is simply not enough to for local economic recovery.
About the Authors:
David Park is Program Director of NLC’s Center for Municipal Data & Analytics.
Yucel (“u-jel”) Ors is the Legislative Director for Public Safety and Crime Prevention at the National League of Cities. Follow Yucel on Twitter at @nlcpscp.