How Much CARES Act Funding Have States & Localities Spent?

What’s the story?

• Lawmakers in Congress remain at a partisan impasse over coronavirus (COVID-19) relief legislation and one of the main sticking points is how much, if any, additional relief funding should be provided to state and local governments. But one of the main barriers to additional funding being provided is the fact that state and local governments have been slow to spend the federal funding provided under prior relief measures.
• The CARES Act, which was enacted in late March, provided $150 billion for state and local governments to use for expenses incurred due to the COVID-19 pandemic. Funding was allocated based on population ― the smallest states got at least $1.25 billion, while counties and cities with populations over 500,000 residents are eligible to apply for additional funding.
• The Dept. of the Treasury’s Office of Inspector General in late July released a report summarizing all of the CARES Act funding disbursed to state and local governments, along with how much has been spent through the end of June.
• The IG found that about $139 billion in funding had been disbursed to state and local governments, and that recipients had spent roughly $35 billion ― about 25% ― of the disbursed funding.
• The vast majority of states and their subordinate county and city governments that received funding had spent less than half of their allotment. California (74.5% of $15.3 billion), Colorado (56.4% of $2.2 billion), and New York (53.4% of $7.5 billion) were the only states to have spent more than half of the funding allotted to their state and local governments.

What does it mean going forward?

• The roughly $103 billion in CARES Act funding that remained unspent by state and local governments at the time of the IG report is likely to make it harder for negotiators to come to an agreement on additional funding in a prospective relief bill. 
• That’s in part because of the stark difference in overall funding levels for state and local governments included in the competing proposals offered by Democrats and Republicans.
• Democrats’ HEROES Act would provide $500 billion for state governments, $375 billion for local governments, $20 billion for tribal governments, and $20 billion for territories to respond to, mitigate, cover costs, or replace foregone revenues due to the COVID-19 pandemic. Funds used for other purposes would be considered a debt owed to the federal government.
• Republicans’ HEALS Act doesn’t include additional funding for state and local governments to use for fiscal relief. Instead, it would allocate specific funding for state and local governments to use for education-related expenses amid the pandemic.

— Eric Revell

(Photo Credit: iStock.com / Nelson_A_Ishikawa)