Insights

Summary of CARES Act for Local Governments

March 30, 2020

On March 27, President Trump signed the CARES Act (H.R. 748), a $2 trillion emergency package intended to stave off total economic collapse in the wake of the coronavirus crisis. We have summarized some provisions which may benefit local governments, including cities, townships, boroughs, school districts, authorities and emergency services. 

  • State & Local Government Coronavirus Relief Fund – Under the legislation, $139 billion is reserved to be distributed between states and units of local government. Although widely reported $150 billion, much is earmarked for the District of Columbia, territories, and tribal governments. A unit of local government is a county, municipality, town, township, village, parish, borough, or other unit of general government below the State level with a population that exceeds 500,000. There is no provision that requires a state government to distribute money to smaller local governments. Municipalities may want to contact their local legislator to encourage the state through PEMA to distribute some of this money to small local governments. 

The funds will be distributed to states and local governments no later than 30 days after the enactment of the bill. The funds may only be used for 1) “necessary expenditures” related to COVID-19; 2) are not accounted for the budget most recently approved as of the date of enactment of this section for the State or local government; 3) were incurred during the period that begins on March 1, 2020, and ends on December 30, 2020. Each state is allocated a minimum of $1.25 billion but will be prorated by population. The Tax Policy Institute estimates that Pennsylvania will get $4.96 billion. 

  • Disaster Relief Grants – The CARES Act creates a Disaster Relief Fund with $45 billion to provide for the immediate needs of state, local, tribal, and territorial governments. Reimbursable activities may include medical response, personal protective equipment, National Guard deployment, coordination of logistics, safety measures, and community services nationwide. This funding supplements existing funding that is available to state and local governments through FEMA’s Public Assistance grant program. There will also be an additional $100 million for Emergency Management Performance Grants for state, local, territorial, and tribal governments to support coordination, communications, and logistics.

Here is the link to PEMA’s website where you will find the program guidance and a link to FEMA’s grant portal. 

  • Community Development Block Grant Funding – The CARES Act allocates $5 billion to community Development Block Grants Program. Of that amount, $2 billion direct allocation to states and local governments through the regular program formula within 30 days of enactment; $1 billion to states within 45 days of enactment; and the remaining $2 billion will be allocated by HUD to state and local governments based on need. The measure also suspends the 15% services cap so that grantees may spend additional funds on assistance to low-income households. 
  • Connectivity Grants – U.S. Department of Agriculture will get an additional $25 million for the existing Distance Learning, Telemedicine, and Broadband Program, plus $100 million to extend the ReConnect competitive rural broadband grant/loan program through the end of FY2021. This money may benefit the residents of local governments by making it more feasible to extend high-speed broadband to parts of your municipality that do not otherwise meet density requirements for the extension of service. 
  • Law Enforcement – The CARES Act allocates $850 million for the Byrne-Justice Assistance Grant Program (Byrne-JAG). The funding can be used to purchase personal protective equipment and other needs to help law enforcement with responding to the COVID-19 pandemic. 
  • First Responders – Up to $100 million will be allocated to grants to purchase personal protective equipment for first responders. 
  • Education and Early Childhood Grants – The bill creates an Education Stabilization Fund with $30.75 billion for costs incurred by schools including those for planning for long-term closure, additional technology to enable distance learning as well as funds to be directed towards districts impacted the most, to available through the end of FY2021, with applications being accepted 30 days after bill enactment and approved or denied no later than 30 days after receipt. 

Head Start will receive another $750 million to meet the needs of children and families, as well as allowing for expansion of summer programs through FY2020 and FY2021. 

Child Care and Development Block Grant programs with receive $3.5 billion for child care subsidies for low-income families with children under age 13, as well as flexibility to pair state and federal funds to improve the quality of child care available to families within existing state and local systems, available through the end of FY2021. 

  • Election Grants – The CARES Act makes an additional $400 million available to state governments to prepare for the 2020 election.
  • REAL ID Deadline Extension – Extends the deadline for states to meet the requirements of the REAL ID Act to not earlier than September 30, 2021. 
  • Treasury Loans – The Treasury Department has been allocated $500 billion to make emergency loans to businesses and also to cities and states. We do not know yet how much or how any of this money will be made available for loans to cities and states. 
  • Municipal Bond Purchases – The CARES Act creates a $454 billion “Economic Stabilization Fund” that permits the Treasury Department to “purchase obligations or other interests in secondary markets or otherwise.” This will allow the Federal Reserve to be an institutional investor in securities that mature in greater than 6 months. This fund also provides loans and loan guarantees to small businesses, so not all the $454 billion will be used for bond the purchase of securities. However this fund will help maintain the liquidity of the municipal bond markets. 

To better keep you informed, we created a resource page on our website where we are posting all updates and recommendations for our municipal clients and business clients. Please visit https://mpl-law.com/resource-center/. Please also feel free to post a link to our resource center on your website if you feel the information would be useful to your residents. 

Please feel free to call or email Andy Miller (amiller@mpl-law.com) or Doug Myers (dmyers@mpl-law.com) if you have any questions about these matters. Our office is closed, but our email and cell phones are working!

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