CARES Relief for State and Local Governments
The CARES Act establishes a $500 billion loan program accessible by cities, states, and businesses, while also providing for more than $250 billion in direct funding to state and local governments. The majority of the direct spending is by way of the $150 billion Coronavirus Relief Fund (Relief Fund). The Relief Fund reserves $3 billion for the District of Columbia and major U.S. territories and $8 billion for federally recognized tribal governments. The remainder is reserved for the 50 states apportioned by population, with every state guaranteed at least $1.25 billion.
Importantly, local governments (defined as a “county, municipality, town, township, village, parish, borough, or other units of general government below the state level”) with a population of more than 500,000 may apply directly to the federal government for a share of the funding. Any direct payments to local governments under the Relief Fund are to be deducted from that state’s allocation, but cannot exceed 45% of the local government’s allotment, per the CARES Act’s per capita funding formula, or Relative Population Proportion Amount. Simply put, local governments may bypass their governor and apply directly for funds, but they are limited to 45 cents on the dollar relative to funds available to state government.
To be eligible, there are three qualifying conditions for financial assistance under the Relief Fund:
- the expenditures are necessary and incurred due to COVID-19;
- the expenditures are incurred between March 1 and December 30, 2020;
- the expenditures are not funded in the state or local government’s most recently approved budget.
In addition to the $150 billion Relief Fund, below is a breakdown of additional economic and statutory relief the CARES Act provides for state and local governments, courtesy of the National Conference of State Legislatures:
- $30 billion for an Education Stabilization Fund for states, school districts, and institutions of higher education for costs related to the coronavirus;
- $45 billion for the Disaster Relief Fund for the immediate needs of state, local, tribal, and territorial governments to protect citizens and help them respond and recover from the overwhelming effects of COVID-19;
- $1.4 billion for deployments of the National Guard; This level of funding will sustain up to 20,000 members of the National Guard, under the direction of the governors of each state for the next six months in order to support state and local response efforts;
- an additional $4.3 billion, through the Centers for Disease Control and Prevention, to support federal, state, and local public health agencies to prevent, prepare for, and respond to the coronavirus;
- extends Real ID deadline for full implementation by states from Oct. 1, 2020, to Sept. 30, 2021;
- $25 billion for transit systems; and
- $400 million in election security grants to prevent, prepare for, and respond to coronavirus in the 2020 federal election cycle; States must provide an accounting to the Election Assistance Commission of how the funds were spent within 20 days of any 2020 election.
Our Chambliss team will continue to monitor the developments regarding the CARES Act. Please contact Jim Catanzaro, Justin Furrow, or your relationship attorney if you have questions or need additional information.
Visit our COVID-19 Insight Center for our latest legislative and legal updates, articles, and resources.
The material in this publication was created as of the date set forth above and is based on laws, court decisions, administrative rulings, and congressional materials that existed at that time, and should not be construed as legal advice or legal opinions on specific facts. In some cases, the underlying legal information is changing quickly in light of the COVID-19 pandemic. The information in this publication is not intended to create, and the transmission and receipt of it does not constitute, a lawyer-client relationship. Please contact your legal counsel for advice regarding specific situations.