Federal guidance: States need to send CARES Act money to locals
In comments released late last week, U.S. Treasury officials said that state governments need to be sharing CARES Act money with local governments that did not qualify for direct payments under the act due to their population. This guidance affirms what MAC has been saying in ongoing discussions with the State Budget Office on the need for state help to address COVID-19 financial effects.
The guidance came via a May 28 FAQ document, which states:
“Should States receiving a payment transfer funds to local governments that did not receive payments directly from Treasury?
“Yes, provided that the transferred funds are used by the local government for eligible expenditures under the statute. To facilitate prompt distribution of Title V funds, the CARES Act authorized Treasury to make direct payments to local governments with populations in excess of 500,000, in amounts equal to 45% of the local government’s per capita share of the statewide allocation. This statutory structure was based on a recognition that it is more administratively feasible to rely on States, rather than the federal government, to manage the transfer of funds to smaller local governments. Consistent with the needs of all local governments for funding to address the public health emergency, States should transfer funds to local governments with populations of 500,000 or less, using as a benchmark the per capita allocation formula that governs payments to larger local governments. This approach will ensure equitable treatment among local governments of all sizes.
“For example, a State received the minimum $1.25 billion allocation and had one county with a population over 500,000 that received $250 million directly. The State should distribute 45 percent of the $1 billion it received, or $450 million, to local governments within the State with a population of 500,000 or less.”
MAC will continue to make the case for state help for counties as the budget process continues.