COVID-19 Update from Washington, D.C.
April 16, 2020
Negotiations Continue on a Fourth COVID-19 Relief Bill
This week, negotiations on a fourth coronavirus relief measure continued to progress as Treasury Secretary Steven Mnuchin and Democratic congressional leaders reported inching closer to a potential deal. While House and Senate Republicans have been seeking a “clean” bill that would provide an additional $250 billion for a popular small business loan program, Democrats are insisting that the legislation include more COVID-19 relief funding for states, local governments, and health providers.
Earlier today, the Small Business Administration announced that it had run out of funding to process additional loans through the Paycheck Protection Program (PPP). The announcement puts significant pressure on Congress to act, though there are no definitive signs of a breakthrough on the overall scope of the legislation, which Democratic congressional leaders are calling an “interim” COVID-19 relief bill.
One of the key issues under discussion as part of the ongoing negotiations is whether Congress should provide additional fiscal support for state and local budgets through the Coronavirus Relief Fund (CRF). The CRF, which was funded at $150 billion under the CARES Act, provides General Fund dollars to states and localities for the reimbursement of COVID-19-related expenditures.
For its part, CSAC has been aggressively advocating for additional CRF funding. Moreover, CSAC is urging members of Congress to ensure that the Fund provides direct and flexible support to all county governments and that dollars are distributed in a manner that reflects the division of governmental responsibilities at the local level. Under the CARES Act, only local governments with a population of over 500,000 are eligible to apply to the Department of the Treasury for a direct CRF allocation.
In addition to the CRF, CSAC is urging Congress to ensure that public agencies have access to the same payroll tax credits that were recently made available to the private sector (additional information on this effort is available below). This tax benefit would help offset the cost of the expanded paid leave requirements that were included in the Families First Coronavirus Response Act (PL 116-127). CSAC is also seeking an increase in the federal match for Medicaid/Medi-Cal and the Title IV-E foster care program, as well as a 15 percent increase in the maximum SNAP/CalFresh benefit.
Coronavirus Community Relief Act
Senators Dianne Feinstein (D-CA) and Kamala Harris (D-CA) announced this week that they were joining with several of their Senate colleagues to introduce legislation – entitled the Coronavirus Community Relief Act – that would provide $250 billion in CRF funding for units of local government with a population of 500,000 or less. It should be noted that this is a companion bill to a previously introduced House measure (HR 6467). The House bill currently has over 100 cosponsors, including 20 members of the California congressional delegation.
As indicated above, the CARES Act only allows local governments with populations that exceed 500,000 to apply for a direct CRF payment. Under the Coronavirus Community Relief Act, only those local governments with a population of 500,000 or less would be eligible to apply for the new funding. Funds would be distributed to local governments based on their relative share of population within the state and could be used to replace lost revenues, reimburse entities for expenses already incurred, and cover costs that are reasonably believed to have been caused by or are the result of the COVID-19 pandemic.
Emergency Paid Leave Payroll Tax Credits for Local Governments
PL 116-127 expanded paid sick leave and family medical leave requirements for all state and local public agency employers, as well as certain private sector businesses. While private sector employers are able to receive a refundable tax credit to offset their costs, public sector employers are explicitly prohibited from receiving this same benefit. To ensure that local governments are eligible for the tax credits, Representatives T.J. Cox (D-CA), John Katko (R-NY), and Brad Schneider (D-IL) spearheaded a recent bipartisan letter to House and Senate leaders requesting that subsequent COVID-19 legislation address this inequity. With the support of CSAC, a total of 73 members agreed to sign on, including 24 lawmakers from the California congressional delegation.
In addition to the letter, legislation has been drafted that would provide parity for local governments by simply removing the public employer exclusion from PL 116-127. In other words, the legislation would make state and local governments eligible for payroll tax credits for emergency paid sick and family medical leave. The bill, which has been endorsed by CSAC, will be introduced soon, with the first opportunity coming during a House pro forma session on April 17.
Senate PILT/SRS Dear Colleague Letter
This week, Senators Feinstein and Harris signed on to a bipartisan letter to Senate leaders requesting that the next coronavirus stimulus legislation include a long-term solution for the Payments-in-Lieu-of-Taxes (PILT) program, as well as the Secure Rural Schools (SRS) program. The funding certainty provided by long-term extensions of both programs would help stabilize local government funding in rural counties.
With nearly 44 million acres of eligible federal lands, California counties, as a whole, generally collect the highest allocation of PILT funding in the nation. In fact, 57 California counties received $51.7 million in program dollars last year. While Congress has been able to fully fund PILT in recent years through the annual appropriations process, the uncertainties associated with the federal budget could put future funding at risk.
Under the latest round of SRS funding, 29 California counties received more than $21.9 million in formula payments, while 10 counties collected over $4.2 million in 25 percent payments (based on a rolling seven-year average of receipts generated on national forest system land) for a total of nearly $26.2 million. An additional $2.2 million was made available for federal land projects, or Title II projects, that are identified by local resource advisory committees. A detailed breakdown of the most recent SRS distribution can be accessed here. The program is slated to expire later this year, with final payments to be distributed in the spring of 2021.