Update From Washington, D.C.
House Poised to Approve Sweeping Coronavirus Relief Package
May 15, 2020
Earlier this week, House Democratic leaders released their latest bill (HR 6800) designed to address the COVID-19 pandemic. All told, the legislation – known as the Health and Economic Recovery Omnibus Emergency Solutions (HEROES) Act – would invest nearly $3 trillion in a broad array of programs to alleviate the pandemic’s devastating effects on the economy and the nation’s health-care system. Notably, the price tag of the HEROES Act is roughly equivalent to the combined cost of the four previous coronavirus relief bills approved by Congress (PL 116-123; PL 116-127; PL 116-136; and, PL 116-139).
The centerpiece of HR 6800 is $915 billion in direct federal aid to states and local governments. Specifically, the measure would provide: $500 billion to states; $187.5 billion to counties; $187.5 billion to cities; $20 billion to tribal governments; and, $20 billion to territories. Funds could be used to cover costs or replace foregone revenues stemming from the COVID-19 public health emergency or its negative economic impacts. The dollars would be available to states and local governments until expended.
In addition, the HEROES Act includes a second round of cash payments for individuals and families. Under the bill, individual taxpayers, including dependent children up to the age of 24, would be eligible for a $1,200 payment. The maximum household benefit would be set at $6,000. The measure also includes $200 billion to provide “hazard pay” for essential workers.
While the House bill does not include any additional funding for small businesses through the popular Paycheck Protection Program, it would extend the authorization period to December 31 and make other changes regarding which firms are eligible and how loan proceeds can be spent.
House lawmakers will vote on HR 6800 throughout the day Friday, with votes expected to fall largely along party lines. To comply with social distancing recommendations, members will vote in six groups in 10-minute increments.
For Democrats, the HEROES Act represents an opening bid in negotiations with the Trump administration and Senate Republicans on the next round of federal coronavirus relief. However, Senate Republican leaders have been quick to dismiss the legislation as a partisan wish list that has no chance of passing the upper chamber. For his part, Senate Majority Leader Mitch McConnell (R-KY) has called for a “pause” in legislative action in order to assess the impact of previous federal COVID-19 spending.
To follow are additional highlights of HR 6800:
Changes to the CARES Act/Coronavirus Relief Fund
HR 6800 would amend the CARES Act to allow states and local governments that received Coronavirus Relief Fund (CRF) payments to use the dollars to cover lost, delayed, or decreased revenue stemming from the pandemic. As originally passed by Congress, the CARES Act only permits states and localities to spend CRF dollars to cover certain COVID-19 related expenditures.
The HEROES Act includes a number of key health-related provisions, including:
- A 14 percentage point increase (up from the 6.2 percentage point increase in the CARES Act) in the federal financial match for Medicaid/Medi-Cal and Title IV-E foster care beginning July 1, 2020 through June 30, 2021. Beginning July 1, 2021, the match would return to the 6.2 percentage point increase until the public health emergency ends.
- California’s 1115 waiver would be extended until December 31, 2021.
- The bill would prohibit the U.S. Department of Health and Human Services to implement its Medicaid Fiscal Accountability Rule.
- Jail inmates would be eligible for Medicaid coverage 30 days before release.
- An additional $2 billion would be appropriated to state and local health departments responding to COVID-19. Funds would need to be expended by September 30, 2024.
- Medicaid disproportionate share hospital (DSH) payments would be increased by 2.5 percent through fiscal year 2021.
- An additional $100 billion would be appropriated under the health care provider relief fund.
Tax Credits for Paid Sick Leave and Family Leave
HR 6800 would ensure that local governments and other public agencies have access to tax credits to help offset the costs of complying with new mandates of the Families First Coronavirus Response Act (PL 116-127). Under PL 116-127, all employers are required to provide expanded paid sick leave and family medical leave; however, the law specifies that only private sector employers are eligible to receive tax credits to help mitigate the increased costs of the mandate.
Social Services Block Grant
The HEROES Act would provide an additional $9.6 billion for Emergency Aid and Services through the Social Services Block Grant. States would be required to pass at least 50 percent of the funds to counties, cities, and community-based organizations.
The legislation includes a 15 percent increase in the Supplemental Nutrition Assistance Program (SNAP/CalFresh) benefit beginning June 1 and ending September 30, 2021.
Housing and Homelessness Programs
The measure would provide additional support for a number of housing and homelessness programs, including: $4 billion for tenant-based rental assistance programs; $5 billion for the Community Development Block Grant (CDBG) program; $11.5 billion for Emergency Solutions Grants; $100 billion in emergency rental assistance; and, $75 billion in homeowner assistance funds to help prevent homeowner mortgage defaults, foreclosures, and displacements of individuals and families experiencing financial hardship.
Elimination of Non-Federal Cost Share for FEMA Public Assistance
The HEROES Act specifies a 100 percent Federal cost share for assistance provided under any Stafford Act declaration for the COVID-19 pandemic. Currently, states and local governments are required to put up a 25 percent match for any FEMA Public Assistance dollars received.
The bill would provide $1.3 billion in FEMA grant funding to help respond to the coronavirus. This includes $200 million for the Emergency Food and Shelter Program, $500 million for Assistance to Firefighter Grants (AFG), $500 million for Staffing for Adequate Fire and Emergency Response (SAFER) grants, and $100 million for Emergency Management Performance Grants (EMPG). The measure would waive local match requirements for the AFG and SAFER programs, as well as waive certain other program requirements in order to expedite grant awards.
Justice and Public Safety
HR 6800 includes supplemental funding to help local law enforcement agencies respond to the pandemic, including $300 million for Byrne Justice Assistance Grants and $300 million for the Community Oriented Policing Services (COPS) program. In addition, the measure would provide $100 million for Violence Against Women Act (VAWA) programs, including funds for transitional housing and domestic abuse assistance. It should be noted that the local match requirements would be waived for each of the aforementioned programs. The bill also includes $600 million for grants to “prevent, detect, and stop the presence of COVID-19 in correctional institutions,” as well as rapid COVID-19 testing at prisons and juvenile detention facilities.
HR 6800 includes $1.5 billion to “close the homework gap” by providing funding for Wi-Fi hotspots and connected devices for students and library patrons, as well as $4 billion for emergency home connectivity needs.
The HEROES Act includes $15 billion for grants to support the ongoing work of State departments of transportation and certain local governments to help mitigate the effects of coronavirus, including staff salaries and other administrative expenses. The bill also would provide $15.75 billion in emergency relief spending to support transit agencies that require assistance to maintain basic transit services.
HR 6800 includes language that would shield banks, credits unions, payment processors, and insurers from federal regulatory and enforcement actions if they provide services to a state-legal cannabis business, as well as the ancillary businesses that provide them with goods and services.
State and Local Tax Deduction
The Tax Cuts and Jobs Act of 2017 (PL 115-97) limited the state and local tax (SALT) deduction to $10,000 through 2028. The HEROES Act would fully restore the SALT deduction for the 2020 and 2021 tax years.