Survey finds 32 states withholding CARES aid to local governments

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The National League of Cities reports that 32 states are withholding federal funding to local governments that was approved under the CARES Act that was signed into law March 27.

The survey completed May 18 found most municipal governments have received “no indication when, or if, funds will ever be made available,” the NLC said.

Many congressional lawmakers have been under the impression that local governments already have received a share of the CARES Act funding, but that’s not the case.

The Coronavirus Aid, Relief, and Economic Security Act, also known as the CARES Act established a $150 billion Coronavirus Relief Fund that dispersed $8 billion to tribal governments, $3 billion to territories and the District of Columbia and the remaining $139 billion to all states as well as counties and cities with populations over 500,000.

According to the Treasury, only 171 cities and counties qualified for direct federal grants.

Mike Wallace, program director for community and economic development at the NLC, said the problem with distributing the money is twofold. “The challenge here is because an insufficient amount of funding was allocated in the first place, and because there were regulatory requirements and administrative hurdles, it’s slowed the process down,” said Wallace.

Mike Wallace
Mike Wallace, NLC program director for community and economic development

The House has approved another round of $915 billion in state and local aid under the HEROES Act, but the Senate has begun a weeklong Memorial Day recess without considering additional aid.

“The purpose of the survey was to show congressional lawmakers that the CARES Act funding through the Coronavirus Relief Fund is being slowly distributed and is insufficient,” said Wallace. “Not every senator is there yet and feeling that urgency, so we have some work to do yet.”

Wallace said states would be quicker to release federal funding to municipal governments if there was confidence that another round of federal aid is on the way.

“The ultimate solution isn’t getting the states to act more quickly on the Coronavirus Relief Fund,” he said. “The ultimate solution is to allocate a more sufficient level of support for our states and local governments.”

Counties and municipalities with a population under 500,000 are required to request from their state a share of that federal money.

Governors and state legislatures in a number of states are actively negotiating how to distribute the federal funding.

In Georgia, for instance, NLC said, stakeholders anticipate the state will agree to share 45% of the local share (about $1.2 billion) with all jurisdictions not receiving a direct allocation on a $55 per capita basis. Initially, each eligible jurisdiction will receive an immediate distribution of 20% of their total per capita allocation.

Texas has sent a letter to city and county leaders informing them how to apply for a share of the $1.85 billion in available funding. Texas overall is receiving $5.06 billion, with $3.2 billion sent directly by the Treasury to the six cities and 12 counties with populations greater than 500,000.

The 32 states withholding funding from most municipal governments are: Alabama, Arizona, Arkansas, California, Colorado, Connecticut, Florida, Georgia, Illinois, Iowa, Kansas, Maine, Michigan, Minnesota, Mississippi, Montana, Nebraska, Nevada, New Jersey, New Mexico, New York, North Dakota, Pennsylvania, South Dakota, Tennessee, South Carolina, Rhode Island, Utah, Vermont, West Virginia, Wisconsin and Wyoming.

In addition to those 32, the NLC survey found that two states — North Carolina and Missouri — are allowing transfers to county governments but excluding municipal governments.

Sixteen states are allowing municipal governments to apply for a transfer of funds, with greater and lesser degrees of red tape: Alaska, Delaware, Hawaii, Idaho, Indiana, Kentucky, Louisiana, Maryland, Massachusetts, New Hampshire, Ohio, Oklahoma, Oregon, Texas, Virginia and Washington.

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Coronavirus State and local finance State budgets Washington DC
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