The Federal Stimulus Bill
On March 25, 2020, the White House and Congress agreed upon a $2.2-trillion survival package (i.e., HR 748) to combat the economic effects of the coronavirus pandemic. This 880 page legislation is scheduled to clear the
House on Friday, March 27th. This measure is the third COVID-19 relief package proposed by Congress, and will likely be followed by additional economic relief packages. Already, New York’s Governor is saying his state’s
share of this package for New York City (i.e., $1.4 billion) is nowhere near sufficient. The survival bill includes emergency relief aid for large swaths of the American economy, robust protections for workers, and government
loan transparency. It follows an initial $8.3-billion bill largely aimed at developing a vaccine, and a second package that mandates greater access to paid sick leave for workers and free COVID-19 testing.
The survival package passed the U.S. Senate unanimously on a vote of 96-0 on March 25, 2020. The House of Representative is scheduled to vote on the package on Friday, March 27. Because of limited flight options and
members participating in self-quarantine, the House expects to pass the bill by voice vote.
Stimulus Funding Generally, and by Category
The survival package includes $250 billion for direct payments to individuals and families, $377 billion in small business loans, $260 billion in unemployment insurance benefits, and $500 billion in loans for distressed companies.
In addition, the bill appropriates $150 billion for hospitals and $150 billion for state and local governments ($8 billion set aside for tribal governments). Of this $150B for state and local governments, all states are guaranteed by
the bill to receive at least $1.25 billion. Illinois anticipates approximately $4.9 billion, with $2.7 billion allocated as a “state share” and $2.2 billion flowing to larger units of local government. These allocations are based upon
2019 population estimates, and as a result of state-protective language in the bill capping allocations for (large) local governments at 45% of this relief block grant. Thus, Illinois is assured of receiving 55% of the
total allocation. It is, however, anticipated by GOMB that assistance to smaller locals will necessarily need to be scraped from the $2.7 billion state-share.
Preliminary evaluation does not allow for a conclusive assessment for how much flexibility states will be allowed, regarding the spend-down of these monies. However, initial guidance appears to stipulate restrictions,
based upon satisfaction of the following 3-pronged test:
(1) Are necessary expenditures incurred due to the public health emergency with respect to the Coronavirus Disease 2019 (COVID-19);
(2) Were not accounted for in the budget most recently approved (i.e., FY 20) as of the enactment date for this federal relief; and
(3) Were incurred during the period beginning March 1, 2020, and ending December 30, 2020.
In other words, despite on-going communication between our federal delegation and GOMB, we do not yet know exactly how the federal government will define “necessary costs”. It appears these funds may be used as reimbursement for costs
necessarily incurred in response to COVID-19. This, however, also suggests states may not allowably back-fill lost revenues with these federal relief funds. Staff continue to analyze these issues.
As to the timing of federal disbursements to the states, much is still unknown. However, p. 599 of HR 748 suggests these monies will move to the states relatively quickly – i.e., the Treasurer shall pay within 30 days these allotments to the states. Also, language in the bill indicates large units of local government (i.e., those with populations over 500,000) may elect to apply straight to the federal government (Treasury) for their share, avoiding any delays caused by the state acting as a pass-through entity and seemingly relieving the legislature of any need to appropriate these funds. However, Mayors of large units of local government will have to certify to the Treasury the alignment of expenditures with the 3-pronged test provided above. Moreover, there is a claw-back provision, should the Treasury later find violations of these tests – and $35 million is allocated to the U.S. Inspector General for that purpose.
Direct Payments ($250 billion)
- One-time cash payment ($1,200 per adult and $500 per child).
- Full payment available for individuals making up to $75,000 (individual) and $150,000 (married).
- Value begins decreasing at $75,000 and phases out at the $99,000 income cap.
Unemployment Insurance (UI) ($260 billion)
- Increases maximum unemployment benefit by $600 per week.
- Ensures laid-off workers will receive full pay for 4 months (previously, 3 months).
- Allows part-time, self-employed, and gig economy workers to access UI benefits.
Small Business Rescue Plan ($377 billion)
- $350 billion – loan forgiveness grants to small businesses and non-profits to maintain existing workforce and pay expenses (i.e. rent, mortgage, and utilities).
- $10 billion – Small Business Administration (SBA) emergency grants (up to $10,000) to provide immediate relief for small business operating costs.
- $17 billion – funding for SBA to cover 6 months of payments for small businesses with existing SBA loans.
Employee Retention ($50 billion)
- Creates an employee retention tax credit for companies that retain employees on payroll and covers 50% of workers’ paychecks.
- Allows companies to defer payment of the 6.2% Social Security payroll tax. State and Local Direct Economic Stimulus ($150 billion)
- Creates $150 billion Coronavirus Relief Fund for states, territories, local, and tribal governments.
- Allocated by population proportions.
- Minimum $1.25 billion per state.
- 45% of a state’s funds are set aside for local governments with populations that exceed 500,000, with certified requests to the U.S. Treasury.
- Funds remaining from 45% set aside for localities should revert back to the state (per NCSL).
Health Provisions ($140.4 billion)
- $100 billion – grants to hospitals, public entities, nonprofits, and Medicare- and Medicaid-enrolled suppliers and providers.
- $16 billion – replenish the Strategic National Stockpile of pharmaceuticals, personal protective equipment, ventilators, and other medical supplies.
- $4.3 billion – Centers for Disease Control and Prevention funding to support federal, state, and local public health agencies for purchase of PPE, laboratory testing, infection control, and mitigation.
- $250 million – improve capacity of facilities to respond to medical events.
- $275 million – expand services and capacity for rural hospital, telehealth, poison control centers, and the Ryan White HIV/AIDS program.
- $425 million – funding to the Substance Abuse and Mental Health Services Administration for mental health and substance abuse disorders resulting from coronavirus pandemic.
Federal Emergency Management Agency (FEMA) ($115 billion)
- $45 billion – deposit into FEMA Disaster Relief Fund (doubles the available funding) to provide for immediate needs of nonprofits and state, local, tribal, and territorial governments.
- $25 billion – funding for major disasters declared for certain states under the Stafford Act.
- $45 million – expanding FEMA information technology and communications capabilities.
- Disaster Relief Fund dollars are made available to states via the March 13 national emergency declaration and subsequent states declaration requests.
Agriculture Assistance ($23.6 billion)
- $15.5 billion - additional funding for Supplemental Nutrition Access Program (SNAP).
- $14 billion – funding for the Commodity Credit Corporation.
- $9.5 billion – additional assistance for livestock and specialty crops and funding for dairy producers and producers who support local food systems.
- $8.8 billion - additional funding for Child Nutrition Programs in order to ensure children receive meals while school is not in session.
- $25 million – USDA Rural Development Grant Program for Distance Learning and Telemedicine Program.
- $100 million – USDA ReConnect Program to ensure rural populations have access to broadband.
- $20.5 million – Rural Business Development Grant Program to support business and industry loans.
Defense Spending ($31.6 billion)
- $9.1 billion – funding for the Department of Defense to protect members of armed forces, their families, and military retirees.
- $1.4 billion – deployments of the National Guard (up to 20,000 members) to support state and local response effects under the direction of governors of each state.
- $19.57 billion – funding to the Department of Veterans Affairs for equipment, tests, and support services.
- $932 million – Army National Guard.
- $557 million – Air National Guard.
- $70 million – Army Corps of Engineers.
Education Spending ($30.75 billion)
- $13.5 billion – formula grants to states for elementary and secondary education, 90% to local educational agencies (LEAs) and 10% to state educational agencies.
- $3 billion (per state) – emergency support grants for LEAs and institutions of higher education for distribution by the governor.
- $14.25 billion – emergency relief for institutions of higher education.
- $1 billion – bolster domestic supply chains for production of personal protective equipment (PPE), ventilators, and other urgently needed medical supplies under the Defense Production Act.
- $25 billion – emergency aid for transit systems.
- $10 billion – grants for air carriers and contractors to ensure continued operation.
- $7 billion – for cargo carriers and airline contractors providing ground staff and catering support to airlines.
- $3.5 billion – additional funding for the Child Care Development Block Grant to provide childcare assistance to essential workers.
- $7 billion – funding for affordable housing and homelessness assistance programs to help prevent evictions and minimize an impacts cause by loss of employments.
- $6.5 billion – additional funding for the Community Development Block Grant, the Economic Development Administration, and the Manufacturing Extension partnership.
- $400 million – election assistance for states to help prepare for the 2020 election cycle (states must provide accounting of how funds were spent to the Election Assistance Commission).
- $2 billion – funding to strengthen response capacity and support tribal governments.
- $1 billion – funding for Amtrak to pay employees and ensure continued service nationwide.
Worker and Transparency Protections
The survival bill prohibits the President, Vice President, members of Congress, and heads of executive branch departments from receiving loans or investments from Treasury programs in the survival package. Their spouses, children and in-laws also cannot benefit. To ensure proper oversight, the bill creates a Treasury inspector general and a 5-person congressional panel to oversee the $500-billion fund managed by the Treasury for business loans. Further protections include:
- No stock buybacks or dividends for the length of any loan plus 1 year provided by the Treasury;
- Restrictions on any increases to executive compensation; Protections for collective bargaining agreements;
- Real-time public reporting of Treasury transactions, including terms of loans, investments, or other assistance to corporations;
- Creation of the Treasury Department Special Inspector General for Pandemic Recovery;
- Creation of the Congressional Oversight Commission for legislative oversight of pandemic response; and
- Creation of the Pandemic Response Accountability Committee through the Council of Inspectors General on Integrity and Efficiency to enhance government-wide protection of taxpayer dollars.