Coronavirus Response Discussions Continue on Capitol Hill

Democrats Release Interim Emergency COVID-19 Relief Act

Earlier today, House and Senate Democratic leaders released legislation designed to address several key COVID-19-related issues. According to Democrats, the bill is intended to serve as an “interim” measure prior to consideration of a potential fourth COVID-19 bill.

The legislation, entitled the Interim Emergency COVID-19 Relief Act, includes:

• $150 billion in fiscal relief to states, localities, and tribes. Under the bill:
  • $65.45 billion of the fund would be allocated to States based on population, with a small-state minimum of $500 million.
  • $53.55 billion would be allocated to localities based on the Community Development Block Grant (CDBG) formula.
  • $20 billion of the fund would be allocated to States by their share of the national infection rate according to the most recent CDC tracking data.
  • $8 billion of the fund would be set aside for tribes and $3 billion would be available to territories.

It should be noted that the new fiscal relief funds – as well as the $150 billion Coronavirus Relief Fund created by the CARES Act – could be used to mitigate for lost revenues due to COVID-19.

• $100 billion in additional funding for a new program to provide grants to hospitals, public entities, not for profit entities, and Medicare and Medicaid enrolled suppliers and institutional providers to cover unreimbursed health care related expenses or lost revenues attributable to the public health emergency resulting from the coronavirus.

• 15 percent benefit increase in SNAP, along with program access improvements. Under the bill, the average SNAP benefit would increase by about $25 a month per person. The legislation also would waive time limits/work requirements beginning May 1, as well as provide additional flexibility and funding for states to administer SNAP.

• $250 billion in new funding for small businesses, of which $125 billion is in additional Paycheck Protection Program funding and $125 billion is in new funding for small businesses.

• The legislation also includes various technical fixes to election assistance funding that was included in the CARES Act.

Coronavirus Community Relief Act

On April 7, Congressman Joe Neguse (D-CO) introduced legislation – the Coronavirus Community Relief Act (HR 6467) – that would modify the distribution formula for the newly created Coronavirus Relief Fund. The CARES Act provided $150 billion in emergency funding for the CRF, which is available to states, units of local governments, and tribes to cover costs incurred due to the public health emergency. However, only localities with a population of 500,000 or more can elect to receive a direct CRF payment from the Department of the Treasury.

Pursuant to HR 6467, the Treasury Secretary would be required to provide CRF funds directly to units of local government under the 500,000 threshold, with payments based on relative population.

Emergency Paid Leave Payroll Tax Credits for Local Governments

The Families First Coronavirus Response Act (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, Congressman T.J. Cox (D-CA) – along with Representatives John Katko (R-NY) and Brad Schneider (D-IL) – began circulating a bipartisan Dear Colleague letter this week requesting that congressional leaders address the inequity in subsequent COVID-19 legislation.

In addition to the letter, the aforementioned lawmakers have drafted legislation 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 is expected to be formally introduced early next week when the House convenes for a pro-forma session.

For its part, CSAC has urged members of the California congressional delegation to sign-on to the Dear Colleague letter and to become an original cosponsor of the proposed legislation.

Senate Fails to Achieve Unanimous Consent to Provide Additional SBA Lending Authority

Earlier today, Senate Majority Leader Mitch McConnell (R-KY) was unable to achieve unanimous consent (UC) on legislation – the Paycheck Protection Program Increase Act – that would have provided an additional $250 billion in emergency lending authority for the newly created Paycheck Protection Program. The program, which was part of the third coronavirus response package – the CARES Act (PL 116-136) – offers low-interest loans guaranteed by the Small Business Administration to a wide range of businesses, nonprofits, and individuals affected by COVID-19. An added benefit of these emergency SBA loans is that they can be forgiven for borrowers that pay eligible payroll expenses or rehire workers. If approved, the new funding would have been able to support $600 billion in total lending.

Senate Democrats, who blocked the UC request, have urged GOP leaders to ensure that half of the new funding in the interim emergency legislation be set aside for community-based financial institutions that serve farmers, families, women, nonprofits, and minority and veteran-owned small businesses. They are also seeking an additional $150 billion for state and local governments to mitigate lost revenues.

Looking ahead, further action on this measure could be delayed until lawmakers return to the Capitol for a vote. Both chambers are currently scheduled to return the week of April 20. In the meantime, Democratic leaders have indicated that they will be working on another large stimulus package, or a “CARES 2” Act, which would extend and expand upon the programs and provisions of PL 116-136.