There Was $100 Billion for State and Local Governments in the Relief Bill
There were a number of complaints that the $900 billion coronavirus relief bill Congress adopted and the president signed did not include substantial bailouts for state and local governments.
According to the Tax Foundation, there was plenty of money for state and local governments tucked inside the bill – enough to plug many holes in several budgets:
…the bill contains over $100 billion in state aid that can be used by state governments to backfill revenue losses, if needed.
The bill provides nearly $82 billion for the Education Stabilization Fund, $14 billion for mass transit, and $10 billion for state highways. In each case, the money appropriated to the states must be used for these purposes. However, receipt of the funding is not contingent upon a state’s own contributions, so in many cases, states can reduce their own contributions to education, highways, and mass transit while maintaining current funding levels due to the federal infusion. This frees up the state’s normal share to be used for other purposes, including backfilling revenue losses.
And it turns out state and local budgets have been getting federal backstops for some time:
This is not the first time that such an approach has been used to prop up state budgets, either during the current pandemic or previous economic crises. The Families First Act, for instances, increased FMAP (the federal Medicaid match) by 6.2 percent, worth about $50 billion for states. The CARES Act, moreover, deposited just under $31 billion in the Education Stabilization Fund and provided $25 billion for transit infrastructure, collectively providing about $106 billion in fairly fungible state aid. Whether coincidentally or by design, the $82 billion for the Education Stabilization Fund and $24 billion for transportation—most of which could be flexed—would provide another roughly $106 billion in flexible aid, bringing the total to $212 billion. States have also been able use some of the $150 billion from the Coronavirus Relief Fund to cover existing expenses, like the salaries of public safety and public health officials, further alleviating state budget shortfalls. This all compares favorably to the $144 billion provided during the Great Recession through an FMAP increase and the State Fiscal Stabilization Fund.
It’s not as much as some wanted, of course. They can never have enough of other people’s money. But the amounts of (borrowed) cash going to states and localities under other guises never ended, and in many instances, got even bigger.