Decreasing Revenues During The Coronavirus Pandemic Have Left Local Governments Strapped; Dedicated Federal Funding for Local Communities Would Provide Necessary Relief for Lost Revenues, Increased Costs And Help Avoid Local Tax & Fee Increases; The Direct Support for Communities Act Will Complement Direct Relief to States
Today, incoming U.S. Senate Majority Leader Charles E. Schumer and U.S. Senator Kirsten Gillibrand announced the upcoming introduction of their bill to provide local governments with direct federal relief that can be used to pay for essential services, retain vital frontline workers, and offset lost revenues and increased costs from the COVID-19 emergency. Schumer and Gillibrand will reintroduce their Direct Support For Communities Act in the new Congress to deliver urgently needed relief for communities across New York State as part of a broader state and local fiscal relief fund. The bill would deliver resources to support essential services, and offset lost revenues and increased costs from the COVID-19 pandemic, as part of an overall pot of assistance for state and local fiscal relief.
“Localities throughout New York have heroically stepped up to fight the pandemic on the front lines, resulting in increased spending, while experiencing significant revenue losses,” said Senator Schumer. “Although we were able to secure billions of dollars to aid the state and local effort in the last COVID relief package, much much more is needed to fully address the health and economic crisis municipalities are facing down. With the new Senate majority, we will finally be able to prioritize state and local aid in the next COVID relief bill. Staving off disastrous layoffs and tax hikes, and getting New York municipalities the resources and funding they need to keep essential services running and rebuild local economies is one of my top priorities as the incoming Senate Majority Leader.”
“At a time when more people are in need, our state and local governments are in critical need of resources to help citizens. Instead, they have had no choice but to lay off workers and cut essential services, and will soon be forced to raise local taxes. The federal government must deliver relief to close this gap,” said Senator Gillibrand. “Passing another coronavirus stimulus package will be a priority for the new Democratic Senate majority and the Direct Support For Communities Act should serve as the baseline for funding to help state and local governments recover. I’m proud to work alongside Leader Schumer as we fight to finally deliver this relief.”
The nation’s economic recovery depends on the survival of state and local governments. New York State lost billions of dollars in revenue compared to pre-pandemic years and counties and other municipalities across the state have already had to cut thousands of jobs due to massive budget shortfalls. Concerned about the layoffs of public health care workers, firefighters, sanitation workers, teachers, and other vital public servants across New York, Schumer and Gillibrand are fighting to deliver financial resources to help all counties, cities, towns, and villages recover from the coronavirus pandemic. The Direct Support For Communities Act would help local governments avoid further layoffs and local tax and fee increases that would place a heavier burden on families and businesses in crisis. The senators are pushing for the passage of the Direct Support for Communities Act in addition to direct relief to states.
Under the proposed bill, the local relief fund would be split 50/50, half committed to cities, towns and villages, and half committed to counties:
- Of the portion allocated for cities, towns, and villages, 70% would go to Community Development Block Grant (CDBG) entitlement communities using the CDBG formula through the Department of Housing and Urban Development (HUD) to allocate the funding.
- The remaining 30% for cities, towns, and villages would be sent to states, which would be required to sub-allocate the entire amount within 30 days to all non-entitlement communities in the state based on population.
- The portion of emergency fiscal assistance for counties would be allocated across all counties based on population. The exception to that formula is that a current CDBG entitlement county would receive its entitlement amount if it is higher than what that county would receive under an allocation based on population.
This proposed formula for local fiscal relief is intended to be incorporated into a larger legislative package that will also include fiscal relief for state and tribal governments; retroactive availability to use the Coronavirus Relief Fund in the CARES Act for lost revenues; and other important matters.