On Sunday, December 27, President Trump signed into law a nearly 6,000-page end-of-year legislative package that included 12 FY 2021 spending bills totaling $1.4 trillion, a $908 billion COVID-19 relief package, the Water Resources Development Act (WRDA), and an energy package, among other policy provisions.
This document highlights the provisions of the COVID-19 relief package most relevant to state and local governments.
As previously reported, the package does not include significant resources for state and local governments, aside from funding through a new Housing and Rental Assistance program and potentially through CDC funding for distribution and administration of the COVID-19 vaccine.
The legislation extends by one year the deadline for state and local governments to use monies provided by the Coronavirus Relief Fund (CRF), but does NOT provide any additional flexibility for utilization, such as revenue loss.
Additionally, while many reports anticipated the legislation might provide additional Federal Emergency Management Agency (FEMA) Disaster Relief funds that could potentially be tapped by local governments, it did not do so, nor did it waive existing cost share requirements. The bill does provide $2 billion (100 percent federal match) to be paid through the FEMA Disaster Relief Fund for the express purpose of helping an “individual or household […] meet disaster-related funeral expenses.”
HOUSING AND RENTAL ASSISTANCE
Through a new Department of Treasury program modeled on the CRF, the bill provides $25 billion to states, U.S. territories, tribes, and large localities to “provide financial assistance and housing stability services to eligible households.” Financial assistance includes payment of rent, rental arrears, utilities, and home energy costs and arrears, and other expenses related to housing incurred due to COVID-19, as defined by the Secretary. This includes both retrospective and prospective rent, although prospective rent payments are limited to three months. This is the only significant funding that the legislation provides to state and local governments. The money must be distributed within 30 days of enactment, which is January 26.
Of the $25 billion:
- Each state (as well as the District of Columbia) shall receive at least $200 million
- $800 million is reserved for tribes
- $400 million is reserved for U.S. territories
The Department of the Treasury will distribute the funds in the same manner as the CARES Act’s Coronavirus Relief Fund (42 U.S.C. 801); however, the bill expands eligible entities to any jurisdiction with a population greater than 200,000 (vs. 500,000 under the CARES Act). In order to receive a payment, a local government must provide a certification – like with the CARES Act – to Treasury indicating that the recipient will use the funds in a manner consistent with the law. The legislation provides that any amounts granted to local jurisdictions shall be reduced from the amount given to the state in which that jurisdiction is located.
While it is unclear how much money will be distributed to eligible entities, the National Low Income Housing Coalition has provided initial estimates as to how much funding will be provided to each state. It is worth noting that the bill is silent on how Treasury will handle scenarios where two eligible jurisdictions overlap, like an eligible city within an eligible county.
Grantees can make payments directly to landlords, owners, and utility providers on behalf of renters. A grantee must use at least 90 percent of its allocation to provide financial assistance to eligible
households (see below), including rent, rental arrears, utilities, home energy costs, and other related housing expenses. The remaining 10 percent is available for housing stability services.
Eligible households are defined as renter households who:
- Have a household income not more than 80 percent of AMI;
- Have one or more household members who can demonstrate a risk of experiencing homelessness or housing instability; and
- Have one or more household members who qualify for unemployment benefits or experienced financial hardship due, directly or indirectly, to the pandemic.
Landlords and owners of dwellings are able to apply for assistance on behalf of renters, so long as the renter cosigns the application, the landlord provides a copy of the application to the renter, and assistance received is used to satisfy rental obligations.
Prioritization: renter households whose incomes do not exceed 50 percent of AMI and renter households who are currently unemployed and have been unemployed for 90 or more days. Support can cover up to 18 months of arrears and limit prospective assistance to no more than 12 months.
Expiration: Funds expire on December 31, 2021; however, starting on September 30, Treasury can take unspent funds from grantees and reallocate them to grantees who have obligated at least 65 percent of their original allocation.
On January 6, Treasury launched the Emergency Rental Assistance Program website, which lists the eligible local governments (here) and includes a registration form to receive funds (here).
Eligible grantees must provide payment information and sign the acceptance of award terms form accessible below. The award terms are available for review, and may be accessed below. Prospective grantees should review in full the statutory provisions, cited in the award terms, for complete participation requirements. Completed payment information and a signed acceptance of award terms form generally must be submitted not later than 11:59 p.m. EDT on January 12, 2021, to ensure payments are made within the 30-day period specified by the statute. Eligible grantees that do not provide complete information by 11:59 p.m. EDT on January 12, 2021, may not receive an Emergency Rental Assistance payment.
The legislation extends the Centers for Disease Control and Prevention (CDC) eviction moratorium through January 31, 2021.
Resources for COVID-19 Testing and Vaccination
This legislation includes $73 billion to support public health concerns, including distribution and administration of vaccines and continued COVID-19 testing. These expenses include the following
- $8.75 billion to Centers for Disease Control and Prevention (CDC) for the distribution and administration of COVID-19 vaccines
o This includes $4.5 billion in direct funding for states, localities, and territories through the Public Health Emergency Preparedness (PHEP) cooperative agreement (with states, territories, and six localities).
o This also includes $300 million to ensure vaccines are distributed to higher-risk and underserved populations.
- $22.4 billion for testing, contact tracing, and surveillance o This includes $2.5 billion to ensure testing is provided to higher-risk and underserved populations and $790 million will be granted to the Indian Health Service (IHS).
o The legislation places a special emphasis on using the funding to provide testing to employees, students, and residents of long-term care facilities. Large localities who currently receive funding via the PHEP will be eligible for direct funding. PHEP funding is broken down further here.
- $19.7 billion for the Biomedical Advanced Research and Development Authority (BARDA) for the manufacture and purchase of vaccines
- $3.25 billion for the National Strategic Stockpile
In addition, this legislation provides $4.25 billion for mental health and substance abuse support through the Substance Abuse and Mental Health Services Administration. At least $125 million must be set aside for tribal organizations. The mental health and substance abuse programs include:
- $1.65 billion for the Substance Abuse and Prevention Treatment Block Grant;
- $1.65 billion for the Mental Health Services Block Grant;
- $600 million for Certified Community Behavioral Health Clinics;
- $50 million for suicide prevention programs;
- $50 million for Project AWARE to support school-based mental health for children;
- $240 million for emergency grants to States; and
- $10 million for the National Child Traumatic Stress Network.
Additional Child Care Provisions
- $10 billion through the ACF Child Care and Development Block Grant for childcare, including direct support for child care providers for fixed costs and operating expenses, to help ensure working parents have access to child care so they can work or return to work.
- $250 million to help Head Start programs address additional costs related to COVID-19.
The bill includes $14 billion for transit agencies. Funds are available for operating expenses to “prevent, prepare for, and respond to coronavirus,” including the purchase of personal protective equipment and payment for administrative leave of operations personnel due to reductions in service dating back to January 20, 2020. To the maximum extent possible, funds shall be directed to payroll and public transit service.
The federal cost-share is 100 percent, and all funds must be allocated within 30 days of enactment, which is January 26.
Of the $14 billion:
- $13.27 billion is for urbanized area formula grants. No agency can receive more than 75 percent of its urbanized area’s 2018 operating costs (based on the data in the National Transit Database) in combined CARES Act funding and funding under this bill.
- $678.65 million for formula grants for rural areas. No agency can receive more than 125 percent of its 2018 rural operating costs (based on the data in the National Transit Database) in combined CARES Act funding and funding under this bill.
- $50 million is for formula grants for the enhanced mobility of seniors and individuals with disabilities.
The bill includes $2 billion for airports, including:
- $1.75 billion for primary airports and certain cargo airports “for costs related to operations, cleaning, sanitization, janitorial services, combating the spread of pathogens at the airport, and debt service payments,” distributed via the Airport Improvement Program formulas;
- $45 million for general aviation and commercial service airports, $5 million of which is reserved for non-primary airports that participate in the FAA Contract Tower Program to cover “lawful expenses” to support FAA contract tower operations;
- $200 million for sponsors of primary airports to provide rent and minimum annual guarantee relief to airport car rental, on-airport parking, and in terminal airport concessions at the airports, which will be allocated based on enplanements; and
- $5 million for the Small Community Air Service Development Program.
In response to the CARES Act – in which some airports received tens of years of operating costs – the bill stipulates that no additional funding from this bill will be provided to any airport that was allocated more than four years of operating funds under the CARES Act. The federal cost share for this funding is 100 percent.
The bill also includes $10 billion for state departments of transportation to replace amounts lost because of COVID-19. These funds are designated for preventative or routine maintenance as well as operations and personnel costs.
- The legislation requires that all airports receiving funding must employ at least 90 percent of the individuals employed by the airport as of March 27, 2020 through February 15, 2021.
- The Secretary of Transportation may waive the workforce retention requirement based on economic hardship or a reduction in aviation safety or security.
- The workforce retention requirement does not apply to non-hub and non-primary airports.
USDA NUTRITION RELATED PROVISIONS
This legislation has a number of nutrition related agricultural provisions. These include:
- $13 billion to fund a six-month, 15 percent increase in Supplemental Nutrition Assistance Program (SNAP) funding;
- Suspension of work requirements for SNAP-eligible college students;
- $400 million for the Emergency Food Assistance Program (TEFAP), which provides emergency food assistance; and
- $400 million for the Dairy Donation program, whereby the USDA purchases milk to be processed into dairy products and distributed to nonprofit food banks and similar entities.
$1.5 billion of the allocated funding from the CRRSAA will be used to support a third round of funding for the Farmers to Families Food Box Program. Solicitations will be sent to the organizations that had previously received Basic Ordering Agreements (BOAs) for the program sometime the week of January 11, with awards expected to be made by January 19. Food deliveries will begin after award decisions are made and will continue through April. A list of BOA holders can be found here.
PAID FAMILY AND SICK LEAVE TAX CREDIT EXTENSION
This legislation extends the refundable payroll tax credits for paid sick and family leave, enacted in the Families First Coronavirus Response Act, through the end of March 2021 for private employers. While the tax credit has been extended, it has been done so on a voluntary basis as the law does not mandate employer compliance beyond December 31, 2020. In other words, despite the provision of the tax credit, employers are no longer required to provide additional paid sick leave or family and medical leave if they choose not to do so. These provisions do not apply to government employers. The Department of Labor released guidance regarding the expiration of the paid sick leave.
ECONOMIC IMPACT (DIRECT CASH ASSISTANCE) PAYMENTS
- The provision provides $166 billion for direct cash assistance like the Economic Impact Payments under the CARES Act – albeit half as much. The credit is $600 per person, or $1,200 for a married couple. It also includes $600 per child. Based on 2019 tax returns, payments are based on income up to $75,000 per person, $112,000 if filing as a head of household, or $150,000 per couple, and decrease at a rate of $5 per $100 of additional income over the designated threshold.
- The Treasury Department started distribution of Economic Impact Payments. Individuals who had provided their banking information have been receiving funds via direct deposit, while those who have not provided banking information will receive paper checks. The Treasury Department has also begun sending payments via prepaid debit card.
- Provides $300 per week for all workers receiving unemployment benefits through March 14, 2021
- Extends Pandemic Unemployment Assistance (PUA), with expanded coverage to the selfemployed, gig workers, and others in nontraditional employment, and the Pandemic Emergency Unemployment Compensation (PEUC) program, which provides additional weeks of federally-funded unemployment benefits to individuals who exhaust their regular state benefits
- Increases the maximum number of weeks an individual may claim benefits through regular state unemployment plus the PEUC program, or through the PUA program, to 50 weeks
- Extends until March 31, 2021, the emergency unemployment relief for governmental entities and nonprofit organizations provided by the Families First Coronavirus Response Act (FFCRA), providing federal support for 50 percent of unemployment benefits for state and local government and nonprofit employees.
AID FOR SMALL BUSINESSES
- Provides funding for a second round of forgivable loans through the Paycheck Protection Program for small businesses and nonprofits experiencing significant revenue losses, makes programmatic improvements to PPP, funds grants to shuttered venues, and enacts emergency enhancements to other SBA lending programs. New PPP funds will officially open for community financial institutions on January 11 for first draw PPP loans and January 13 for second draw PPP loans. All other participating lenders will be eligible shortly after January 13. In addition, SBA released program guidance for the new loan program. It also released specific guidance for second draw PPP loans, and provided guidance for Guidance on Accessing Capital for Minority, Underserved, Veteran, and Women-Owned Business Concerns.
o $284.45 billion for Paycheck Protection Program Loans. Of these:
- $35 billion is reserved for entities seeking their first loans;
- $15 billion would be for first and second loans from community financial institutions;
- $15 billion would be required to be provided by credit unions and other financial institutions holding less than $10 billion;
- $15 billion for first loans for businesses with fewer than 10 employees or those in lower income areas; and
- $25 billion set aside for second loans to groups in those same parameters.
- In order to be eligible for a second loan, an entity would have fewer than 300 workers and be able to demonstrate a 25 percent decrease in revenue compared to an identical quarter in 2019.
o $25 million for Minority Business Development Centers under the Minority Business Development Agency (MBDA) to assist minority business enterprises with technical assistance, such as applying for PPP
o $20 billion for the Economic Injury Disaster Loan (EIDL) Advance program, of which $20 million is for the SBA Inspector General
o Extends the covered period for EIDL Grants through December 31, 2021. SBA formalized the extension on December 30, 2020.
o $3.5 billion for continuing the Section 7(a) Debt Relief program
o $2 billion to carry out SBA lending enhancements
- The legislation provides $15 billion to venue operators, movie theaters, zoo operators, and nonprofit museums that can demonstrate a 25 percent decrease in revenue compared to an identical quarter in 2019.
- On January 6, the IRS issued guidance allowing forgiven PPP loans to be tax deductible.
COMMUNITY DEVELOPMENT FINANCIAL INSTITUTIONS (CDFI) AND MINORITY DEPOSITORY INSTITUTIONS (MDI)
In addition to authorizing PPP lending through community-based lenders like CDFIs and MDIs, the package includes $12 billion for CDFIs and MDIs:
- $3 billion through the CDFI fund; and
- $9 billion to establish a new Department of Treasury Emergency Capital Investment Program (ECIP) to expand lending and investment in low-and moderate-income (LMI) and minority communities impacted by COVID-19.
The COVID-19 relief legislation provides a total of $82 billion in education-related funding, including:
- $4.05 billion for the Governor’s Emergency Education Relief Act
o This funding can be used at the governor’s discretion for K-12 schools and institutions of higher education (IHEs).
o $2.75 billion will be specifically allocated for non-public schools.
- $54.3 billion for the Elementary and Secondary School Emergency Relief Fund
- $22.7 billion for the Higher Education Emergency Relief Fund, of which:
o $20 billion will be allocated to all public and private nonprofit IHEs;
o $908 million will be distributed to for-profit colleges to provide financial aid to students;
o $1.7 billion will be set aside for Historically Black Colleges and Universities (HBCUs) and Minority Serving Institutions (MSIs); and
o $113.5 million will go to institutions with the most need, or IHEs who do not fall under the original distribution formula, such as independent graduate schools.
Colleges and universities can use the funds from this bill in the same way they used the funding they were awarded in the Coronavirus Aid, Relief, and Economic Security (CARES) Act (Pub. L. 116-136). The
funds will be distributed to institutions of higher education via a similar formula provided for in the CARES Act, and 50% of these funds must be provided in the form of direct aid to students.
Although it was included in the draft legislation, the bill does not extend the pause on payments and interest accrual of federal student loans currently extended by Secretary of Education Betsy DeVos through February 1, 2021.
The relief legislation also provides an additional $30 million to the Student Aid Administration and $5 million to the Department of Education Office of the Inspector General. Finally, the agreement includes various policy provisions. First, the bill includes provisions that simplify the Free Application for Federal Student Aid (FAFSA), including reducing the number of questions on the FAFSA and allowing more students to have their eligibility automatically calculated. Additionally, the bill overturns a provision prohibiting incarcerated individuals from receiving Pell Grants.
BROADBAND AND TELECOMMUNICATIONS
The FCC is currently seeking comments on the proposed implementation plan for the $3.2 billion Emergency Connectivity Broadband Fund created in CRRSAA. This fund will support the Emergency Broadband Benefit Program, which allows eligible households to receive discounts off of the cost of broadband service as well as specific connected devices during the COVID-19 emergency. Participating providers will be eligible to receive reimbursement for such discounts. Comments on the filing must be made by January 24.
The FCC announced on January 6 that it is seeking comment on the next round of the COVID-19 telehealth program. Comments are due by January 19, 2021. The additional $249.5 million under this program will support health care providers offering telehealth services. Specifically, “the Commission seeks public input on the metrics the Commission should use to evaluate applications for this round of funding, how the Commission should treat applications that were filed during the initial funding round provided under the Coronavirus Aid, Relief, and Economic Security Act (CARES Act), and additional program improvements.” The public notice is available here.
In addition to COVID-19 relief, this omnibus legislation included a package of extended tax deductions, known as “tax extenders.” Some of these are especially relevant to state and local governments, including making permanent the four percent rate for calculating Low-Income Housing Tax Credits (LIHTC).
In addition to LIHTC, this legislation includes the following tax extenders.
It makes the following provisions permanent:
- Craft Beverage Excise Tax, with modifications to address importation issue
- 7.5 percent medical expense deduction
- Short-Line Railroad Maintenance Tax Credit (at a lower, 40 percent rate)
- Energy-efficient commercial buildings deduction (with updated standards)
- Higher Learning Tuition deduction (this higher learning tuition deduction is made permanent by increasing the phase-out limits in the permanent Lifetime Learning Credit)
- Volunteer firefighter income exclusion of state tax benefits (SECURE Act provision)
It extends the following tax credit to 2025:
- New Markets Tax Credit (NMTC)
- Work Opportunity Tax Credit (WOTC)
- CFC look-through
- Family Leave Credit
- Employer Paid Student Loan Income Exclusion (CARES Act provision)
- Motorsports Depreciation
- Empowerment Zones (repeal section 179 (which are obsolete) and capital gains benefits (which are expired))
- Film and Live Performances Expensing
- Oil Spill Liability Trust Fund
- Principal Residence COD at $750,000 (reduced from $2 million)
It extends the following tax credits through 2021:
- Private mortgage insurance (PMI) deduction
- Health Coverage Tax Credit
- Alternative fuels/mixture credit
- Second-generation biofuels credit 10
- Nonbusiness energy property credit
- 2-wheel electric plug-in credit
- Fuel cell motor vehicles credit
- Energy-efficient homes credit
- Alt fuel vehicle refueling property credit
- Renewable electricity credit
- American Samoa Economic Development Tax Credit
- Racehorse depreciation
- Indian business property depreciation
- Indian coal credit
- Indian employment credit
- Mine rescue training credit
- Black Lung Trust Fund
Policy and Taxation Group is your voice in Washington on economic freedom. We advocate for policies that allow American families to fully enjoy the economic liberties and benefits of a robust free market unique to our nation. For over 25 years, we have been the loudest voice in the nation’s capital on eliminating the death tax. This ill-conceived tax has a destructive impact on families, family businesses, job creation, and the national economy.