on Dec 17, 2020

How the Latest Federal Stimulus Will Impact Cities

Congressional leaders have reportedly been getting closer to an economic stimulus deal, which is expected to provide at least:

 

• $300 billion in small business support, including repurposed CARES Act funds, to continue supporting programs such as the Paycheck Protection Program (PPP) and the Economic Injury Disaster Loans (EIDL);

• over $200 billion to extend the Federal supplemental unemployment insurance benefits, to support $300 per week in bonus federal unemployment payments for roughly four months and all pandemic unemployment insurance programs, including the Pandemic Unemployment Assistance (PUA) and the Pandemic Emergency Unemployment Compensation (PEUC); and

• direct stimulus checks to individuals and families in the range of $600 per person.

 

As of this writing, the full contents of the proposal are still under discussion. The Democratic demand to retain flexible state and local government aid and the Republican demand for sweeping liability protections for businesses, hospitals, schools and other institutions open during the pandemic appear likely to be jettisoned, in exchange for the extension of unemployment benefits and direct stimulus checks.

The effect of this emerging compromise, while definitely not good news for beleaguered state and local governments, is not all bad news either: in addition to the above amounts, the current draft contemplates direct aid to state and local governmental entities. While total funding for those organizations is down from the $305 billion proposed in the original bipartisan compromise bill to $145 billion, and much state and local flexibility with respect to how to spend funds has been removed, significant state and local government support remains, earmarked for:

 

• $82 billion for education, including $54 billion for elementary and secondary schools (K-12) through State educational agencies (SEAs) for the purpose of providing local educational agencies with emergency relief funds; $20 billion for higher education institutions, including amounts set aside for minority serving institutions; and $7.5 billion in flexible emergency block grants, empowering governors to decide how best to meet the current needs of students and schools, including private and charter schools;

• $28 billion for transportation, including $15 billion to support public transit systems, $8 billion to support bus systems, ferries and school buses, $4 billion to airports, and $1 billion to Amtrak, all of which will are targeted to preventing furloughs and keeping systems running;

• $25 billion for rental housing assistance to state and local governments through the Coronavirus Relief Fund (CRF) that must be used for rent, rental arrears, utilities, and home energy costs; and

• $10 billion for broadband, including $6.25 billion for State Broadband Deployment and Broadband Connectivity Grants to bridge the digital divide and ensure affordable access to broadband service, and $3 billion to provide E-Rate support to educational and distance learning providers.

Are these amounts a lot or a little? For context:

 

• The $25 billion for rental housing assistance through the CRF could help approximately 5 million households for 6 to 9 months, assuming well-designed programs.

• The $3 billion for E-Rate broadband support to educational and distance learning providers could help close the learning gap for over 4.4 million households with students that lack consistent access to a computer by providing them with a hotspot, tablet and support for roughly 7 months.

To learn more about HR&A’s tracking of federal funding for A Just & Resilient Recovery, drop us a line at stimulus@hraadvisors.com.