Source: National Association of Towns and Townships (NATaT), March 15, 2021
…The American Rescue Plan Act of 2021 includes $350 billion in direct financial relief for all state, local, tribal, and territorial governments; extends federal supplemental unemployment benefits; increases funding for the Paycheck Protection Program; provides funding to assist schools in safely reopening; provides additional utility assistance; and includes additional funding for COVID-19 testing, vaccination, and treatment, among other provisions that assist many industries, businesses, and individuals.
Many of the federal departments and agencies that received additional or new funding for programs and financial assistance will likely begin issuing guidance for this funding over the coming weeks.
This NATaT Special Report, based largely off summary documents provided by Senate Democratic leadership, covers each title of the American Rescue Plan Act of 2021, including funding levels and provisions that may be of interest to towns and townships.
Source: Robin L Prunty, Marian Zucker, S&P Global Finance, March 18, 2021
– The American Rescue Plan’s funding will support credit quality of issuers across all U.S. public finance sectors.
– The plan’s flexibility will afford issuers the opportunity to address unique financial and economic challenges associated with the pandemic.
– Many of the initiatives will support a more robust economic recovery across the country.
Source: White House, Press Release, April 12, 2021
Today, the White House released state-by-state fact sheets that highlight the urgent need in every state across the country for the investments proposed by President Biden in the American Jobs Plan. The fact sheets highlight the number of bridges and miles of road in each state in poor condition, the percentage of households without access to broadband, the billions of dollars required for water infrastructure, among other infrastructure needs.
Individual fact sheets for each of the 50 states, the District of Columbia and Puerto Rico are linked below.
Source: Council of State Governments, 2021
…According to an official fact sheet released by the White House, the Plan proposes an investment of $2 trillion over the course of the next 15 years, consisting principally of one-time capital investments. Funding sources include an increase in the corporate tax rate to 28% and efforts to better enforce global minimum tax rates on corporations.
As proposed, the Plan constitutes the most extensive federal investment in infrastructure, job and workforce development and technology research and development to date. Furthermore, the Plan is unique in its broad focus, including efforts to address climate change as well as long-standing racial injustice and gender inequity. Notably, nearly 40% of the benefits of climate and clean infrastructure investments will be focused on disadvantaged communities. Proposed advances in job development, specifically within STEM fields1 and the care economy, also will directly benefit women and communities of color.
The remainder of this document breaks down the funding in the American Jobs Plan by its major components:
• Building Upgrades, Modernization, and Repairs
• Jobs Investments
• Other Funding
Source: Council of State Governments, 2021
The American Rescue Plan Act of 2021, a $1.9 trillion economic relief package, was signed by the president on March 11. Part of this package includes the Coronavirus State and Local Fiscal Recovery Fund, which provides approximately $350 billion in new federal fiscal assistance for states, territories, tribes, counties and municipalities. An additional $10 billion is available to states, territories and tribal governments for critical capital projects that directly enable work, education and health monitoring in response to COVID-19.
• The American Rescue Plan: K-12
• The American Rescue Plan: Employers
Source: Alexander Bartik, Zoe Cullen, Edward L. Glaeser, Michael Luca, Christopher Stanton, Aditya Sunderam, Harvard Business School NOM Unit Working Paper No. 21-021, July 30, 2020
There are 2 versions of this paper
From the abstract:
The Paycheck Protection Program (PPP) aimed to quickly deliver hundreds of billions of dollars of loans to small businesses, with the loans administered via private banks. In this paper, we use firm level data to document the demand and supply of PPP funds. Using an instrumental variables approach, we find that PPP loans led to a 14 to 30 percentage point increase in a business’s expected survival, and a positive but imprecise effect on employment. Moreover, the effects on survival were heterogeneous and highlight an important tradeoff faced by policymakers: while administering the loans via private banks allowed for rapid delivery of funds, it also limited the government’s ability to target the funding – instead allowing pre-existing connections between businesses and banks to determine which firms would benefit from the program.
Source: Timothy J. Bartik, Brookings Metropolitan Policy Program, September 2020
From the summary:
Even before the COVID-19 recession, distressed communities across the United States lacked sufficient jobs. The pandemic’s effects will further damage these local areas, while pushing even more places into economic distress. Without intervention, even a robust national recovery may leave many communities behind. Communities’ responses will be hindered by a lack of resources, and their residents will suffer from lower earnings and increased social problems.
As a solution, this paper proposes a new federal block grant to create or retain good jobs in distressed communities and help residents access these jobs. The block grant would provide long-term flexible assistance to increase local earnings and ensure those gains are broadly shared.
Source: Philip Mattera and Mellissa Chang, Good Jobs First, September 2020
This new report combining data from Covid Stimulus Watch and Violation Tracker shows how many CARES Act recipients have a history of corporate misconduct.
More than 43,000 businesses and non-profit organizations that received CARES Act funds have a history of misconduct, collectively paying $13 billion to settle civil and criminal penalties over the last decade.
Together, the same companies received $57 billion in grants and $91 billion in loans through the federal economic stimulus bill passed by Congress to mitigate the economic fallout from the COVID-19 pandemic.
Among the violations are workplace safety issues, leading in one case to the death of a worker, flouting of environmental standards, wage theft and defrauding the federal government. They raise the question whether greater scrutiny should be given to how recipients are using taxpayer dollars.
Source: James W. Douglas, Ringa Raudla, The American Review of Public Administration, Special issue: Double Issue Dedicated to COVID-19, Volume 50 Issue 6-7, August-October 2020
From the abstract:
The COVID-19 crisis is placing a tremendous fiscal squeeze on state and local governments in the United States. We argue that the federal government should increase its deficit to fill in the fiscal gap. In the absence of sufficient federal assistance, we recommend that states suspend their balanced budget rules and norms and run deficits in their operating budgets to maintain services and meet additional obligations due to the pandemic. A comparison with Eurozone countries shows that states have more than enough debt capacity to run short-term deficits to respond to the crisis.
Source: Sungho Park, Craig S. Maher, The American Review of Public Administration, Special issue: Double Issue Dedicated to COVID-19, Volume 50 Issue 6-7, August-October 2020
From the abstract:
The novel coronavirus (COVID-19) is an infectious respiratory illness afflicting people to a degree not seen since the flu pandemic of 1968 when approximately one million lives were lost worldwide. What makes COVID-19 distinct is the rate at which it spread throughout the world, stress-testing health care systems and stymieing global economies. To confront this unprecedented crisis, nearly every country has been developing a wide range of policy responses, including fiscal measures. This study aims to discuss government fiscal responses to the pandemic from a financial management perspective. The core question is, “How does each country’s financial management system support its fiscal responses to the crisis?” We are particularly interested in reexamining commonly accepted norms about fiscal federalism and the fiscal condition of national and local governments heading into this pandemic. This study takes a comparative approach to the question, focusing on South Korea and the United States. Our findings suggest that the ability to respond to this pandemic in a comprehensive and effective manner is challenged by each nation’s financial management system that generates variation in policy coordination and responsiveness.