On March 27, 2020, President Trump signed the CARES Act into law. The CARES Act contains broad based financial measures aimed at providing immediate relief to unemployed workers, small and mid-sized businesses, and various sectors of the U.S. economy including healthcare and transportation. Within the CARES Act, Congress also established the Coronavirus Relief Fund (Article 5) aimed at providing financial support to state, tribal and qualifying local governments experiencing adverse economic impacts and expenses related to the COVID-19 crisis.
Summary of the Coronavirus Relief Fund: Key Points
- $150 Billion total allocation: $139 Billion to states and qualifying local governments; $8 Billion to Tribal governments and $3 Billion to the District of Columbia, Puerto Rico and other U.S. territories
- Qualifying expenses must be necessary expenditures related to the COVID-19 epidemic, not accounted for in the most recently approved governmental budget enacted before March 27, 2020, and incurred between March 1, 2020 and December 30, 2020
- Each state receives a minimum of $1.25B; the ultimate relief to each state is allocated proportionally based on the state’s population relative to the population of all states, as determined by the most current year census data
- Eligible local governments with a population of at least 500,000 may petition the Department of the Treasury for direct payments
- 45% cap on funds directed to local government
- Funds directed to local governments are applied against the proportionate share of funds allocated to that State
- Payments are made directly by the Treasury Secretary and monitored by the Office of the Inspector General
- Future COVID-19 stabilization funds may include direct funding to local governments with smaller populations. On April 3, 2020, several members of Congress petitioned Speaker Nancy Pelosi to consider smaller local government units in the next COVID-19 aid package. A copy of the letter can be found here.
Our Firm’s Government and Business Transactions Divisions are actively assisting local government clients in seeking financial aid available under the CARES Act. Should you have any questions or need additional guidance, please contact a member of our Government Division or Banking & Financial Institutions Practice Group.