The Coronavirus Relief Fund (CARES Act, Title V): Background and State and Local Allocations (R46298, Version 2, Updated April 14, 2020)
Summary
This Congressional Research Service report, R46298 Version 2, updated April 14, 2020, explains the $150 billion Coronavirus Relief Fund created by the CARES Act, with $139 billion for the 50 states, $8 billion for tribal areas and $3 billion for territories. It adds a reference to the Treasury's April 13, 2020 distribution methodology for units of local government. Treasury guidance says that where a city of 700,000 sits in a county of 900,000, both are eligible, but the county's direct payment is calculated using only 200,000 people. The report also notes that Table 3 figures for some states are CRS estimates based on 2018 Census data because Treasury is using 2019 population data not yet publicly available.
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The Coronavirus Relief Fund (CARES Act,
Title V): Background and State and Local
Allocations
Grant A. Driessen
Analyst in Public Finance
Updated April 14, 2020
Congressional Research Service
7-....
www.crs.gov
R46298
SUMMARY
R46298
The Coronavirus Relief Fund (CARES Act, Title
April 14, 2020
V): Background and State and Local Allocations Grant A. Driessen
The sudden decline in economic output following the Coronavirus disease 2019 (COVID-19) Analyst in Public Finance
outbreak has significantly altered the fiscal outlook for state and local governments. A sizable -redacted-@crs.loc.gov
share of economic output derives from state and local government activity. These governments
are generally required to balance their operating budgets every one or two years. Early evidence For a copy of the full report,
suggests that the COVID-19 economic shock will have a notable impact on state and local please call 7-.... or visit
budgets. www.crs.gov.
The Coronavirus Aid, Relief, and Economic Security Act (CARES Act; P.L. 116-136), signed into law on March 27, 2020,
created the Coronavirus Relief Fund, which provides $150 billion in direct assistance for domestic governments. The CARES
Act stipulates that the $150 billion provided to the Coronavirus Relief Fund is allocated to governments in states, territories,
and tribal areas as follows: (1) $139 billion is allocated to state governments in the 50 states, with allocations based on their
populations and with no state receiving less than $1.25 billion; (2) $8 billion is set aside for governments in tribal areas; and
(3) $3 billion is allotted to governments in territories, including the District of Columbia and Puerto Rico.
Coronavirus Relief Fund assistance is provided to state governments. Local governments serving a population of at least
500,000, as measured in the most recent census data, may elect to receive assistance directly from Treasury. Such direct local
assistance allocations reduce the allocation that is made to the state government (keeping the state allocation constant), and
are equal to the product of (1) the state or territory allocation amount, (2) the share of the state or territory population served
by the local government, and (3) 45%.
Congressional Research Service
The Coronavirus Relief Fund (CARES Act, Title V): State and Local Allocations
Contents
Background ............................................................................................................................... 1
Eligible Purposes ....................................................................................................................... 2
Allocations Across States, Territories, and Tribal Areas ........................................................... 2
Allocations to Governments Within States and Territories ....................................................... 5
Tables
Table 1. Estimated Fund Allocations by State ................................................................................. 3
Table 2. Estimated Fund Allocations by Territory ........................................................................... 5
Table 3. Estimates of Localities with Direct Assistance Eligibility by State and Territory ............. 6
Contacts
Author Contact Information ............................................................................................................ 8
Congressional Research Service
The Coronavirus Relief Fund (CARES Act, Title V): State and Local Allocations
he sudden decline in economic output following the Coronavirus disease 2019 (COVID-
T 19) outbreak has significantly altered the fiscal outlook for state and local governments.
The Coronavirus Aid, Relief, and Economic Security Act (CARES Act; P.L. 116-136),
signed into law on March 27, 2020, created the Coronavirus Relief Fund, which provides $150
billion in direct assistance for state and local governments. This report briefly summarizes the
background, purpose, and allocation details of the Coronavirus Relief Fund. Table 1 provides
Congressional Research Service (CRS) estimates of Coronavirus Relief Fund allocations to states,
Table 2 provides allocation amounts to territories, and Table 3 shows CRS estimates of local
government direct assistance eligibility by state and territory.
Background
A sizable share of economic output derives from state and local government activity. State and
local governments spent $3.7 trillion in 2017, 19% of gross domestic product (GDP), divided
about equally across state governments (55% of combined state and local expenditures) and local
governments (45% of combined state and local expenditures). 1 These governments are generally
required to balance their operating budgets every one or two years. For more on how economic
shocks affect state and local government activity, see CRS Insight IN11258, State and Local
Fiscal Conditions and Economic Shocks.
Early evidence suggests that the COVID-19 economic shock will have a notable impact on state
and local budgets. Consumption declines following nonessential business closures and social
distancing efforts are likely to produce a sharp drop in sales tax revenues (35% of state and local
own-source revenues in 2017). Spikes in unemployment and decreased firm profitability are
expected to have a similar effect on individual and corporate income tax receipts (26% of own-
source revenues). 2 Use of state and local spending programs is likely to increase, particularly for
public welfare programs (19% of 2017 expenditures) as well as hospital and public health
expenses (8% of 2017 expenditures).
The Coronavirus Relief Fund, established through Section 5001 of the CARES Act, offers a
means of assistance for state and local governments. The Coronavirus Relief Fund provides a
total of $150 billion in federal fiscal support for state and local governments, with eligibility
dependent upon the location, level of government, and use of potential funds. Separately, Section
4003 of the CARES Act authorized use of Federal Reserve capacity to support up to $454 billion
in debt issued by state governments, local governments, and eligible businesses. A similar fund,
the State Fiscal Stabilization Fund, was created during the 2007-2009 recession by the American
Recovery and Reinvestment Act of 2009 (P.L. 111-5). The State Fiscal Stabilization Fund
provided $54 billion to state and local governments, most of which was targeted to certain types
of spending for education programs.3
1 All state and local government finance data used in this report draw from U.S. Census Bureau, “2017 Survey of State
& Local Government Finances,” October 2019, available at https://www.census.gov/programs-surveys/gov-
finances.html.
2 There are no indications as yet of a comparable effect on the base for property taxes (32% of 2017 own-source
revenues), which are predominantly collected by local governments.
3 For more information about this program, see U.S. Department of Education, “State Fiscal Stabilization Fund,” March
7, 2009, available at https://www2.ed.gov/policy/gen/leg/recovery/factsheet/stabilization-fund.html.
Congressional Research Service 1
The Coronavirus Relief Fund (CARES Act, Title V): State and Local Allocations
Eligible Purposes
Section 5001(d) of the CARES Act provides the eligible purposes for which Coronavirus Relief
Fund payments may be used. Specifically, it allows state and local governments to make
payments for programs that
(1) are necessary expenditures incurred due to the public health emergency with respect to
Coronavirus Disease 2019 (COVID-19);
(2) were not accounted for in the budget most recently approved as of the date of enactment
[March 27, 2020] of this section for the State or government; and
(3) were incurred during the period that begins on March 1, 2020 and ends on December
30, 2020.4
Per Section 5001(f) of the CARES Act, the Inspector General of the Department of the Treasury
determines whether Coronavirus Relief Fund payments are used for eligible purposes. Fund
payments that are deemed for ineligible purposes are treated as a debt owed by the implementing
government to Treasury.
Coronavirus Relief Fund payments may not be used to directly account for revenue shortfalls
related to the COVID-19 outbreak. Such funds, however, may indirectly assist with revenue
shortfalls in cases where expenses paid for by the Coronavirus Relief Fund would otherwise
widen the gap between government outlays and receipts. For instance, if $3 billion in Coronavirus
Relief Fund assistance is sent to a government with revenues that are $10 billion lower than
expected and $5 billion in new COVID-19-related expenses, that assistance will reduce the fiscal
gap (from $15 billion to $12 billion) by the same amount regardless of whether it applies to
revenues or spending. Only in cases where governments have revenue shortfalls and less related
spending than the program provides are governments limited by the eligible purpose restrictions.
For instance, in that same example but with no new COVID-19-related expenses, the government
could not use Coronavirus Relief Fund assistance despite its decrease in revenues.
Allocations Across States, Territories, and Tribal Areas
The CARES Act stipulates that the $150 billion provided to the Coronavirus Relief Fund is
allocated to governments in states, territories, and tribal areas as follows:5
$139 billion is allocated for governments in the 50 states based on their
populations (as measured by the U.S. Census Bureau in 2019), with no state
receiving less than $1.25 billion.
$8 billion is set aside for governments in tribal areas, with each tribal area’s
allocation based on its share of aggregate tribal expenditures in FY2019, as
determined by the Secretary of the Treasury in consultation with the Secretary of
the Interior.
$3 billion is allocated to the territories of the District of Columbia (DC), Puerto
Rico, U.S. Virgin Islands, Guam, Northern Mariana Islands, and American
Samoa, with each territory receiving an amount based on its share of the total
4 Section 5001(d) of the CARES Act, p. 603.
5 This allocation methodology differs from what was implemented by the American Recovery and Reinvestment Act of
2009 for the State Fiscal Stabilization Fund, which treated the 50 states, the District of Columbia, and Puerto Rico
uniformly when implementing allocation procedures.
Congressional Research Service 2
The Coronavirus Relief Fund (CARES Act, Title V): State and Local Allocations
population across all territories, with populations determined by the Secretary of
the Treasury.
Table 1 shows state allocations for Coronavirus Relief Fund payments. Due to the $1.25 billion
minimum allocation for states, every state with an allocation greater than the minimum amount
receives a smaller allocation share (excluding amounts provided to tribal areas) than its share of
the population. Most states with a minimum allocation amount, in contrast, have a larger
allocation share than their population share.
Table 1. Estimated Fund Allocations by State
Allocation
State Allocation % Population Population %
($ Billions)
Alabama 1.901 1.4 4,903,185 1.5
Alaska 1.250 0.9 731,545 0.2
Arizona 2.822 2.0 7,278,717 2.2
Arkansas 1.250 0.9 3,017,804 0.9
California 15.321 11.0 39,512,223 12.1
Colorado 2.233 1.6 5,758,736 1.8
Connecticut 1.382 1.0 3,565,287 1.1
Delaware 1.250 0.9 973,764 0.3
Florida 8.328 6.0 21,477,737 6.6
Georgia 4.117 3.0 10,617,423 3.2
Hawaii 1.250 0.9 1,415,872 0.4
Idaho 1.250 0.9 1,787,065 0.5
Illinois 4.914 3.5 12,671,821 3.9
Indiana 2.610 1.9 6,732,219 2.1
Iowa 1.250 0.9 3,155,070 1.0
Kansas 1.250 0.9 2,913,314 0.9
Kentucky 1.732 1.2 4,467,673 1.4
Louisiana 1.803 1.3 4,648,794 1.4
Maine 1.250 0.9 1,344,212 0.4
Maryland 2.344 1.7 6,045,680 1.8
Massachusetts 2.673 1.9 6,892,503 2.1
Michigan 3.873 2.8 9,986,857 3.0
Minnesota 2.187 1.6 5,639,632 1.7
Mississippi 1.250 0.9 2,976,149 0.9
Missouri 2.380 1.7 6,137,428 1.9
Montana 1.250 0.9 1,068,778 0.3
Nebraska 1.250 0.9 1,934,408 0.6
Nevada 1.250 0.9 3,080,156 0.9
New Hampshire 1.250 0.9 1,359,711 0.4
Congressional Research Service 3
The Coronavirus Relief Fund (CARES Act, Title V): State and Local Allocations
Allocation
State Allocation % Population Population %
($ Billions)
New Jersey 3.444 2.5 8,882,190 2.7
New Mexico 1.250 0.9 2,096,829 0.6
New York 7.543 5.4 19,453,561 5.9
North Carolina 4.067 2.9 10,488,084 3.2
North Dakota 1.250 0.9 762,062 0.2
Ohio 4.533 3.3 11,689,100 3.6
Oklahoma 1.534 1.1 3,956,971 1.2
Oregon 1.635 1.2 4,217,737 1.3
Pennsylvania 4.964 3.6 12,801,989 3.9
Rhode Island 1.250 0.9 1,059,361 0.3
South Carolina 1.996 1.4 5,148,714 1.6
South Dakota 1.250 0.9 884,659 0.3
Tennessee 2.648 1.9 6,829,174 2.1
Texas 11.243 8.1 28.995,881 8.9
Utah 1.250 0.9 3,205,958 1.0
Vermont 1.250 0.9 623,989 0.2
Virginia 3.310 2.4 8,535,519 2.6
Washington 2.953 2.1 7,614,893 2.3
West Virginia 1.250 0.9 1,792,147 0.5
Wisconsin 2.258 1.6 5,822,434 1.8
Wyoming 1.250 0.9 578,759 0.2
Total 139.000 100.0 327,533,774 100.0
Source: U.S. Treasury, “Data sources and the distribution methodology for units of local government,” April 13,
2020, available at https://home.treasury.gov/policy-issues/cares/state-and-local-governments.
Note: Allocation and population percentages do not include the $8 billion in assistance provided to tribal
governments.
Table 2 provides Coronavirus Relief Fund estimated allocations made to territories. Territory
allocations are made in direct proportion to the relevant population estimate, with no minimum
amount provided. Allocation shares for all territories except Puerto Rico are smaller than the state
minimum amount.
Congressional Research Service 4
The Coronavirus Relief Fund (CARES Act, Title V): State and Local Allocations
Table 2. Estimated Fund Allocations by Territory
Allocation
Territory Population Allocation %
($ Billions)
American Samoa 0.035 50,135 1.2
District of Columbia 0.495 705,749 16.5
Guam 0.118 168,147 3.9
Northern Mariana Islands 0.036 51,718 1.2
Puerto Rico 2.241 3,193,694 74.7
U.S. Virgin Islands 0.075 106,631 2.5
Total 3.000 4,274,608 100.0
Source: U.S. Treasury, “Data sources and the distribution methodology for units of local government,” April 13,
2020, available at https://home.treasury.gov/policy-issues/cares/state-and-local-governments.
Note: Allocation and population percentages do not include the $8 billion in assistance provided to tribal
governments.
Allocations to Governments Within States and Territories
Coronavirus Relief Fund assistance is generally provided to state governments. Local
governments serving a population of at least 500,000, as measured in the most recent census data,
may elect to receive assistance directly from Treasury. Such direct local assistance allocations
reduce the allocation made to the state government (keeping the state allocation constant) and are
equal to the product of
the state or territory allocation amount;
the percentage of the state or territory population attributed to the local
government; and
45%.6
The CARES Act does not explicitly prevent local governments (regardless of their eligibility for
direct assistance) from receiving Coronavirus Relief Fund payments from state governments, so
long as the funds are used for eligible purposes. State governments transferred $534 billion to
local governments in 2017, or 28% of all local government revenues.
Table 3 provides the number of cities and counties in each state eligible for direct assistance and
estimates of the total amount of available direct assistance for eligible local governments. Direct
assistance eligibility varies greatly across states, ranging from those with no eligible localities (20
states) to those with local governments eligible for 38% of a state’s allocation (Massachusetts and
California). CRS calculates that local governments are eligible to receive $29.3 billion (21% of
nontribal allocations) in direct assistance.7
In many cases, populations are served by more than one local government that is eligible for
direct assistance from the Coronavirus Relief Fund (e.g., a city with a population of 700,000
located in a county with 200,000 other people, and thus with a county population of 900,000).
Guidance from the Secretary of the Treasury clarified that in such cases, all overlapping
6 Section 5001(c)(5) of the CARES Act.
7 Treasury is using 2019 population data that are not yet publicly available in determining direct assistance eligibility
and amounts provided to cities. Table 3 figures for states that do have eligible cities with a portion of their population
in ineligible counties are CRS estimates based on 2018 Census data.
Congressional Research Service 5
The Coronavirus Relief Fund (CARES Act, Title V): State and Local Allocations
governments are eligible for assistance. However, direct assistance payments to larger localities
will be calculated using only their unique population, or will be reduced by any amounts also
attributable to smaller localities receiving assistance (i.e. in the above example the county
government only uses a population of 200,000 for its direct payment calculation).
Table 3. Estimates of Localities with Direct Assistance Eligibility by State and
Territory
Maximum Direct
Assistance Estimate ($
State Eligible Localities Billions) % of State Allocation
Alabama 1 0.115 6
Alaska 0 — —
American Samoa 0 — —
Arizona 5 0.965 34
Arkansas 0 — —
California 22 5.796 38
Colorado 6 0.559 25
Connecticut 3 0.469 34
Delaware 1 0.323 26
District of Columbia 0 — —
Florida 13 2.472 30
Georgia 5 0.614 15
Guam 0 — —
Hawaii 1 0.387 31
Idaho 0 — —
Illinois 6 1.395 28
Indiana 2 0.168 6
Iowa 0 — —
Kansas 2 0.216 17
Kentucky 2 0.134 8
Louisiana 0 — —
Maine 0 — —
Maryland 5 0.691 30
Massachusetts 8 1.017 38
Michigan 5 0.792 20
Minnesota 2 0.317 15
Mississippi 0 — —
Missouri 2 0.296 12
Montana 0 — —
Nebraska 1 0.166 13
Congressional Research Service 6
The Coronavirus Relief Fund (CARES Act, Title V): State and Local Allocations
Maximum Direct
Assistance Estimate ($
State Eligible Localities Billions) % of State Allocation
Nevada 2 0.414 33
New Hampshire 0 — —
New Jersey 9 1.050 31
New Mexico 2 0.182 15
New York 7 2.408 32
North Carolina 4 0.481 12
North Dakota 0 — —
Northern Mariana Islands 0 — —
Ohio 6 0.778 17
Oklahoma 3 0.251 16
Oregon 3 0.249 15
Pennsylvania 8 1.029 21
Puerto Rico 0 — —
Rhode Island 1 0.339 27
South Carolina 1 0.091 5
South Dakota 0 — —
Tennessee 4 0.285 11
Texas 18 3.205 29
U.S. Virgin Islands 0 — —
Utah 2 0.315 25
Vermont 0 — —
Virginia 1 0.200 6
Washington 5 0.786 27
West Virginia 0 — —
Wisconsin 3 0.260 12
Wyoming 0 — —
United States 171 29.217 20.6
Source: Calculated by the Congressional Research Service using information from the U.S. Census Bureau.
Notes: Figures for states that do not have eligible cities with a portion of their population in ineligible counties
reflect CRS calculations based on 2019 Census data. Figures for states that do have eligible cities with a portion
of their population in ineligible counties are CRS estimates based on 2018 Census data. The fund does not
provide for direct assistance to local governments within tribal areas. Allocation percentages in this table
therefore exclude amounts set aside for tribal governments.
Congressional Research Service 7
The Coronavirus Relief Fund (CARES Act, Title V): State and Local Allocations
Author Contact Information
Grant A. Driessen
Analyst in Public Finance
[redacted]@crs.loc.gov, 7-....
Acknowledgments
The author wishes to thank Jameson Carter, Gene Falk, and Maggie McCarty for their helpful contributions
to this report.
Congressional Research Service R46298 · VERSION 2 · UPDATED 8
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