View of the U. S. Capitol Building dome and waving flag
Article

State and local governments seek alternative funding sources after Consolidated Appropriations Act, 2021 excludes relief

On Dec. 21, 2020, the Consolidated Appropriations Act, 2021 (Act), the new COVID-19 relief funding bill, was passed by Congress and unfortunately, funding similar to the Coronavirus Aid, Relief, and Economic Security (CARES) Act was not included for state and local governments. We anticipate that future legislation will include funding for governments, but for now, we know the recently passed Act includes the following:

  • Extension of the spending deadline for CARES Act funds to Dec. 31, 2021
  • Funding for vaccine development and distribution, a portion of which will be in the form of direct funding for states
  • Direct grants to state and local governments for increased testing and contact tracing
  • Funding for healthcare providers
  • Rental assistance to state and local governments
  • Funding for education providers: the majority of the allocation is for K-12 providers to be distributed through the Governors’ Emergency Education Relief Fund and the Elementary and Secondary School Emergency Relief Fund
  • Transportation funding for airports and public transit systems
  • Small business relief, including extension of Paycheck Protection Program (PPP)
  • Direct stimulus payments to individuals
  • Extension of pandemic unemployment insurance program as well as expansion of the federal supplement for unemployment assistance

Interim or alternative funding options for state and local governments

Regardless of your fiscal situation pre-pandemic and the funding you may have received from the CARES Act, you are likely exploring options for continuous coronavirus-related expenditure reimbursement. Potential options your organization may be eligible for include:

  • The Federal Emergency Management Agency (FEMA) funds may still be available for certain pandemic-specific costs. There are some uncertainties as to what FEMA will cover; however, if you have unreimbursed costs lingering from the past nine months or expect to have unreimbursed costs in the future, FEMA may be a viable option to secure additional relief.
  • Identify and request state funding to fill gaps in federal funding. Some states are taking measures to assist local units of government in response to the pandemic. These measures vary widely by state, but below are a few examples:
    – Minnesota is providing approximately $115 million in funding to counties for local small business and not-for-profit grants.
    – Indiana redirected Community Development Block Grant (CDBG) funds to address the immediate impacts of COVID-19 on Indiana’s rural communities and distributed the funds as grants to local governments.
    – Pennsylvania distributed funding to counties through the COVID-19 County Relief Block Grant (CRBG) program to support small businesses and assist the cities, boroughs, towns and townships within eligible counties with COVID-19-related response efforts.

Government management during an uncertain time

Even if you are able to add the above options to your funding arsenal, your entity may still be concerned about short- and long-term budget sustainability and be investigating ways to bolster economic stability in this uncertain time. Actions you can take today to prepare your organization to successfully reset its finances and operations post-pandemic include:

  • Work with your accountant and advisor to understand the impact on your current and future budgets by engaging in cash flow modeling and comprehensive financial planning
  • Identify opportunities to reduce your operating budget through process efficiency and alternative service delivery
  • Assess the pandemic’s impact on your community through residential and business outreach, polling and engagement
  • Make staffing adjustments by anticipating current and future needs and understanding workforce and retirement trends
  • Amplify local business retention and expansion efforts by helping owners access available state and local funding

Baker Tilly’s public sector resources

Baker Tilly understands and appreciates the challenges facing public sector organizations. As we await a future bill that could include support for state and local governments, the following insights offer proactive guidance for public sector entities as you navigate this disruptive situation. Our specialized team is prepared to help you develop an approach that addresses your community’s specific needs.

For more information, or to learn how Baker Tilly’s public sector specialists can help, contact our team.

Connect with us.

arrowCreated with Sketch.
Next up

Banking industry stepped up to provide timely data on credit losses during this crisis, FASB advisers say