One of the reasons Gov. Inslee has given for not calling a special session is to wait and see if Congress provides additional relief funds for state governments. Last week, the U.S. Senate released its proposed relief package. Negotiations with the U.S. House of Representatives are ongoing. The Senate proposal would allow the funds to be used for revenue shortfalls, but the ability is limited. Washington would not be able to cover its full shortfall.

Under current rules, the Coronavirus Relief Fund in the CARES Act must generally be used for new spending related to coronavirus response. The state government received $2.167 billion from the fund.

If the Senate package is adopted, these funds could be used “to fund operations of the State” if revenues in FY 2020 or FY 2021 are less than revenues in FY 2019. However, the funds could only be used to cover such a revenue shortfall if the state or local government “has distributed at least 25 percent of the total amount of the payments received by the State or local government” to localities under their jurisdiction (if there are any).

(There is also a maintenance of effort clause in the proposal related to the distributions to local governments: Any funds that the state distributes to local governments must “supplement, and not supplant” any funding the state “would otherwise provide, distribute, or use for assistance to such unit of general local government.”)

Additionally, the amount that may be used to cover revenue shortfalls is limited to the lesser of 25 percent of the total funds or the sum of the revenue shortfall for fiscal years 2020 and 2021. The Economic and Revenue Forecast Council estimates that revenues for FY 2020 will be above FY 2019, but FY 2021 revenues are expected to be $903 million below FY 2019. Thus, the state of Washington could use just $541.8 million of the federal funds to cover the revenue shortfall (see the table below).

Meanwhile, the U.S. Department of the Treasury has released an interim report of the relief fund amounts spent by state and local governments (those that received direct funds from the federal government), through June 30. (See the table for the figures.)

Our state government may have only spent $7.1 million through June 30, but it had allocated $739.3 million through that date. Those allocations included $297.0 million to local governments (13.7 percent of the state’s share). If the state increased the allocations to localities to 25 percent of the state share (in order to qualify to use funds for revenue shortfalls), it would need to distribute another $244.8 million.