Treasury expects states to provide more federal COVID-19 relief funds to local governments than Washington has

By: Emily Makings
3:41 pm
June 2, 2020

The U.S. Department of the Treasury has updated its “Coronavirus Relief Fund Frequently Asked Questions” document. The update suggests that the state of Washington should forward additional funds to local governments.

Under the CARES Act, the federal government provided $150 billion for states and local governments with populations over 500,000. Of that funding, $2.953 billion has been distributed to governments in Washington. The state received $2.167 billion, and the remainder went to King, Pierce, Snohomish, and Spokane counties and the city of Seattle.

Later, the state allocated about $297 million of its share to the local governments that did not receive direct federal funds. Commerce has not provided details as to the allocation methodology, except to say that allocations were “based on population, COVID-19 impact and other factors.”

According to Treasury, the population threshold for direct federal funds “was based on a recognition that it is more administratively feasible to rely on States, rather than the federal government, to manage the transfer of funds to smaller local governments.” Thus,

Consistent with the needs of all local governments for funding to address the public health emergency, States should transfer funds to local governments with populations of 500,000 or less, using as a benchmark the per capita allocation formula that governs payments to larger local governments. This approach will ensure equitable treatment among local governments of all sizes.

Treasury goes on to say that 45 percent of the state’s allocation should be distributed to local governments with populations of 500,000 or less.

There are a few ways to interpret this. First, the “per capita allocation formula that governs payments to larger local governments” means that a local government received 45 percent of the allocation it would be owed based on its population. Using this formula, I estimate that the state would need to give cities and counties about $748.3 million ($451.7 million more than it has already).

Second, 45 percent of the state’s allocation is $975.2 million, which is $678.6 million more than the state has already distributed.

The CARES Act itself does not require governments to pass through any of their allocations. But this new guidance from Treasury suggests that cities and counties may have a claim on some of the $1.779 billion of the state’s share that has not yet been allocated.

Categories: Budget.
Tags: CARES Act , COVID-19 , state action on COVID-19