COVID-Relief Packages + State-Local Aid

**Updated April 5, 2021 to correct the minimum amount for state governments. In a previous version I had that the minimum amount for states in the ARP was $1.25 billion; however, that was incorrect and the minimum is $500 million. Thank you to Eli Byerly-Duke for pointing this out!

Both the Coronavirus Aid, Relief, and Economic Security (CARES) Act (passed in March 2020) and the American Rescue Plan (ARP) Act (signed into law in March 2021) provide billions in federal aid to state and local governments. This post is just a very quick comparison of the state-local aid provisions of those two acts. Please note, I focused on just aid going to state and local general-purpose governments, so I didn’t look at money going to schools, Tribal governments, or US territories. I also did not dig into the various aspects of the acts that provide federal money to state and local governments for specific programs/spending purposes (like Medicaid or Unemployment Insurance).

Here’s a quick side-by-side summary:

Total Amount$150 billion$350 billion
Amount for State + Local Governments Only$111.4 billion is dedicated to states while $27.6 billion went to local governments$195.3 billion is set aside for state governments while $130.2 billion is for local governments.
Fund NameCoronavirus Relief FundCoronavirus State And Local Fiscal Recovery Funds
Who are Prime Recipients?States, eligible local governments, District of Columbia, U.S. Territories, and tribal governmentsStates, eligible local governments, District of Columbia, U.S. Territories, and tribal governments
Local Government Population Threshold (for being prime recipient)500,000All counties and metropolitan cities, and towns with a population of at least 50,000
# Counties + Cities that Directly Got Aid (out of nearly 40,000)15430,000+
Minimum Allocation per State? (includes distribution to all prime recipients)$1.25 billion$500 million (for state governments only)
Formula for Aid to State GovernmentsPopulation$500 million per state plus $169 billion allocated based on each state’s share of national unemployment
Formula for Aid to Local GovernmentsPopulationCounties–population; Metropolitan cities–community development block grant criteria; other towns and cities–population
What Can Money Be Used For?Necessary expenses tied to the “public health emergency with respect to COVID-19.” Allowable expenses are more expansive than just healthcare spending; for example, payroll for police officers and costs related to telework for public employees are acceptable expenses (for details, see federal guidance).Spending tied to the public health emergency from COVID-19 or its “negative economic impacts”; premium pay for essential workers; revenue losses tied to COVID-19; and, “necessary investments in water, sewer, or broadband infrastructure.”
Do State Governments Have to Allocate a Portion of their Aid to Local Governments that Aren’t Prime Recipients?NoNo; States are responsible for distributing $ to non-metropolitan cities/towns
When Does Money Have to Be Spent By?Deadline for incurred expenses is December 31, 2021Deadline for incurred expenses is December 31, 2024
Anything Else?$ can’t be used for revenue shortfalls or spending that was budgeted for prior to March 27, 2020.$ can’t be used to offset tax cuts or for public pensions. The money is distributed in two tranches, rather than all at once.

Note: A “prime recipient” is an entity directly receiving aid from the federal government (meaning the money is transferred from the Treasury Department to the relevant state or local government)

If you want to know how much money is going to specific state and local governments, check out this handy spreadsheet from the National League of Cities (thanks NLC!) 

And thanks to Chris Goodman for giving the table a quick look (any and all errors are solely mine). Last, if you want to know more about the CARES Act program you can read this piece I co-authored, as well as this piece I co-authored for Governing.

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