Proposed Federal COVID-19 Relief Package Includes Direct Aid to Cities

February 16, 2021

The newest federal aid package, which includes direct and flexible aid for local governments, could be passed by Congress and sent to President Biden for approval by mid-March.

The House Oversight and Reform Committee last week released bill text that will form the framework for what is expected to be a $1.9 trillion COVID-19 relief package.

Local funding provisions

Critical for cities across the country, the local aid section of the reconciliation provision includes $350 billion in aid to states, cities, counties, tribes, and territories. This has been a key priority for the League of Minnesota Cities and the National League of Cities.

From the $350 billion, $130 billion will be set aside for local governments, equally divided between municipalities and counties. The $65 billion for municipalities will be allocated to all 19,000 cities, towns, and villages according to a modified Community Development Block Grant (CDBG) formula.

Under that formula:

  • $45.5 billion will be split among all municipalities that are designated CDBG entitlement cities (generally, cities with populations above 50,000).
  • $19.5 billion will be split among cities not designated CDBG entitlement cities (generally, cities with populations below 50,000) and will be allocated based on population.

There are no deadlines for the funds to be expended, and eligible expenditures will include the replacement of lost revenue.

More measures of interest to cities

Other provisions in separate sections of the bill framework that are notable to cities include:

  • $29 billion in additional federal assistance for homeowners and renters, with utility payments included as an eligible use.
  • $19.05 billion in funding to the Department of Treasury for emergency rental and utility assistance allocated to states, territories, counties, and cities to assist renters and property owners.
  • $30 billion to assist with transit operating costs, payroll, and personal protective equipment.
  • $8 billion in airport assistance, including $800 million for airport concessionaires.

The committee is likely to advance the state and local aid section, which will then be referred to the House Budget Committee, where it will be added to other sections that will form the overall aid package.

LMC encourages passage of the bill

The League of Minnesota Cities signed a letter with state municipal leagues and local government groups from across the country supporting the local funding and encouraging members of Congress to pass it swiftly.

House and Senate majorities are eying passage of the full package in the House by the end of February with Senate passage shortly after that to have a bill to President Biden for his signature by mid-March. While the framework and language is in place, the bill’s final text can still change, and the League of Minnesota Cities will continue to inform cities of the final text and advocate for the inclusion of direct local aid in the final package.

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