Senator Collins Joins Bipartisan Group Introducing Bill to Provide $500 Billion to State and Local Governments

The SMART Act delivers robust, flexible federal funding for every state, county, municipality to cover rising costs and revenue losses due to pandemic

Maine would receive $2 billion through the SMART Act, with more funds available determined directly by revenue shortfalls

 

This builds on the $1.25 billion Maine has already received through the CARES Act – funds which would be made more flexible

 

Senator Collins successfully advocated to make all towns eligible for funding, ensuring that rural communities aren’t excluded from aid

 

Washington, D.C. – Today, U.S. Senator Susan Collins joined a bipartisan group of six Senators in introducing a bipartisan bill to deliver critical federal resources to states and communities on the front lines of the COVID-19 response to offset plummeting revenues resulting from the coronavirus.  Senator Collins worked to develop this legislation with a bipartisan group of Senators and House members convened by No Labels, which she co-chairs in the Senate.

 

The State and Municipal Assistance for Recovery and Transition (SMART) Act would provide $500 billion in emergency funding to every state, county, and community in the country, while prioritizing assistance to the areas with the greatest need.  Senators Bob Menendez (D-NJ), Bill Cassidy, M.D. (R-LA), Joe Manchin (D-WV), Cory Booker (D-NJ) and Cindy Hyde Smith (R-MS) introduced the bill with Senator Collins.

 

The State of Maine would receive at least $2 billion from the SMART Act, with at least $333 million going to counties and $333 million going to local governments.  Moreover, the $1.25 billion allocated to Maine from the CARES Act would be made more flexible – including being eligible to address revenue shortfalls under the SMART Act.  

 

“In addition to its tragic health effects, COVID-19 has devastated communities and slammed Maine’s economy.  The impact on Maine’s revenues could be among the worst in the nation,” said Senator Collins.  “Dramatic revenue shortfalls will force state and local governments to either increase taxes or slash or suspend important services in health care, education, and transportation construction, which are needed now more than ever in the midst of this crisis.  The SMART Act would help avoid the worst of these consequences by providing Maine’s state and local governments with flexible funding that can be used to directly offset some of their plummeting revenues.  Congress must act now to protect vital services and to prevent widespread furloughs of state and local public servants, including police, firefighters, medical professionals, and educators.”

 

The SMART Act answers the bipartisan call for help from our nation’s governors.  Without this federal assistance, governors, mayors and county leaders have warned of deep cuts to essential services and layoffs of police, firefighters, paramedics, teachers, sanitation, public health and public works employees, and other frontline workers.

 

The funds provided by the SMART Act can be used to help state and local governments meet the current demand; expand testing capacity and contact tracing; and provide further assistance to residents, local hospitals, small businesses and schools, in addition to maintaining critical services residents depend upon. 

 

The SMART Act builds upon the $150 billion set aside in the Coronavirus Aid, Relief, and Economic Security (CARES) Act to help state and local governments.  It also includes a provision Senator Collins successfully advocated for to provide every state, county, city, and town with federal assistance regardless of its size.  The CARES Act only allowed those with over 500,000 residents to receive direct federal assistance.

 

Additionally, the SMART Act targets funding to areas of greatest need based upon infection rates and revenue losses, and overturns the U.S. Treasury’s erroneous guidance that placed undue restrictions on how state and local governments could use the CARES stabilization funding.

 

Specifically, the SMART Act would provide $500 billion to state, local, and tribal governments in order to avoid mass layoffs, steep tax hikes, and a breakdown of essential services.  After $16 billion is set aside for Native American tribal governments, the remaining funding would be allocated to states through three equally divided tranches:

 

1.       One-Third Based on Population Size.  This tranche of funding will be allocated to all 50 states, D.C., and U.S. territories in proportion to each respective state or territory’s percentage of the U.S. population.  Counties and municipalities will each get a share of one-sixth of their state’s respective allocation for a combined total of one-third of their state’s allocation from this tranche.  Funding will be distributed to counties and municipalities based on each county or municipality’s proportion of the state’s population for this tranche. 

 

2.       One-Third Based on Infection Rates.  This tranche of funding will be allocated based on each state’s relative share of the nation’s infection rate.  States that have disproportionately high infection rates will incur significantly higher expenses and will likely need to continue stay-at-home orders for longer periods of time, leading to larger revenue losses.  Counties and municipalities will each get a share of one-sixth of their state’s respective allocation for a combined total of one-third of their state’s allocation from this tranche.  Funding will be distributed to counties and municipalities based on each county or municipality’s proportion of the state’s population for this tranche. 

 

3.       One-Third Based on Revenue Losses.  This tranche of funding will be allocated based on each state’s revenue loss in proportion to the combined revenue loss of all the states from January 1, 2020, through December 31, 2020.  Counties and municipalities will each get a share of one-sixth of their state’s allocation for a combined total of one-third of their state’s allocation from this tranche.  Funding will be distributed to counties and municipalities based on each county or municipality’s revenue loss from January 1, 2020, to December 31, 2020, in proportion to the combined revenue loss for all counties and municipalities in the state over this period.  This is designed to ensure that adequate funding flows to counties and municipalities that have experienced higher impacts relative to their population.

 

Under the formula, for example, if a state were awarded $2 billion in SMART funds, $1.33 billion would go to help stabilize the state government, $333 million would be split among its counties, and the remaining $333 million dispersed to each of its municipalities based upon the respective criteria in each tranche.

 

All states, Puerto Rico, and D.C. shall receive a minimum of $2 billion combined from the first two tranches in addition to their allocation from the third tranche.

 

State and local government leaders from around the country have expressed their support for the SMART Fund.

 

“With widespread bipartisan agreement on the need for this assistance, we cannot afford a partisan process that turns this urgent relief into another political football.  This is not a red state and blue state crisis.  This is a red white and blue pandemic.  The coronavirus is apolitical. It does not attack Democrats or Republicans. It attacks Americans,” said National Governors Association Chair Larry Hogan (R-Md.) and Vice Chair Andrew Cuomo (D-N.Y.) in a joint statement issued May 13.  “The nation’s governors are counting on our leaders in Washington to come together, put partisanship aside, and to get this done for the American people.”

 

“The SMART Act provides essential federal aid for counties at a time when our revenues are plummeting, yet demands for our frontline public health and public safety services are skyrocketing. We are encouraged by lawmakers on both sides of the aisle working with us to address the urgent needs of county governments, including our economic response and recovery priorities,” said National Association of Counties Executive Director Matthew Chase. “We thank Senators Cassidy, Menendez, Manchin, Booker, Collins and Hyde-Smith for their bipartisan leadership to achieve our shared goal of saving lives and restoring our economy.”

 

“The National League of Cities welcomes introduction of the bipartisan SMART Act, a bill that would assist all local governments with maintaining their core responsibilities, including keeping emergency responders on the job intervening in localized outbreaks of COVID-19; and restoring the economic activity of their communities long term,” said Clarence Anthony, National League of Cities CEO and executive director.  “Providing federal relief for municipalities across the nation is critical to advancing the reopening of America and our national economic recovery, on which thousands of jobs and the livelihoods of American families depend.  The SMART Act is another positive sign that Members of Congress want to help the local leaders they represent; and that momentum is growing for the next emergency response package to include fair and appropriate levels of assistance to all cities, towns, and villages.”

 

"We are pleased that a bipartisan group of senators, led by Senator Menendez and Senator Cassidy, have put forward a plan that recognizes the urgency of the fiscal crisis facing cities.   These senators understand that this is not a partisan or geographic issue.  COVID-19 has done fiscal harm in every state and every city.  The next package that Congress passes must include strong and flexible fiscal assistance that provides direct emergency relief to all cities and can be used to help mitigate budget shortfalls resulting from the pandemic.  Cities are on the frontlines of this crisis, and Washington’s response must rise to meet the tremendous challenge cities face in responding to both the public health crisis and its dire economic impacts,” said Tom Cochran, CEO and executive director of The United States Conference of Mayors.

 

Reps. Mikie Sherrill (D-NJ) and Peter King (R-NY) are leading bipartisan companion legislation in the House of Representatives.  The House bill is cosponsored by Josh Gottheimer (D-NJ), Tom Reed (R-NY), Tom O’Halleran (D-AZ), Fred Upton (R-MI), Ted Lieu (D-CA), Brian Fitzpatrick (R-PA), Debbie Dingell (D-MI), and Elise Stefanik (R-NY).