Shaheen & Hassan Urge Administration to Remove Restrictions Limiting Relief Funds for State & Local Governments

April 27, 2020

(Washington, DC) – U.S. Senators Jeanne Shaheen (D-NH) and Maggie Hassan (D-NH) called on the Trump administration to remove bureaucratic restrictions preventing state and local governments from using COVID-19 emergency relief funds distributed through the CARES Act. In a letter to Treasury Secretary Steven Mnuchin, the Senators called on the administration to revise initial guidelines so that states and local governments can provide essential public services amidst the COVID-19 global pandemic, as the law intends.

Under the CARES Act, which is now law, states may use federal funding for costs related to the COVID-19 public health emergency incurred between March 1 and December 30, 2020.  This federal funding is provided to relieve pressure on state budgets and meant to ensure they can maintain essential public services. However, when the Department of the Treasury issued its initial Coronavirus Relief Fund guidance for state, territorial, local, and tribal governments, it included limiting language not found in the law.

Shaheen and Hassan joined 44 Senators calling on the Trump administration to reverse course and revise the overly restrictive guidance, urging the administration, “to follow the law as written instead of creating more bureaucratic red tape in the middle of a public health emergency and ensuing economic crisis. Of all the regulations that this Administration seeks to cut, it should start with this one.”  

The Senators continued, “In the midst of an economic collapse, the intent of the entire CARES Act is to provide flexible help to a wide range of Americans. To prevent the flexible use of these relief funds is a choice that is neither required nor intended by law.”

State and local governments are being pushed to the financial brink by skyrocketing costs and plunging revenue, and they need stability in order to have a chance at recovery. Senators Hassan and Shaheen, along with Senators Mike Rounds (R-SD) and Angus King (I-ME), previously called for flexibility in using the CARES Act funding. Last week, Senate Republican Majority Leader McConnell’s (R-KY) suggested that states and municipalities go into bankruptcy as a preferable alternative to Congress providing federal municipal assistance. Senators Shaheen and Hassan have strongly opposed his comments.

In addition to Senators Shaheen and Hassan, the letter was signed by Senators Reed (D-RI), Baldwin (D-WI), Bennet (D-CO), Blumenthal (D-CT), Booker (D-NJ), Brown (D-OH), Cardin (D-MD), Carper (D-DE), Casey (D-PA), Coons (D-DE), Cortez Masto (D-NV), Duckworth (D-IL), Durbin (D-IL), Feinstein (D-CA), Gillibrand (D-NY), Harris (D-CA), Heinrich (D-NM), Hirono (D-HI), Jones (D-AL), Kaine (D-VA), King (I-ME), Klobuchar (D-MN), Leahy (D-VT), Manchin (D-WV), Markey (D-MA), Menendez (D-NJ), Merkley (D-OR), Murphy (D-CT), Murray (D-WA), Peters (D-MI), Rosen (D-NV), Sanders (I-VT), Schatz (D-HI), Schumer (D-NY), Sinema (D-AZ), Smith (D-MN), Stabenow (D-MI), Tester (D-MT), Udall (D-NM), Van Hollen (D-MD), Warner (D-VA), Warren (D-MA), Whitehouse (D-RI), and Wyden (D-OR).

The full text of the letter is available here or below: 

The Honorable Steven T. Mnuchin

Secretary

Department of the Treasury

1500 Pennsylvania Avenue, N.W.

Washington, D.C. 20220

Dear Secretary Mnuchin:

We write regarding the Treasury Department’s Coronavirus Relief Fund Guidance to urge you to promptly revise your interpretation so states, Tribal, and local governments can use these funds to prevent further economic damage.

While the term “lost revenue” does not appear specifically in Title V of the Coronavirus Aid, Relief and Economic Security (CARES) Act, a plain text reading of the law leads to the logical conclusion that lost or delayed revenues are a direct cost created by the coronavirus that were never accounted for in any budget.  Therefore, we believe it is fully within your authority and the intent of the CARES Act that these funds may be used to replace lost or delayed tax revenues and maintain public services.  In the midst of an economic collapse, the intent of the entire CARES Act is to provide flexible help to a wide range of Americans.  To prevent the flexible use of these relief funds is a choice that is neither required nor intended by law. 

We are not alone in this view.  Governors and Senators from both sides of the aisle have set aside ideology and urged you to follow the law as written instead of creating more bureaucratic red tape in the middle of a public health emergency and ensuing economic crisis. Of all the regulations that this Administration seeks to cut, it should start with this one.

We all have a common interest in preserving as much of our economy as possible so that we are well positioned for a robust recovery.  A critical component of our economy is our state, Tribal, and local governments as they not only serve as customers for our local businesses, but also provide the essential services, such as effective law enforcement, public infrastructure, a strong education system, and other necessary conditions that provide the business certainty that make our country attractive to businesses and investors throughout the world.  We should preserve and maintain this critical comparative advantage. 

To avoid distracting states, Tribes, and localities from meeting the crisis at hand, the Treasury Department should publicly confirm that states, Tribes and localities may use these funds to maintain their essential services as the CARES Act clearly permits. 

We thank you for your consideration and urge you to act promptly.

Sincerely,