With Congress stuck, states are stepping in with relief for residents and businesses

Most of the funding is coming from the $150 billion pot of money federal lawmakers doled out to states and certain cities as part of their $2 trillion stimulus package in late March. The funds, which can only cover pandemic-related expenses, must be spent by December 30. Any remaining amount must be returned to the Treasury Department.

“States are trying to just get these dollars out to areas in need the most,” said Emily Maher, policy associate at the National Conference of State Legislatures, which is tracking the distribution.

Throughout the public health emergency, governors and state lawmakers have used the CARES Act money for a wide variety of purposes, including coronavirus testing, personal protective equipment, distance learning, unemployment benefits and housing assistance.

But many officials, particularly in blue states, have pressed Congress for months to extend the spending deadline beyond the end of the year, provide hundreds of millions of dollars more and allow the funds to be used to plug revenue shortfalls.
These requests are one of the main stumbling blocks on Capitol Hill. Senate Republicans are wary of providing more assistance to states — many of which, they argue, are financially mismanaged — but House Democrats insist that any new relief package include more support.

States are no longer waiting.

“We urge Congress to extend federal unemployment programs, but with their future unclear, we are stepping in to try to provide a level of assistance and certainty,” said Laura Fortman, commissioner of the Maine Department of Labor.

The Pine Tree State announced Tuesday that it will use more than $25 million in CARES Act funds to send a one-time $600 payment to up to 42,000 out-of-work residents. They include many freelancers, gig workers, independent contractors and others on pandemic unemployment programs that are expiring at the end of the month. Some other residents who remained jobless in December because of the pandemic can also qualify.

“People are looking at a financial cliff ahead of them with absolutely no guarantee that there is any money on the other side of it,” Fortman said.

The payments are only one of a flurry of CARES Act allocations Democratic Gov. Janet Mills announced in recent weeks. Maine also has launched a $40 million grant program to help small businesses in the tourism, hospitality and retail industries, put $6.2 million towards rent relief, dedicated $10 million to help food and agriculture firms and sent $2 million to food banks and pantries.

Meanwhile, in New Mexico, Democratic Gov. Michelle Lujan Grisham signed a $330 million package late last month that provides funding for housing assistance, food banks and a one-time $1,200 payment for more than 100,000 jobless residents. Also, businesses with fewer than 100 employees that suffered revenue losses amid the pandemic can apply for grants. Nearly all of it was paid for through the state’s CARES Act allotment.

Had Congress passed a relief bill, the state might have allocated the money differently, sending more to health care and hospitals, said Democratic Rep. Patricia Lundstrom, chair of New Mexico’s House Appropriations and Finance Committee.

A big increase in demand for social services, including Medicaid, food stamps and behavioral health services, signaled to state lawmakers that they needed to provide more assistance to residents, she said. So many people signed up for unemployment benefits that New Mexico had to get a federal loan to make the payments.

“When you see a trend like that, you know it’s an emergency situation,” Lundstrom said. “You just have to jump in and try to help.”

Some states are urging their residents to take advantage of the relief programs they’ve set up before the funds expire at year’s end. Kentucky set aside $15 million to help low-income residents affected by the pandemic pay for natural gas or electric utility bills and water and wastewater costs. So far, only $6.8 million has been requested, so Democratic Gov. Andy Beshear this week reminded people to apply.

“These one-time payments can make a huge difference in keeping the lights, water or heat on this winter,” he said.

States are also preparing for more potential fiscal pain ahead, especially if the economy continues to struggle next year. Many saw income tax revenue come in stronger than expected this year, staving off serious budget cuts, said Tracy Gordon, senior fellow with the Urban-Brookings Tax Policy Center. But that might not last too much longer as federal assistance evaporates and the economy teeters.

Helping small businesses keep their doors open and residents pay for housing, groceries and other necessities also benefits states financially. New Mexico’s direct payment, for instance, will be spent at local businesses, Lundstrom said.

“States are acting now with the hopes that it will help their economies remain afloat,” Gordon said.

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