When Congress comes back from its recess in a few weeks, at the top of its priority list will be a potential new round of fiscal relief. One item that’s likely to be included in any package is another tranche of aid to states and localities.
Thus far, state aid has been provided essentially without strings, and the Democratic-led HEROES Act  in the House would continue that approach, with $915 in additional aid on top of the $150 billion given to states so far. Of course, the real amount of aid to the states is actually far larger, as increases to state-administered programs like unemployment insurance and SNAP run through the states as well.
One alternative approach is the State Municipal Assistance for Response and Transition (SMART ) Act, co-sponsored by Sens. Bill Cassady and Bob Menendez in the Senate and Reps. Mikie Sherrill, Tom Reed, and others in the House. This bill would extend $500 billion in three separate tranches based on states’ population, infected population, and lost revenue.
In order to guide lawmakers as they consider this potential additional round of relief, the R Street Institute is leading a coalition of 30 organizations in laying out principles for more stringent oversight of federal aid to states and localities. A letter signed by leaders from both national and state-based organizations and sent up to the Hill on Monday calls for any future aid to the states to be (1) direct, (2) transparent, (3) fair, and (4) responsible.
The idea is simple: Congress should ensure that taxpayer relief funds are spent wisely and prudently. Since the federal government has already spent nearly three trillion dollars in response to the COVID-19 pandemic, it’s important that there be a continued focus on ensuring that any future funds be allocated as transparently and wisely as possible.
Significant focus continues to be placed — rightfully so — on ensuring transparency over relief to businesses and individuals, but aid disbursed to states thus far has lacked similar oversight. The letter notes that the “organizations take various positions on what we consider the appropriate amount of federal aid to be and whether further aid is even necessary. But we all believe that any additional funding should be conditioned on reasonable transparency requirements of its recipients.”
Signatories suggest that funds should be targeted toward strain explicitly caused by the pandemic, and distributed proportional to state populations. The letter also advises that expenses should be posted online so that citizens will know it isn’t put toward unrelated policy priorities.
The full text of the coalition letter can be viewed here .
Image credit: lunamarina
- “HEROES Act”: https://taxfoundation.org/heroes-act-state-local-aid/
- “SMART”: https://www.govtrack.us/congress/bills/116/s3752
- “here”: https://www.rstreet.org/2020/07/06/coalition-letter-federal-response-to-state-and-local-budget-strain-caused-by-covid-19/