May 18, 2020
FOR IMMEDIATE RELEASE:
SALT LAKE CITY—Today Sutherland Institute announced its support of HR 6652, the ‘‘Flexibility for Localities and Eligibility Expansion Act of 2020’’ (FLEX Act) sponsored by U.S. Rep. Don Bacon, R-Neb. This bipartisan legislation would allow local governments to use existing federal aid funding (offered in the CARES Act) to address budget shortfalls due to the pandemic. Currently states are prevented from allocating CARES Act funding to programs in an already-approved budget.
Sutherland encourages all members of Utah’s delegation to analyze this critical legislation, which is already supported by a wide bipartisan coalition and several members of Congress.
Derek Monson, Sutherland vice president of policy, recently wrote an op-ed published in The Salt Lake Tribune discussing the critical need for this legislation in Utah:
Utah legislative leaders recently learned that economic losses caused by the novel coronavirus pandemic will likely reduce tax revenue between $186 million and $599 million in the current fiscal year (ending in June) and between $592 million and $1.287 billion in the upcoming fiscal year. At the same time, the state of Utah received $687.5 million in pandemic relief funds from the federal CARES Act, of which $433 million remains unallocated.
The downturn driving Utah’s budget shortfall has been caused by the pandemic, so common sense would argue that states should have great flexibility to address pandemic tax revenue impacts with CARES Act funding. But that’s not the case.
Congress needs to change it.
The CARES Act’s state and local pandemic relief funding was a good-faith attempt by Congress to help address the public health crisis created by COVID-19. This policy decision was made with great haste — understandably — but with unreasonable restrictions on the use of these funds. Instead of providing flexibility to use relief funding to address pandemic-driven budget shortfalls, the CARES Act and its administrators put up barriers to such uses of this funding. Only recently have we seen efforts to extend some flexibility to state and local governments. Congress can correct this mistake.
Much of Utah’s CARES Act funding remains unspent, and discussion about additional state and local relief funding is ongoing. Whatever final decisions are made about the amount of federal aid to state and local governments, Congress should apply the principle of local flexibility to that funding so it can be used to address any public health or economic need reasonably connected to the pandemic.
In the case of CARES Act funding, that means enacting the FLEX Act, sponsored by Rep. Don Bacon of Nebraska. The FLEX Act would increase flexibility for the state, counties and municipalities in Utah by adding the offset of revenue shortfalls to the list of allowed state and local government uses of CARES Act funds.
There is reasonable concern that states might seek to use pandemic relief funds to bail themselves out of non-pandemic-related problems, such as decades-long decisions to poorly manage pension funds for state employee retirement. This, of course, should not be allowed. Flexibility does not mean you get to abuse federal taxpayers. But policies like the FLEX Act address this by requiring that federal aid be used for revenue shortfalls explicitly due to the COVID-19 public health emergency, and only for shortfalls occurring between March and December 2020.
The need for such flexibility is not a partisan issue. Nonpartisan national organizations including the National Governors Association, National Association of Counties, National League of Cities and the National Conference of State Legislators have all called for flexibility in federal pandemic relief funding. Local nonpartisan organizations such as the Utah League of Cities and Towns and the Utah Association of Counties have added their voice in calling for greater flexibility in federal pandemic relief funding.
The broader reality is that the pandemic needs of New York City are different from those in Salt Lake City and rural Utah. We have a federal system of government in place so that these differences can be taken into account in a public health crisis such as the current pandemic. A nationally driven, top-down plan is neither needed nor likely to be effective. But resources that don’t come with excessive strings attached would be highly beneficial to local efforts to fight the pandemic and move toward recovery.
You can read the op-ed in full here.
In April, Sutherland signed a coalition letter – along with more than 20 free market think tanks in 26 states – calling on Congress to modify the CARES Act. This coalition also recently published this article in The Hill illuminating the crippling effects that CARES Act restrictions currently have.
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