Cutting Taxes Not Allowed! Law contains provision that takes State Government rights away.
(How can the Federal Government Dictate That!!!)
- Can’t Reduce Taxes?
In the section giving states the $350 B of Coronavirus Relief Support, the U.S. Senate added, and the House concurred in, a proviso which says during the covered period (March 2021 – December 2024) a state “shall not use the funds provided under this section . . . to either directly or indirectly offset a reduction in the next tax revenue of such State or territory resulting from a change in law, regulation, or administrative interpretation during the covered period that reduces any tax (by providing for a reduction in a rate, a rebate, a deduction, a credit or otherwise) or delays the imposition of any tax or tax increase.”
And it’s followed by a provision that says states may not use the funds to deposit into any
pension fund, despite several states having unfunded liabilities (including Washington’s TRS/PERS 1 plan).
So, you can’t be fiscally responsible and use the funds to make payments into underfunded pension plans, and the feds are trying really hard (see “indirect”) to prevent states from reducing taxes as well.
Congress passed the $1.9 Trillion “American Rescue Plan”.
- Washington State/local government will likely receive $15 billion from bill
Federal Fiscal Information for States yesterday put out the PDF below showing the state & local government funding in the bill. And, while the $350 billion ($1,400 checks to citizens) has gotten the most attention, there are scads upon scads of buckets of state/local government funding in the bill. All told? Federal Fiscal Information Services calculates $803 billion to state governments from the bill.
The ”rough rule” of thumb is the state, with a little over 2% of the country’s population, typically qualifies for about 2% of these pots of funds. That would put Washington at about $16 billion.
But all the rest are pots for which Washington appears eligible. That means, of the net of $750 Billion, Washington would expect to get about $15 billion. So For example Washington State would get approx $3.3 Billion for the “Education Stabilization Fund (-12)” of 165B according to early estimates. This adds up to $2957.13 per student (but this part of the bill is spread over now to 2023.
At least $100 M from:
- Emergency Connectivity Fund (schools/libraries) – $7 B
- Education Stabilization Fund (K-12) – $165 B*
- Grants to states for COVID testing – $48 B
- Grants to states for vaccines – $7 B
- Health Care Provider Relief – $8 B
- Child Care Development Block Grant – $15 B
- Child Care Stabilization Fund – $24 B
- Low Income Home Energy Assistance – $5 B
- Community Health Centers – $8 B
- Public Health Workforce – $8 B
- Transportation (Transit) – $30 B
- Transportation (Airports) – $8 B
- Transportation (Highways) – $0 B**
- Tenant Based Rental Assistance – $5 B
- Home investment partnerships – $5 B
- Coronavirus Relief State & Local Fiscal Recovery – $350 B
- Coronavirus Capital Projects Fund – $10 B
- Emergency Rental Assistance – $22 B
- Homeowner Assistance – $10 B
- State Small Biz Credit Initiative – $10 B
*(twice what we got in December from Feds, which resulted in $824 M to K-12 in Fed “Early Action” Bill)
**(yep, $0 – gave $10 B in December from Feds)
***($7 B to Washington: $4.25 B for state, $1.5 B to counties, $700 M to Metro Cities, $500 M to other local governments, i.e. smaller cities)
The full list of all pots of funds, along with comparison of how much the states were given in the prior COVID relief bills is attached here:
2. Timeline to Spend: K-12 – Sept 2023; Big Flexible Fund – Dec. 2024; Other Pots – Vary
The K-12 money can last all through this upcoming budget cycle, plus push a few months into the 23-25 biennia.
The $4.25 B of Coronavirus Relief State support doesn’t have to be spent until the end of 2024.
3. Here is the bill itself:
The tax language can be found on page 579.