Federal COVID & Spending Update - Erlinda A. Doherty, Director Budgets & Revenue Committee - National Conference of ...
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Federal COVID &
Spending Update
Erlinda A. Doherty, Director
Budgets & Revenue Committee
NATIONAL CONFERENCE OF STATE LEGISLATURES
Federal COVID & Proposed Spending Update
• Federal COVID Spending = $5 Trillion over 10 years
NATIONAL CONFERENCE OF STATE LEGISLATURES 2
Source: Federal Funds Information for States
NATIONAL CONFERENCE OF STATE LEGISLATURES 3
Federal COVID & Proposed Spending Update
More than $500 billion in State & Local Aid
• The CARES Act provided $150 billion for state, local, and tribal governments and U.S. territories
to pay for unbudgeted virus-related expenses
o It limited the use of funds to cover emergency costs incurred from March 1 through Dec.
30, 2020 originally, but deadline extended to Dec. 31, 2021
o The Treasury Department said recipients couldn’t use the funds to fill revenue shortfalls
• The American Rescue Plan provided another $350 billion in state and local aid
o Covered costs incurred through Dec. 31, 2024
o Funds could be used to address economic effects of Covid-19, provide premium pay to
essential employees, support government services affected by a revenue drop, and invest
in infrastructure
NATIONAL CONFERENCE OF STATE LEGISLATURES 4
ARPA: Coronavirus State and Local Fiscal Recovery Fund
Key Takeaways:
o $350 billion in flexible aid to help states, counties, cities and tribal governments
o $195.3 billion for states and the District of Columbia
○ More flexible than CARES Act Coronavirus Relief Fund
○ State and local government recipients have until Dec. 31, 2024 to use the funds
○ Updated guidance issued May 10, 2021
○ Non Entitlement Units of Government guidance also posted May 27, 2021
NATIONAL CONFERENCE OF STATE LEGISLATURES 5
ARPA: Coronavirus State and Local Fiscal Recovery Fund
What does ARPA say?
“A State or territory shall not use the funds...to either directly or indirectly
offset a reduction in the net 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.”
NATIONAL CONFERENCE OF STATE LEGISLATURES 6o Continued response to public
health emergency
o Economic recovery
o Replenishing Unemployment
Trust Funds
o Rehiring state employees
o Revenue loss
o Water, sewer and broadband Allowable Uses for States
infrastructure
NATIONAL CONFERENCE OF STATE LEGISLATURES 7o Replenish rainy day funds
o Pay-down debt
o Infrastructure outside of water, sewer and
broadband projects
o Extraordinary deposits to pension funds
o Tax cuts
Notable Ineligible Uses
NATIONAL CONFERENCE OF STATE LEGISLATURES 8Federal COVID & Proposed Spending Update
Payroll Tax Credits for Businesses
• The Families First Act established tax credits for employers that provide emergency paid leave and health
benefits
o Paid leave credits were modified and extended through Sept. 30 under American Rescue Plan
o Credits expanded to cover Covid-19 vaccinations or wait times for test results or diagnoses
o Wages covered by family leave credit increased to $12,000 per employee, from $10,000
• The CARES Act established a credit to cover 70% of eligible wages and health benefits paid by employers
that retain their workers
o Credit modified and extended through Dec. 31 under American Rescue Plan
o Eligibility expanded to new startups as well as companies that had a 90% decline in revenue
over the year
• The CARES Act also deferred employer payroll taxes in 2020 and allowed repayment over two years
NATIONAL CONFERENCE OF STATE LEGISLATURES 9Federal COVID & Proposed Spending Update
Tax Credits for Families
• The American Rescue Plan expanded the earned income tax credit for taxpayers without
children for 2021 by increasing the credit percentage, phaseout thresholds
o Allowed individuals ages 19 and older to qualify, eliminating the 25-to-64 age range
o Eliminated rule barring individuals who have children without SSNs from claiming the credit
• Measure expanded the child tax credit for the year and made it fully refundable
o Increased the maximum credit to $3,600 for each child younger than 6 and $3,000 for other
children, and allowed it to be claimed for 17 year olds
o Directed Treasury Department to establish program to advance periodic payments beginning
July 1
• It also increased the value of the child and dependent care tax credit in 2021
o Allowed it to cover 50% of expenses of as much as $8,000 for one dependent, $16,000 for two
or more
o Excluded as much as $10,500 in employer-provided dependent care from tax
NATIONAL CONFERENCE OF STATE LEGISLATURES 10President’s FY 2022 Budget Proposal
○ The Biden administration released the full version of its fiscal 2022 budget, which:
• Calls for $6 trillion in spending and a deficit of $1.8 trillion; deficits would exceed $1
trillion for a decade
• Proposes detailed allocations for federal agencies following topline requests in
April’s “skinny” budget
• Reflects proposals in the American Jobs Plan and American Families Plan, which
comprise his overall infrastructure plan.
To contact the editor responsible: Adam Schank at aschank@bgov.com
NATIONAL CONFERENCE OF STATE LEGISLATURES
11President’s Infrastructure Plan: Part 1
○ President Joe Biden unveiled the first portion of his wide-ranging infrastructure plan on March 31,
called the “American Jobs Plan.”
○ The package totals $2.25 trillion over eight years, with a focus on transportation, caregiving,
manufacturing, housing, schools, water, broadband, and the power grid
• Biden also proposed hiking corporate taxes and setting a minimum tax on overseas profits
• Second package significantly expands social policies
• Majority leadership wants to pass an infrastructure bill by July 4
To contact the editor responsible: Adam Schank at aschank@bgov.com
NATIONAL CONFERENCE OF STATE LEGISLATURES
12○ Initial proposal at $2.25 trillion
over 8 years
○ Sparked a discussion of what is
“infrastructure”
○ Corporate Tax Increases fully paid
for
American Jobs Plan
NATIONAL CONFERENCE OF STATE LEGISLATURES 13President’s Infrastructure Plan: Part 2
○ President Joe Biden unveiled the second portion of his wide-ranging infrastructure and economic plan
on April 28, called the “American Families Plan.”
○ The package totals $1.8 trillion and would include:
• Two years of free community college, universal preschool, and child care assistance
• National paid family and medical leave
• Expanded nutrition assistance
• Extended child, earned income, and dependent care tax credits
○ Plan would raise taxes on wealthy households, saving about $1.5 trillion over a decade
• Increases top income and capital gains tax rates to 39.6%
• Ends tax breaks related to inheritance and investment funds
• Increases support for IRS tax enforcement
To contact the editor responsible: Adam Schank at aschank@bgov.com NATIONAL CONFERENCE OF STATE LEGISLATURES
14○ Initial proposal at $1.8 trillion
over 8 years
○ Free community college &
childcare assistance
○ Raise taxes on wealthy
households
American Families Plan
NATIONAL CONFERENCE OF STATE LEGISLATURES 15Bipartisan Budget Resolution/
Reconciliation
Where are we now? Appropriations Process
NATIONAL CONFERENCE OF STATE LEGISLATURES 16You can also read
