JLF Leads Effort to Ensure CARES Act Flexibility for States | Eastern North Carolina Now

Publisher's note: The author of this post is Mitch Kokai for the John Locke Foundation.

    The John Locke Foundation is leading a national effort to highlight a critical flaw in the $2 trillion federal relief package tied to the COVID-19 pandemic. Fixing the flaw could help state governments avoid unsustainable budget spending increases.

    Working with the Nebraska-based Platte Institute, JLF has drafted a letter to bipartisan congressional leaders. More than a dozen other state-based public policy think tanks from Maine to Nevada have signed on.

    The letter reads as follows:

    April 13, 2020

    The Honorable Mitch McConnell, Majority Leader     U.S. Senate     Washington, DC 20515

    The Honorable Charles Schumer, Majority Leader     U.S. Senate     Washington, DC 20515

    The Honorable Nancy Pelosi, Speaker of the House     U.S. House of Representatives     Washington, DC 20515

    The Honorable Kevin McCarthy, Speaker of the House     U.S. House of Representatives     Washington, DC 20515

    The CARES Act established a $150 billion Coronavirus Relief Fund to assist state and local governments combat the Coronavirus Disease 2019 pandemic. Under the Act, each state will receive at least $1.25 billion plus an additional amount based on population, with a portion of the money allocated to local governments within the state.

    As written, however, the fund provides little actual relief for state budgets but instead all but compels them to devise new spending that can be attributed to the Coronavirus Disease 2019 (COVID-19).

    Congress needs to address this unintended outcome quickly by providing states and local governments the flexibility to use money from the Coronavirus Relief Fund 1) to offset lost tax and fee revenue that would otherwise have paid for ordinary operating expenses between March 1 and December 30, or 2) to provide one-time tax relief to individuals and businesses to revive the local economy.

    Unlike the federal government, most states and local governments must balance their budgets. New costs associated with the Coronavirus outside of Medicaid (covered by the Families First Act) and education (covered in the Education Stabilization Fund) would not come close to the full amount appropriated except through budgetary gluttony. Billions of dollars in tax and fee revenue, however, have been lost and cannot be recovered. We ask Congress to allow states the ability to use their Relief assistance in the most prudent and least disruptive way possible.

    Amy Cooke, CEO     John Locke Foundation, North Carolina

    Jim Vokal, CEO     Platte Institute, Nebraska

    Daniel Erspamer, CEO     Pelican Institute, Louisiana

    Jonathan Small, President     Oklahoma Council of Public Affairs, Oklahoma

    Donald Bryson, President     Civitas Institute, North Carolina

    Christian Braunlich, President     Thomas Jefferson Institute for Public Policy, Virginia

    Matthew Gagnon, CEO     Maine Policy Institute, Maine

    Jon Pritchett, President and CEO     Mississippi Center for Public Policy, Mississippi

    Charles Mitchell, President and CEO     Commonwealth Foundation, Pennsylvania

    Chris Ingstad, President     Iowans for Tax Relief, Iowa

    Annette Meeks, CEO     Freedom Foundation, Minnesota

    John Tsarpalas, President     Nevada Policy Research Institute, Nevada

    Lynn Taylor, President     Virginia Institute for Public Policy, Virginia

    Drew Cline, President     Josiah Bartlett Center for Public Policy, New Hampshire

    Justin Owen, President and CEO     Beacon Center of Tennessee

    Rick Larsen, President and CEO     Sutherland Institute, Utah

    Bethany Marcum, Executive Director     Alaska Policy Forum, Alaska