by Brenée Goforth
Communications Associate, John Locke Foundation
On April 14, The John Locke Foundation, in collaboration with the Platte Institute and more than two dozen other state-based think tanks, sent a letter to Congress calling for more flexibility under the CARES Act. Carolina Journal reported on the release of the letter, writing:
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.
The letter reads:
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.
A John Locke Foundation press release explains the reason for the letter:
The letter reminds congressional leaders that new COVID-19 costs linked to Medicaid and public education already are covered by other federal measures. Additional new costs tied to the coronavirus pandemic “would not come close to the full amount appropriated except through budgetary gluttony,” according to the letter.
Rather than force states to add new spending, an amended Coronavirus Relief Fund could help states address billions of lost dollars in tax and fee revenue that “cannot be recovered.”
The foundation writes in the letter:
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.