b'ViewpointsAn Opportunity of a Lifetime: Unexpected Monies to Address Long-Standing NeedsBy John Kamensky A blockbuster, one-time-only pandemic-driven grant of $350What is the Coronavirus State and Local Fiscal billion to states and localities has created an opportunity ofRecovery Fund? a lifetime to make investments in longstanding needs. WillThe Recovery Funds main purpose, according to one of officials be up to the challenge? its architects, Gene Sperling, who is now the overall White States and localities imposed austerity measures in the earlyHouse coordinator for the implementation of the broader months of the pandemic as sales tax revenues plunged andAmerican Rescue Plan, is based on a lesson learned in the they faced unprecedented unemployment claims. Their2009 Great Recession: that a broad economic recovery isnt spending dropped 6 percent on an annual basis in the secondpossible without fiscally healthy state and local governments. quarter of 2020. This was the biggest decline in nearly seventyThe main purpose is to allow them to avoid painful budget years, and it continued to drop. Florida, for example, projectedcuts and layoffs. a $2.7 billion budget deficit at the end of 2020. Recovery Fund monies can be used for more than just In March 2020, Congress provided states and localities $150revenue replacement or to mitigate the impact on local billion in stopgap funding to battle the coronavirus as part ofeconomies and individuals (such as rent relief or pay boosts the larger $2.2 trillion Coronavirus Aid, Relief, and Economicfor essential employees). States and localities can also use the Security Act (CARES Act). These funds were targeted tofunds to provide services to communities disproportionately mitigating costs of the public health emergency created by theaffected by COVID-19, to expand access to broadband, and pandemic and had to be spent by the end of 2021. But statesfor other longer-term investments such as water and sewer and localities continued to predict dire financial circumstances.infrastructure. The programs chief goal is to lay a foundation By theend of the year, they had hemorrhaged 1.3 million jobs,for a systemic, strong, and equitable recovery.mostly in education.In March 2021, as part of the $1.9 trillion American Rescue Plan, Congress provided a second fiscal infusion of $350 billion to states and localities via a new programthe Coronavirus State and Local Fiscal Recovery Fund. This program provides states and more than 19,000 localities the greatest fiscal flexibility since the General Revenue Sharing program in the 1970s. These new monies are equivalent to 5 to 23 percent of a states annual budget, depending on the distribution formula, and averages nationally about 8.5 percent. For many localities, the funds are equivalent to 25 to 50 percent of their annual budgets, according to the Brookings Institution.According to the U.S. Treasury, which administers this program, this historic windfall is intended to help turn the tide on the pandemic, address its economic fallout, and lay the foundation for a strong and equitable recovery. There is substantial flexibility in how these funds can be useda flexibility unseen in federal grants since the 1970s.74 www.businessofgovernment.org The Business of Government'