Bipartisan Group to Introduce SMART Fund in the House of Representatives

May 18, 2020

Gottheimer, Sherrill, King, Reed, O’Halleran, Upton, Lieu, Fitzpatrick, Dingell, and Stefanik Lead Companion Legislation to Menendez-Cassidy Bill to Provide a $500 Billion Stabilization Fund to Support State and Local Governments on the Front Lines of COVID-19 Pandemic

Representatives Josh Gottheimer (NJ-5), Mikie Sherrill (NJ-11), Pete King (NY-02), Tom Reed (NY-23), Tom O’Halleran (AZ-01), Fred Upton (MI-06), Ted Lieu (CA-33), Brian Fitzpatrick (PA-01), Debbie Dingell (MI-12), and Elise Stefanik (NY-21) announced today that they are introducing legislation to provide robust support to state and local governments on the front lines of the COVID-19 pandemic. The State and Municipal Assistance for Recovery and Transition (SMART) Fund will provide $500 billion in emergency funding to every state, county and community in the country, while prioritizing assistance to the areas with the greatest need. This bicameral, bipartisan legislation is led by Senators Robert Menendez (D-NJ) and Bill Cassidy (R-LA) in the Senate.

The State and Municipal Aid for Recovery and Transition (SMART) Fund will enhance the $150 billion Congress provided to assist state and local governments in the Coronavirus Aid, Relief, and Economic Security (CARES) Act, adding an additional $500 billion in funding. The additional federal support answers the call of the country’s governors, county officials, and local mayors who have been working around the clock to address the public health and the economic threat of COVID-19. It eliminates the current 500,000 resident population threshold, allowing every state, county, municipality, U.S. territory and the District of Columbia to qualify for direct federal assistance, regardless of its size.

“I’m fighting to get federal resources back to each county and community in hard-hit North Jersey — the eye of the COVID-19 storm. We need to get the backs of those on the frontlines of this crisis, including EMS, firefighters, and law enforcement. It’s Congress’ responsibility to help the hardest-hit communities. No excuses from the Moocher States. This new bipartisan, bicameral bill puts country first,” said Rep. Gottheimer

“In the midst of a national emergency, the federal government cannot sit on its hands and watch our communities go bankrupt and our people suffer. This isn’t a blue state or red state issue—this is an American issue—and it requires a national response,” said Senator Menendez. “The SMART Fund is the commonsense, reasonable and bipartisan approach our frontline states and communities need to deliver them the necessary flexible funding to defeat COVID-19, maintain critical services, avoid mass layoffs and tax increases, and expedite our economic recovery.”

“States and local communities shut down when the federal government asked and then lost billions in sales tax and other revenue. These states, communities either lay off workers or they get help. The SMART Act helps. The SMART Act keeps the thin blue line, firefighters and teachers from being casualties of Covid-19. It keeps our communities alive,” Senator Cassidy said.

“State and local governments in New Jersey are a critical line of defense in the effort to respond to COVID-19,” said Rep. Sherrill. “The federal government has a responsibility to help. This legislation is an important, bipartisan step toward getting towns, counties, and states the resources they need to keep their residents safe. I want to thank Senator Menendez and Senator Cassidy for their leadership and quick response to the needs expressed by our counties and governors. I appreciate their partnership, and I’m proud to bring colleagues from both sides of the aisle together to lead on this important piece of legislation.”

“This legislation is absolutely essential to defeating and crushing the Coronavirus pandemic,” said Rep. King. “State and local governments must have the necessary funding support so that the cops, firefighters, healthcare workers and all first responders can get the job done. Too much is at stake to do otherwise!”

“I thank my colleagues for their willingness to work over the last two months in a bipartisan, bicameral fashion on a solution that properly addresses the magnitude of the economic challenges facing state, county, and municipal governments in this country,” said Rep. Reed. “I care about protecting American communities across the country by ensuring they have the resources to continue providing essential public health services and safely facilitating the reopening of the nation’s economy. Speaking with local leaders every day, and as a former small town mayor myself, I knew it was only fair that this bill protect localities and specifically safeguard the critical federal support they will receive.”

“Due to a flawed funding formula used under the CARES Act, only two of Arizona’s 15 counties received direct federal assistance,” said Rep. O’Halleran. “Rural communities in my district are on the front lines of this pandemic, purchasing PPE and COVID-19 test kits without adequate federal cost reimbursement. Small municipalities slowed their local economies at the guidance of public health experts and have seen their sales tax revenues plummet. I am proud to help introduce this bipartisan, bicameral legislation that will provide critical relief to our states, cities, counties, and tribes who have so far been made to bear the brunt of this national emergency, under a new funding formula that does not unfairly disadvantage hard-hit rural areas.”

“Our nation is facing unprecedented challenges that require a historic response,” said Rep. Upton. “States and local communities have been working overtime to address this crisis, and many – including Michigan – now have severe revenue shortages. I have been in contact almost daily with the Governor and local leaders. It is abundantly clear from my discussions with them that our states and small communities need help, and this bipartisan legislation is the right solution to get resources into the right hands.”

“Cities and towns in my district and across the country are working incredibly hard on the frontlines of the fight against COVID-19,” Rep. Lieu said. “It’s imperative that the federal government supports local officials’ efforts to address the unique issues this pandemic presents in their communities. I’m grateful that Rep. Sherrill has convened a politically diverse group of Members to introduce this bill because it demonstrates the bipartisan will to support our local leaders during this challenging time.”

“Our communities need our help, and they need it now. The financial relief provided by the CARES Act is a start, but more funding is needed to fight COVID-19,” said Rep. Fitzpatrick. “The bipartisan SMART Fund is a commonsense proposal to provide much needed assistance to communities across the country. I am proud to join my bipartisan colleagues in putting forward a plan to assist those in need.”

“At a time went our state and local governments—who represent the frontline for all American’s in the fight against COVID-19—are facing depleting resources and possible financial ruin, we must pull together as one to ensure they have the funding and flexibility to carry on the fight,” said Rep. Dingell. “The SMART Fund builds off past relief packages and proposals to deliver a pragmatic way forward. It is a good bipartisan and bicameral approach for extending the flow of critical resources to continue necessary government services nationwide to weather this national emergency and solidify a foundation for a strong economic recovery.”

“Our North Country communities have been working diligently to address this public health crisis, and they need help,” said Rep. Stefanik. “I have spoken with local elected officials from across the district, many of whom have faced severe revenue shortages as a result of the shutdown. The SMART Fund will provide direct, flexible assistance to our local governments and municipalities to help them get back on their feet. I will continue to work with my colleagues in a bipartisan fashion in order to ensure that our communities continue to receive critical support throughout this crisis and beyond.”

Specifically, the SMART Fund would provide $500 billion to state, local, and tribal governments in order to avoid mass layoffs, steep tax hikes, and a breakdown of essential services. After a $16 billion set-aside for Native American tribal governments, the remaining funding would be allocated to states through three equally divided tranches:

  • One-Third Based on Population Size.  This tranche of funding will be allocated to all 50 states, D.C. and U.S. territories in proportion to each respective state or territory’s percentage of the U.S. population. Counties and municipalities will each get a share of one-sixth of their state’s respective allocation for a combined total of one-third of their state’s allocation from this tranche. Funding will be distributed to counties and municipalities based on each county or municipality’s proportion of the state’s population for this tranche.
  • One-Third Based on Infection Rates.  This tranche of funding will be allocated based on each state’s relative share of the nation’s infection rate.  States that have disproportionately high infection rates will incur significantly higher expenses and will likely need to continue stay-at-home orders for longer periods of time, leading to larger revenue losses. Counties and municipalities will each get a share of one-sixth of their state’s respective allocation for a combined total of one-third of their state’s allocation from this tranche. Funding will be distributed to counties and municipalities based on each county or municipality’s proportion of the state’s population for this tranche.
  • One-Third Based on Revenue Losses.  This tranche of funding will be allocated based on each state’s revenue loss in proportion to the combined revenue loss of all the states from January 1, 2020 through December 31, 2020. States that took strong actions to curb the spread of the coronavirus should not face additional budget shortfalls as a result of taking responsible action. Counties and municipalities will each get a share of one-sixth of their state’s allocation for a combined total of one-third of their state’s allocation from this tranche. Funding will be distributed to counties and municipalities based on each county or municipality’s revenue loss from January 1, 2020 to December 31, 2020 in proportion to the combined revenue loss for all counties and municipalities in the state over this period.  This is designed to ensure that adequate funding flows to counties and municipalities that are disproportionately affected relative to their population.

Under the formula, for example, if a state is awarded $6 billion in SMART funds, $4 billion would go to help stabilize the state government, $1 billion would be split among its counties and the remaining $1 billion dispersed to each of its municipalities based upon the respective criteria in each tranche.

All States, Puerto Rico and the District of Columbia shall receive a minimum of $2 billion combined from the first two tranches in addition to their allocation from the third tranche


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