Federal Aid Package to Support State Funding Restorations Fails to Materialize
Thursday marked the deadline for the federal government to approve flexible financial assistance to state and local governments amid the economic downturn ushered in by the ongoing COVID-19 pandemic. With Congressional leaders and the White House still not in agreement on a COVID-19 relief measure, budget cuts included in the 2020-21 state budget are here to stay, according to the California Department of Finance (DOF). In a letter to legislative leaders, DOF Director Keely Martin Bosler provided official notice that funding restorations would not occur as a result of the lack of federal action.
Recall, California’s final 2020-21 budget agreement included a series of funding restorations and funding actions if the state received an additional $14 billion of flexible federal funding by October 15, 2020. If the funding was received, numerous cuts would have been “triggered” off, restoring support to numerous state and local services, spanning health and human services, education, and housing. Most notably, an additional $250 million would have been dedicated to augment the budget’s $750 million General Fund “backfill” to offset counties’ loss of realignment sales tax funding, including for public health and indigent health services.
The House of Representatives passed earlier this month a revised $2.2 trillion relief measure that would have provided $436 billion in assistance for state, local, territorial, and tribal governments. However, the measure was deemed to carry too large of a price tag by Senate Republicans, and agreement has not been secured from the White House. While stimulus talks remain underway among Congressional leaders and the White House, it is unclear whether any significant aid will materialize at this time.
DOF will continue to “monitor and report on federal developments” on any potential federal funding that may be provided to the state. Additional details will communicated to CHEAC Members as information becomes available.