Congress Passes $1.9 Trillion COVID-19 Relief Package

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The American Rescue Plan, a $1.9 trillion relief package, was passed by Congress on Wednesday. It is expected to be signed into law by President Biden on Friday March 12, 2021. The bill allocates funds for vaccines, schools, families, small businesses, and public sector agencies providing economic relief to those affected by the COVID-19 pandemic.

“IPMA-HR applauds the passage of the American Rescue Plan which will provide states, cities, counties, tribes, and territories urgently needed aid,” stated IPMA-HR Executive Director Cara Woodson Welch.

Here is a closer look at how the bill will provide support for local and state governments.

Direct Recovery Funds for State and Local Governments

The bill provides $350 billion in direct aid to states, counties, cities, and tribal governments to cover increased expenditures, replenish lost revenue, and mitigate economic harm caused by the COVID-19 pandemic.

  • $192.2 Billion to States and D.C. A minimum of $500 million is allocated to each state for a total of $25.5 billion. The other $169 million will be divided among states based on their share of unemployed workers during the period of October-December 2020.
  • $130.2 Billion to Local Governments. Counties will be allocated $65.1 billion based on the county share of the U.S. population. Metropolitan cities will receive $45.6 billion and towns with fewer than 50,000 people will receive $19.5 billion.
  • $20 Billion to Tribal Governments.
  • $4.5 Billion to U.S. Territories.

The plan allows the recovery funds to be used to respond to the COVID-19 emergency and address its negative economic effects, including covering costs and replacing revenue lost due to the pandemic. The bill states the funds cannot be used, directly or indirectly, to offset a reduction in net tax revenue.

Extension of Unemployment Benefits

The new law also extends federal supplemental unemployment benefits. Initially provided through the Families First Coronavirus Response Act (FFCRA) and the Coronavirus Aid, Relief, and Economic Security Act (CARES), unemployment benefits were scheduled to expire March 14, 2021. The American Rescue Plan extends it through September 6, 2021.

Temporary Extension of Tax Credit for Emergency Leave

The bill provides an extension and expansion of the paid sick and FMLA leave tax credits created in the Families First Coronavirus Response Act (FFCRA) in 2020. It provides payroll tax credits for employers who voluntarily provide paid leave through the end of September 2021. The bill also expands eligibility to state and local governments that provide this benefit.

Assistance for Children and Families

The bill provides another round of Economic Impact Payment of $1,400 per income-eligible individuals and $2,800 for income-eligible couples filing jointly. It also increases the Child Tax Credit amount to $3,000 per child (age 6-17) and $3,600 for children under age 6. 

Funding for Public Transit

The plan provides $30.5 billion for grants to involving transit costs including payroll, personal protective equipment, and operating expenses. From those funds, $26.1 billion are allocated to aid transit services in urbanized areas, $281 million for states to support rural transit agencies in areas with fewer than 50,000 people, and $100 million for services supporting essential connections between cities in rural areas. The funds are available through FY 2024.

In February, IPMA-HR joined 300 organizations in a letter to Congress describing the economic hardships states and cities have endured during the COVID-19 pandemic.

For more in-depth information, refer to the title-by-title summary of the American Rescue Plan.

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