O’Halleran Joins Bipartisan Group to Introduce SMART Fund in the House of Representatives

May 19, 2020
Contributed Columns

Representatives Tom O’Halleran (AZ-01), Mikie Sherrill (NJ-11), Pete King (NY-02), Josh Gottheimer (NJ-05), Tom Reed (NY-23), 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 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.

“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.”

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.