Money, Money Everywhere: A historic amount of federal funding is letting states craft relief efforts that stretch beyond the pandemic's public health and economic shocks.

• Author: Maher, Emily
• Position: THE MONEY ISSUE

Unprecedented. Uncertain. Historic. Those words apply to the COVID-19 pandemic, the state budgets it disrupted--and the subsequent massive infusion of federal stimulus. All three kicked off a unique era of decision-making challenges for governors, legislators and staff alike.

States Needed Help--and They Got It

To prop up budgets and avoid economic upheaval from pandemic shocks, Congress passed six federal stimulus packages in a matter of a year, totaling nearly $5.2 trillion in aid--an unheard-of transfer of funds from the federal government to states, tribal governments, territories and localities.

"The baby beast and the big beast" is how Montana Rep. Llew Jones (R) describes the two largest packages. Like many lawmakers, Jones, vice chair of the House Appropriations Committee, appreciates the help during an extraordinary time but says it has come with extraordinary complexity. He's still getting calls months after the end of the legislative session for guidance on how to manage the money the state authorized. He's not sure the state can absorb it all in the ways required by the relief and recovery measures, and he'd like more control over how to spend the money to meet his rural state's needs.

"It's creating some chaos at a level I've never seen before," says Jones, who has served in the Legislature since 2005 and is chair of the House Appropriations Committee.

And that's before the Biden administration's far-reaching Infrastructure Investment and Jobs Act passed, adding $1.2 trillion for states to spend on traditional infrastructure and broadband.

The "beasts" Jones mentioned are his names for the Coronavirus Aid, Relief and Economic Stimulus Act and the American Rescue Plan Act of 2021, known as ARPA--a life raft for state, local, territorial and tribal governments. The acts created two separate funds: the $150 billion Coronavirus Relief Fund and the $350 billion Coronavirus State and Local Fiscal Recovery Fund. These helped buoy states, keeping virus-related expenses at bay without sinking general and reserve funds. The cash infusion buffered otherwise insurmountable pandemic costs for states and the nation.

Rescue vs. Recovery

The first round of flexible stimulus funds for states, the Coronavirus Relief Fund, provided discretion to cover pandemic-related expenses not accounted for in fiscal year 2020 budgets and incurred from March 2020 to December 2021. The fund calmed spiraling revenues early in the pandemic and mounting public health and economic pressures from increasing spending demands.

But the aid came with key restrictions. Relief funds could be used only for coronavirus-related expenses. Funds could not be used to cover lost revenues, which was clearly the biggest need for most states early in the pandemic. Although revenues recovered later in 2020, the pandemic's early months left states reeling from sharp, unexpected revenue declines. The ineligibility of aid for revenue replacement left states grasping for solutions to immediate budget woes. Additionally, a lack of clear guidance on what were considered allowable expenses and the piecemeal release of federal information...