Federal SMART Fund Bill to Help State and Local Governments

U.S. Senators Bob Menendez (D-N.J.) and Bill Cassidy, M.D. (R-La) have announced a bipartisan bill that would create a $500-billion fund to help state and local governments respond to the current public health and economic crisis, while maintaining essential services.

The State and Municipal Aid for Recovery and Transition (SMART) Fund builds upon the existing $150 billion set aside in the Coronavirus Aid, Relief, and Economic Security (CARES) Act to help states and local governments.  It expands eligibility to include counties and towns with populations of 50,000 or greater (the current threshold is 500,000), ensures every eligible entity receives additional funding, increases flexibility for states and local governments to use the funds to plug revenue losses due to the COVID-19 outbreak, and targets additional funding toward coronavirus hot zones to combat the pandemic head-on.

The proposal is in line with requests made by the National Governors Association (NGA), to help support state and local government efforts to fight the pandemic.  These funds can be used to help meet the current demand while helping communities transition towards reopening by expanding testing and contact tracing, providing additional resources to residents, local hospitals, small businesses and schools.

Specifically, the SMART Fund would deliver funding to state and local governments, U.S. territories and the District of Columbia in three equal tranches based upon a new formula that takes into consideration areas of the country with the greatest need:

  1. One-third to eligible entities based on population size to ensure they each receive additional federal resources to meet their growing needs (Same formula used to disburse the $150 billion state stabilization fund created in the CARES Act, but essentially doubles those available funds)
  2. One-third to eligible entities based upon the number of COVID-19 cases relative to the U.S. population to target the urgent public health challenge
  3. One-third to eligible entities based upon state revenue losses relative to pre-COVID-19 projections to target the urgent economic challenge

“I want to thank Sen. Cassidy for his continued leadership and understanding that we best address our country’s most pressing challenges when we put partisanship aside and do it together,” said Sen. Menendez.  “As a former mayor, I understand the incredible toll fighting this pandemic is having on cities, towns and states on the frontlines to both wage this war and continue to support their local health departments, pay teachers and first responders, fix the roads and maintain the parks.  The COVID-19 pandemic may not know state borders, but it has certainly hit some states and regions harder than others.  The proverbial house is on fire and we need to focus the water on the hotspots, because if we don’t put the flames out, they will only jump until the entire block is up in smoke.”

“Sen. Menendez’s state and mine were hit hard by the COVID-19 epidemic.  I thank him for his partnership,” said Sen. Cassidy.  “We worked hard to make sure state and local governments can maintain essential services necessary for employees and employers to survive. We must protect Americans’ financial future.”

“New Jersey and our nation as a whole have faced continued challenges due to the impacts of the COVID-19 pandemic on our state,” said Governor Phil Murphy.  “This fund will provide us with a critical resource during this unprecedented time and prevent draconian budget cuts that would negatively impact our state’s fiscal stability and ability to meet the needs of New Jersey’s nine million residents. I thank Senator Menendez for his leadership and his unwavering commitment to the people of New Jersey.”

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