Local governments could get a needed shot in the arm

By BY STEVE WILSON FOR THE E-T,

A bill in the U.S. Senate could provide $500 billion in funds to state, local and tribal governments and remove restrictions on previously passed stimulus funds to help these governments as well.

The State and Municipal Assistance for Recovery and Transition (SMART) Act would provide governments with federal assistance and has bipartisan sponsorship.

SMART Act funds would be used by governments to help prevent layoffs, tax hikes and the interruption of services. The bill would also apply the same flexibility to the relief fund in the Coronavirus Aid, Relief, and Economic Security (CARES) Act that was passed in March by Congress. Mississippi received $1.25 billion in CARES Act funds.

The money would be allocated in three batches, with each state receiving a minimum of $2 billion. One third of the money would be allocated based on population size, another third would be based on the COVID-19 infection rate and the last third would be based on revenue losses. One third of all money provided to a state would be mandated for counties and municipalities.

As passed, the CARES Act has a population threshold of 500,000 for municipal aid not related to direct costs for mitigating the COVID-19 virus. The SMART Act would remove this threshold and allow these monies to be allocated to local governments.

U.S. Sen. Cindy Hyde-Smith, R-Mississippi, is one of the original co-sponsors of the SMART ACT.

“I’ve heard from many Mississippi counties and communities about the financial hardships they’re experiencing as costs related to COVID-19 consume more of their budgets.  All our state and local leaders want to avoid layoffs, disrupting essential services, or raising taxes,” Hyde-Smith said in a news release. “The fact that cities and counties face layoffs, reductions in essential services, and even bankruptcies is cause enough for us to look at responsible ways to ensure people have access to the services they need. 

“This bill represents a good-faith effort to help communities, counties, and states weather the financial hardships of the coronavirus emergency.”

The SMART Act also has a companion bill in the U.S. House of Representatives.

The Mississippi Legislature passed a $300 million small business relief plan last week and $950 million of the CARES ACT funds remain unallocated.

Mississippi state tax revenues are down more than $244 million under the estimate for the month of April and total year to date revenues are down by $26.3 million.

The report from the state Department of Revenue has income tax collections down $125.8 million from estimates, corporate taxes down $89.9 million, sales tax collections down $17.6 million, and gaming taxes down by $11.1 million. The only tax category that had an increase was the use tax, which is a 7 percent tax assessed on all out-of-state purchases. These revenues were up $1.7 million over estimates and $30.2 million over the estimate for the year to date.

Mississippi isn’t the only state government feeling the pinch from the COVID-19 pandemic and the associated economic shutdown. Alabama’s tax revenues are down $445 million from the same period last year.

Tennessee has a state shortfall of more than $854 million in tax revenues compared with April 2019 and local governments are short $62 million compared with the same time last year.

Georgia’s tax revenues are down $100 million, which includes sales and fuel taxes, as compared with April 2019. Pennsylvania is down $760 million, while Texas will be dealing with a shortfall of more than $1 billion.

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