State and local governments will have more flexibility over how they spend their latest round of relief funding from the federal government, Maryland Sens. Chris Van Hollen (D) and Benjamin L. Cardin (D) said at a Monday news conference.
The $1.9 trillion American Rescue Plan includes stimulus checks, child tax credits and relief for small businesses – but also billions in relief for state and local governments. The proposal includes roughly $195 billion for state governments, $130 billion for local governments, and around another $25 billion for territories and tribal governments.
At their virtual news conference, Cardin and Van Hollen said the latest federal stimulus effort will mean billions for Maryland’s counties and municipalities, including more than $600 million for Baltimore City. Cardin emphasized that the funding for Baltimore city is particularly dramatic compared to prior relief efforts.
“The aid to Baltimore City is unprecedented,” Cardin said.
That funding won’t have many strings attached, Van Hollen said, although it can’t be used to reduce taxes. He said local governments will need to use that money to “meet the burdens of COVID-19” — and offered building out broadband infrastructure as one example.
Cardin and Van Hollen both said they wanted the latest federal relief effort to give local governments more flexibility on how to spend their federal funding. Cardin noted that the direct aid to state and local governments is in addition to funding for schools and vaccine distribution.
The move to earmark billions in relief for local governments comes after Congress cut $160 billion in direct aid to state and local governments from a relief package in an 11th hour deal last December. Those cuts led local and state officials to demand aid as part of Gov. Lawrence J. Hogan Jr.’s (R) billion-dollar RELIEF Act rather than relying on the federal government.
Uncertainty surrounding federal relief efforts was a common refrain as the Maryland House and Senate as the RELIEF Act quickly made its way through both chambers. How the latest round of federal aid will affect lawmakers’ budget plans remains to be seen.
State and local governments in Maryland used money from the CARES Act’s Coronavirus Relief Fund to stand up a slew of emergency programs to help struggling individuals and businesses in the early days of the pandemic, including money for rental relief and eviction prevention.
According to the U.S. Treasury Department, those funds had to be used only for expenses that “are necessary expenditures incurred due to the public health emergency,” weren’t accounted for in state budgets when the CARES Act was enacted last March and were incurred between March 1, 2020 and Dec. 31, 2021.
Aid to individuals
A federal Earned Income Tax Credit (EITC) expansion, coupled with a child tax credit and the long-sought stimulus checks, will mean relief for millions of Americans, the senators said. Van Hollen estimated that more than a million children in Maryland will benefit from the child tax credit, and another 255,000 individuals would benefit from the EITC expansion.
“Across the political spectrum, economists urged us to go big,” Van Hollen said.
And the federal stimulus checks – up to $1,400 for individuals, $2,800 for couples and additional funding for dependents – will soon head out to millions of Marylanders who meet certain income criteria, Van Hollen said.
Aid to businesses
Cardin said he and Van Hollen had a particularly strong say in crafting the Rescue Plan’s aid for small businesses. The proposal includes $50 billion in aid for small businesses, including $28.6 billion in grants for restaurants and bars and an expanded Paycheck Protection Program.
Cardin, who this year became chairman of the Senate Small Business and Entrepreneurship Committee, has been a “lead negotiator” in congressional small business relief efforts during the pandemic, according to a news release.
$15 minimum wage
Cardin and Van Hollen also pledged to continue pushing for a $15 federal minimum wage after it was cut out of the latest relief package. The pair pushed for the increase to be included in the American Rescue Plan, but that provision was removed amid objections from Republicans and some Democrats.
Van Hollen said the proposal would’ve gradually phased-in the minimum wage to the full $15 in 2025, in some ways mirroring Maryland’s own increase.
Whether or not the duo will be successful in increasing the minimum wage in another piece of legislation isn’t clear: Eight Democrats in the Senate voted against the proposal.