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New guidance from Treasury on uses of CARES Act relief funds

The U.S. Department of the Treasury has again updated its “Coronavirus Relief Fund Frequently Asked Questions” document. The relief fund is the source of the $2.953 billion that was allocated to Washington’s state and local governments.

The new update confirms that governments may use the money as matching funds for FEMA disaster assistance. (Under the federal Stafford Act, when federal disaster assistance is granted to state and local governments, the federal government pays for at least 75 percent of the work, and the state or local government pays the rest.) The ability to use the funds for this purpose came up at a recent Ways & Means Committee work session.

Some other notable items from the guidance (these may or may not be new to this update; the document doesn’t show how it has changed from previous versions):

  • Funds may be used, for example, for “a program to assist individuals with payment of overdue rent or mortgage payments to avoid eviction or foreclosure.” But funds may not be used to help property owners pay property taxes: “Fund payments may not be used for government revenue replacement, including the provision of assistance to meet tax obligations.”
  • Governments may still use the funds to assist small businesses even if stay-at-home orders are no longer in effect, “if the relevant government determines that such expenditures are necessary in response to the public health emergency.”
  • Using the funds to expand rural broadband capacity would be allowed “if they are necessary for the public health emergency.” But if projects are not “expected to increase capacity to a significant extent until the need for distance learning and telework have passed due to this public health emergency” they are not eligible uses.
  • Funds may be used “to remarket the recipient’s convention facilities and tourism industry” when “[e]xpenses incurred to publicize the resumption of activities and steps taken to ensure a safe experience may be needed due to the public health emergency.”

(A previous update suggested that states should give 45 percent of their share to local governments that did not qualify for direct aid from the federal government.)

Meanwhile, the city of Kent has announced that it will distribute $1 million of the $3.9 million in federal coronavirus relief funds it received from the state in “grants to small businesses to help reimburse them for costs of business interruption that were caused by required closures because of the COVID-19 pandemic.” Similarly, Federal Way will spend $2.5 million of its $2.9 million share for small business grants.


This article was provided by the The Washington Research Council. Emily Makings is a Senior Research Analyst at the Council.

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