BRUNSWICK, ME – U.S. Senator Angus King (I-Maine) joined a group of 46 Senators in calling on the U.S. Department of Treasury to revise its flawed interpretation of Coronavirus Relief Fund guidelines so that the funds can support states’ work to provide essential public services amidst the coronavirus global pandemic. Under existing guidance, the Coronavirus Relief Funds may be utilized by states and local governments to help with urgent needs and cope with the public health and economic impact of the coronavirus – but this does not allow the states to use funds to address secondary impacts of the coronavirus response, such as decreasing tax revenue to support public services. Specifically, the Senators’ letter urges this guidance to be revised to allow states to maintain public services in the face of impending budget shortfalls.

“We write regarding the Treasury Department’s Coronavirus Relief Fund Guidance to urge you to promptly revise your interpretation so states, Tribal, and local governments can use these funds to prevent further economic damage,” wrote the Senators. “While the term ‘lost revenue’ does not appear specifically in Title V of the Coronavirus Aid, Relief and Economic Security (CARES) Act, a plain text reading of the law leads to the logical conclusion that lost or delayed revenues are a direct cost created by the coronavirus that were never accounted for in any budget.  Therefore, we believe it is fully within your authority and the intent of the CARES Act that these funds may be used to replace lost or delayed tax revenues and maintain public services.  In the midst of an economic collapse, the intent of the entire CARES Act is to provide flexible help to a wide range of Americans.  To prevent the flexible use of these relief funds is a choice that is neither required nor intended by law. “

Senator King has strongly advocated for increased federal action to support states in the fight against the coronavirus, including a drastic increase in our national testing infrastructure and increased financial support for states. Yesterday, he joined 26 of his Senate colleagues in a letter urging the federal government to waive cost-sharing requirements, which mandate that states cover 25% of FEMA’s work to respond to coronavirus. Earlier this month he joined a bipartisan group of former governors urging the federal government to provide increased financial flexibility to states by allowing them to allocate federal funds to address budget shortfalls caused by the pandemic.

The full letter can be downloaded HERE or read below.

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Dear Secretary Mnuchin:

We write regarding the Treasury Department’s Coronavirus Relief Fund Guidance to urge you to promptly revise your interpretation so states, Tribal, and local governments can use these funds to prevent further economic damage.

While the term “lost revenue” does not appear specifically in Title V of the Coronavirus Aid, Relief and Economic Security (CARES) Act, a plain text reading of the law leads to the logical conclusion that lost or delayed revenues are a direct cost created by the coronavirus that were never accounted for in any budget.  Therefore, we believe it is fully within your authority and the intent of the CARES Act that these funds may be used to replace lost or delayed tax revenues and maintain public services.  In the midst of an economic collapse, the intent of the entire CARES Act is to provide flexible help to a wide range of Americans.  To prevent the flexible use of these relief funds is a choice that is neither required nor intended by law. 

We are not alone in this view.  Governors and Senators from both sides of the aisle have set aside ideology and urged you to follow the law as written instead of creating more bureaucratic red tape in the middle of a public health emergency and ensuing economic crisis. Of all the regulations that this Administration seeks to cut, it should start with this one.

We all have a common interest in preserving as much of our economy as possible so that we are well positioned for a robust recovery.  A critical component of our economy is our state, Tribal, and local governments as they not only serve as customers for our local businesses, but also provide the essential services, such as effective law enforcement, public infrastructure, a strong education system, and other necessary conditions that provide the business certainty that make our country attractive to businesses and investors throughout the world.  We should preserve and maintain this critical comparative advantage. 

To avoid distracting states, Tribes, and localities from meeting the crisis at hand, the Treasury Department should publicly confirm that states, Tribes and localities may use these funds to maintain their essential services as the CARES Act clearly permits. 

We thank you for your consideration and urge you to act promptly.