DES MOINES, Iowa – Americans for Prosperity (AFP) released a report on Tuesday detailing the nearly $2 trillion in federal assistance already available to state and local governments, including more than $1.1 trillion provided in the wake of the outbreak of COVID-19.  

The analysis, conducted by AFP Policy Manager Matthew Dickerson and AFP Senior Fellow Alison Winters, also calculates the flexible federal assistance available to each state. The report suggests that this unprecedented amount of federal funding combined with responsible decisions at the state and local level should allow state and local governments to maintain necessary services without expediting a massive bailout bill from Congress.

AFP’s report finds the federal government will be providing at least $1.9 trillion in total assistance to state and local governments this year. That includes $790.7 billion in grants to state and local governments in pre-COVID funding and $1.1 trillion in additional support for state and local governments in response to COVID-19.

They noted that the CARES Act established a new $150 billion Coronavirus Relief Fund to provide money to states and local governments. Those funds were designated for “necessary expenditures incurred due to the public health emergency with respect to COVID-19”, through December 30, 2020, that were “not accounted for in the budget most recently approved.” 

They write, “This is an open-ended invitation for states to spend on new programs, projects, and activities on the federal the backs of federal taxpayers.”

The report’s authors also note that the Federal Reserve has used its Section 13(3) emergency powers to establish a new Municipal Liquidity Facility on April 9, 2020, to purchase up to $500 billion in state and municipal government debt. 

The report notes that Iowa had $1,250,000,000 allocated to it through the CARES Act. Under the Federal Reserve program, Iowa’s maximum eligibility is $3,538,900,000. Between those provisions and Iowa’s 2019 rainy day fund balance of $762,000,000. The report states that Iowa’s liquidity is $5,550,900,000. 

“With a staggering amount of money at the state level, it’s clear that a massive federal bailout isn’t just bad policy – it’s not necessary. This report confirms that Iowa has over 5 billion at its disposal. Our lawmakers need to make the tough choices they were elected to make and allocate the funds we already have responsibly,” Drew Klein, AFP-Iowa State Director, said in response to the report. 

He said the state and local government bailout passed by the U.S. House last Friday is unnecessary. 

“The $3 trillion package from Speaker Pelosi is another blatant attempt to leverage this crisis to push through a partisan wish list, and our Senators should stand up and oppose it. We don’t need bailouts; we need a plan to safely reopen the economy and policies that will help us recover stronger than before,” Klein added.

The report’s authors state that instead of pushing for more funding, state and local policymakers should illustrate how they are utilizing the currently available federal funds to make the responsible decisions that will prioritize necessary services for their residents.

They also note that state and local policymakers should also enact reforms and spending reductions to address state budget challenges, many of which are the result of fiscal mismanagement before the COVID-19 crisis.

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