Has the U.S. Department of Treasury issued any new guidance for
the use of state and local funds received from the $150 billion Coronavirus
Relief Fund established by the CARES Act?
Yes. Just yesterday (April 22), the Department of Treasury
released a guidance memo for state and local governments, along with a
frequently asked questions document related to the Coronavirus
Cities over 500,000 population that receive disbursements
directly from the federal government can look to the guidance memo for an
extensive list of eligible and ineligible uses of the funding. The guidance
also states that expenditures of the allocation must be used for actions taken
to respond to the public health emergency, and that revenue replacement is not
a permissible use. According to the guidance, “funds may not be used to fill
shortfalls in government revenue to cover expenditures that would not otherwise
qualify under the statute.”
The FAQ document provides a bit of promising news for cities
under 500,000 population that did not receive a direct allocation from the
federal government. The Department of Treasury advises that a state receiving a
payment under the Coronavirus Relief Fund may transfer funds to a local
government, provided that the transfer qualifies as a necessary expenditure
incurred due to the public health emergency.
That means the State of Texas may use its portion of the roughly
$11.24 billion total allocation to Texas for grants to local governments under
500,000 population. Will the state share any of the money? On a call
today (April 23), the governor was appreciative of the work mayors have been doing
locally. He stated that a portion of the money will be made available to
all cities through Texas A&M’s county extension agents. According to
the governor, county extension agents will soon be reaching out to all local
officials in their county. The governor’s office issued the following
press release moments ago (April 23):
“Governor Greg Abbott today announced that Texas A&M
AgriLife Extension Service will provide a series of free online trainings to
help local officials understand, acquire, and administer federal
assistance available to the state of Texas and municipalities through the
Stafford Disaster Relief and Emergency Assistance Act and recently passed
Coronavirus Aid, Relief, and Economic Security (CARES) Act. Beginning
today, AgriLife Extension will offer these trainings online to help local
leaders navigate the federal funding process, and in turn, respond and recover
from the COVID-19 pandemic as quickly and effectively as possible.
In conjunction with the announcement, the Governor joined Texas
A&M University System Chancellor John Sharp and Texas Division of Emergency
Management Chief Nim Kidd for a series of calls with mayors and county judges,
members of the Texas legislature, and the Texas congressional delegation today
to provide details on the training, walk leaders through the process, and
answer questions about federal funding.
‘Our local officials have done a tremendous job leading their
communities throughout the COVID-19 response, and the state of Texas will
continue to work alongside them and provide these leaders with the resources
and support they need during this challenging time,’ said Governor Abbott.
‘These online trainings will assist local leaders in efficiently navigating the
federal funding process and ensure that our communities receive the financial
support that they need in a timely manner.’
‘One thing we learned during our response to Hurricane Harvey
was that federal funding is invaluable in the recovery process,’ said John
Sharp, Chancellor of The Texas A&M University System. ‘However, it comes
with all sorts of strings and requirements that can be confusing to those who
don’t know the rules. AgriLife Extension agents are well-positioned to guide
county judges, mayors, and other local officials through the federal funding
The first online training, Federal Relief: An Overview for Local Governments, is now
available. Additional trainings will dive into the specifics of individual
programs based on the needs of state and local officials. Extension agents will
be available to assist local leaders with questions throughout the training and
subsequent federal funding application process.
The CARES Act authorizes approximately $2 trillion in federal
stimulus funds to combat the crisis and stabilize the economy, including $150
billion available directly to states, territories, and tribal
governments. This includes a number of programs to address the issues that
states and local governments are facing as they work to protect their
communities during this challenging time.”
Presumably, based on the governor’s remarks, the press release
and training above is intended for cities of all sizes. The League will
continue to monitor the situation and report on the developing situation.
Did the attorney general issue an opinion on issues related to
public comment on agenda items?
Yes, but it isn’t necessarily relevant right now because the law
that is the subject of the opinion (Texas Government Code Section 551.007(b)) is currently suspended by the governor. It will remain so as long
as the state is under a disaster declaration related to the virus.
Yesterday (April 22), the attorney general issued Opinion No. KP-300. The opinion answered two questions
about 2019 legislation mandating that the public be allowed to provide input on
agenda items at an open meeting. It concludes that: (1) “a governmental
body may satisfy [the bill]’s requirements by holding a single public comment
period at the beginning of an open meeting to address all items on the agenda;”
and (2) “a governmental body may adopt a rule capping the total amount of time
a member of the public has to address all items on the agenda if the rule is
A more detailed article on the opinion, with a link to a full
Q&A on the law, will appear in tomorrow’s (April 24) TML Legislative Update and in the TML Exchange
What are examples of grant and loan programs established by
economic development corporations (EDCs) to support small businesses?
The Texas Economic Development Council has gathered some example
documents related to a handful of small business assistance programs from EDCs
across the state, and posted them on their COVID-19 resource webpage.
Despite various requests to suspend some of the state laws
related to the expenditure of EDC sales tax dollars to allow more flexible use
of that money, the governor has not taken action to do so.
Consequently, EDCs must continue to spend money in strict
compliance with state law. As seen in the examples linked above, some believe
that state law currently allows for the use of EDC funds to support small
businesses under certain circumstances. City and EDC officials should consult
with local legal counsel to determine if a similar program is appropriate in
Is a city authorized by the Public Funds Investment Act to
invest in PPP loans made pursuant to the CARES Act?
On April 22, Senator Donna Campbell submitted a request to the attorney general’s office on
this issue. The request states that public entities should be able to
purchase pooled loans from banks that are sold into the secondary market, and
argues that allowing that practice will support local and community
banks. The League will report when the opinion is issued.
Where can I find archived issues of the TML Coronavirus Updates?
TML Coronavirus Updates are archived by date here and by subject here.