TML Coronavirus Update

Urgent Updates

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 Relief Fund.

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 maze.’

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.

Further Updates

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 reasonable.”

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 email. 

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 their communities.  

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?