U.S. Sen. Bob Menendez is among the sponsors of new bipartisan legislation that would deliver states and local governments the $500 billion in unrestricted coronavirus relief funds that Gov. Phil Murphy and other governors have been advocating.

Menendez and U.S. Sen. Bill Cassidy, a Republican from Louisiana, said their proposal won’t be part of the next pandemic response bill due a vote at some point this week, nicknamed COVID 3.5 and focused mainly on small businesses, with money also added for testing and hospitals.

“I think we’re coming at it from a bipartisan perspective and we think it’s well-poised for a COVID 4,” Menendez said.

Menendez said the bill builds off the $150 billion for states and local governments in the Coronavirus Aid, Relief, and Economic Security (CARES) Act by creating a new State and Municipal Aid for Recovery and Transition (SMART) Fund. He called it “bigger, bolder and most importantly bipartisan.”

“We recognize that this pandemic is unprecedented. It’s like a hurricane sitting on land for indefinitely,” Menendez said.

One third of the $500 billion, about $166.7 billion, would be distributed the same way as is in the CARES Act, based on population size, with an assurance even the smallest states get $1.25 billion. New Jersey and nine of its counties are awaiting $3.44 billion from the CARES Act.

However, while the CARES Act provided direct funds to governments serving 500,000 residents or more, the proposed SMART Fund would set a threshold of 50,000 residents – meaning all 21 counties in New Jersey would qualify, as well as 37 municipalities, if the Census Bureau’s 2018 estimates are used.

“It will be a lifeline to all those individual communities that absolutely got nothing, at least from the overall CARES stabilization funding,” said Menendez, though some of those smaller counties or towns within them are in line for some cash through the Community Development Block Grant formula.

A county or city would be able to claim 45% of the funds being allocated based on their population, and the state would receive the other 55%. The Tax Foundation estimates that of the $3.44 billion going to New Jersey through the CARES Act, the state’s share will be around $2.4 billion and its nine largest counties will split $1.05 billion.

Another third of the SMART Fund money would be distributed based upon a state’s share of COVID-19 cases. As of Monday evening, the 88,806 positive test results for New Jersey residents was more than 11% of all the known cases in the United States.

“States that have disproportionately high infection rates will incur significantly higher expenses, and they’ll likely need to continue the stay-at-home orders for longer periods of time, leading to even larger revenue losses,” Menendez said.

The final third would be based upon state losses, relative to pre-pandemic projections, for the period from Feb. 1 through Dec. 31. That wouldn’t be a dollar-for-dollar match, with each state instead getting back a proportional amount of their revenue deficit.

“A state that took aggressive actions to curb the spread of the coronavirus shouldn’t be facing additional budget shortfalls as a result of taking responsible actions,” Menendez said.

Cassidy said preserving state and local services – fighting fires, pickup up garbage, responding to emergency medical calls – is key to ensuring families and businesses come through the crisis intact.

“I would argue that if you cannot provide essential services, it doesn’t matter what you do for everybody, you’re not going to have the ability to reopen to the degree that you want,” Cassidy said.

“I learned as a physician financial health is as important as physical health. If we address the physical health but we enter a depression, then we are effectively having a continuation of the effects of the pandemic – not in deaths, but in the loss of financial health, and that in turn affects physical health,” Cassidy said.

Murphy said the legislation is “exactly what the doctor ordered” but that “we can’t wait another minute longer” to push off the funding the next major COVID response bill. He said supporting small business doesn’t mean states on the front line can’t also be helped.

“For us to continue to be able to responsibly be there, we’re going to need a lot of help, or the consequences without getting into them will be grave,” Murphy said.

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