U.S. Treasury says states tapping federal COVID-19 relief funds – Reuters

House Speaker Nancy Pelosi (D-CA) and Senate Majority Leader Chuck Schumer display the “American Rescue Plan” during the enrolment ceremony following passage of U.S. President Joe Biden’s $1.9 trillion coronavirus disease (COVID-19) relief bill on Capitol Hill in Washington, U.S., March 10, 2021. REUTERS/Erin Scott

WASHINGTON, Oct 14 (Reuters) – Federal COVID-19 relief funds provided to states and localities have prevented severe budget cuts and layoffs, bolstered pandemic response efforts and facilitated more longer-term investments across the country, the U.S. Treasury Department said on Thursday.

Initial reporting shows that U.S. states have appropriated or budgeted 45% of the federal COVID-19 relief funds they had on hand as of July 31, with a greater proportion of funds likely allocated in the last two months, it said.

In a blog, Treasury’s chief recovery officer, Jacob Leibenluft, said creation of the $350 billion Coronavirus State and Local Fiscal Recovery Fund (SLFRF) under the American Rescue Plan was helping states and local governments avoid the deep cuts seen after the 2008-2009 global financial crisis. The American Rescue Plan went into effect in March.

“Simply knowing these funds were in their coffers has allowed state and local governments to avoid budget cuts and layoffs, preventing a repeat of the Great Recession,” Leibenluft said.

He said Treasury had already provided over $240 billion of the total to state, territorial, local and tribal governments, and initial reporting showed they were putting the money to good use.

For example the governor of Hawaii rescinded plans to furlough over 10,000 state employees and cut the state’s budget by $600 million less than a week after the American Rescue Plan was passed.

Governments were also using the funds to get more people into the workforce and grow their economies, Leibenluft said.

He said Snohomish County, Washington, was funding programs to provide dislocated workers with job training to enter high-demand occupations in growing industries, while Orange County, Florida was planning to fund childcare in high poverty areas.

Reporting by Andrea Shalal and David Lawder; editing by Jonathan Oatis and Cynthia Osterman

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