The CARES Act and how it can benefit local governments

We are all aware that the novel coronavirus pandemic is having a widespread impact on industries across the board in the private and public sectors. In fact, state and local governments are on the “frontlines of this crisis,” according to the Brookings Institute. Because local governments are responsible for providing a large share of public health and Medicaid costs, they are feeling the pinch. Many states (including Utah) have balanced budget requirements built into their budget, which means in order to satisfy budget demands they will need to cut back in certain areas in order to meet the extra demand in other areas. Additionally, most states will rely on federal government relief efforts to help supplement revenue shortfalls. On the bright side, many states are facing this crisis with record-high rainy day fund reserves. As reported by the Brookings Institute, “the median rainy day fund balance has more than quadrupled since 2010, reaching 7.6 percent of state general spending by the end of 2019. States will undoubtedly use these funds to help cushion the blow of the pandemic.”

Recently, congress passed the Coronavirus Aid, Relief, and Economic Security (CARES) Act. This rescue package is intended to help provide relief for small business owners as well as families and individuals. Hopefully, this relief effort will help lessen the strain on local governments as they try to provide as much relief effort as possible while still keeping their budget in check.

Here are a few highlights of the CARES Act as reported by US Congressman, Christ Stewart.

SMALL BUSINESS HELP

The Small Business Owner’s Guide to the CARES Act can be found here.

The Paycheck Protection Program is now up and running, offering nearly $350 billion in forgivable loans to keep companies operational and their workers employed. If eligible businesses and organizations retain their full staff and payroll—and use their loan proceeds on payroll or other eligible expenses—their loan will be 100% forgiven.

Payroll Tax Credit

The CARES Act creates an Employee Retention Credit, which is a refundable payroll tax credit equal to 50 percent of up to $10,000 in wages per employee (including health benefits) paid by certain employers during the novel coronavirus crisis.

Additional Small Business Tax Relief:

Delayed Payroll Tax Payment: The CARES Act authorizes employers to delay the payment of their 2020 payroll taxes until 2021 and 2022, providing businesses with an extra $300 billion in cash flow.

Carry-Back Losses: The CARES Act allows businesses to carry back losses from 2018, 2019, and 2020 to the previous 5 years, which will allow businesses access to immediate tax refunds.

Investment in Improvements: The CARES Act fixes cost recovery for investments in Qualified Improvement Properties, which will allow businesses that made these investments in 2018 and 2019 to receive tax refunds now.

CORONAVIRUS-RELATED UNEMPLOYMENT RESOURCES FOR INDIVIDUALS

How to File for Coronavirus-related Unemployment:

File online here or call: 801-526-4400

Unemployment benefits will cover:

1. Individuals requested by the employer to be quarantined as a consequence of COVID-19, even if they’re not diagnosed
2. Laid-off employees due to loss of production caused by COVID-19
3. In a few cases, asymptomatic employees that impose a self-quarantine
4. Those in mandatory quarantine because of suspicion of having COVID-19

Frequently Asked Questions regarding coronavirus-related unemployment can be found here.

More information can be found here.

U.S. Department of Labor’s Guidance on Pandemic Unemployment Assistance: