Municipal Matters Client Alert

A Guide to the CARES Act for ME Municipalities

By: Mary Costigan and Letson Douglass 

On March 27, 2020, the President signed into law the Coronavirus Aid, Relief, and Economic Security Act (the “CARES Act”). The third federal emergency relief package enacted by Congress in March 2020, the CARES Act appropriates $2.2 trillion in federal stimulus funds to aid businesses, individuals, and governments in response to the COVID-19 pandemic.

Summary of Key Provisions of the CARES Act

Coronavirus Relief Fund

The CARES Act establishes the Coronavirus Relief Fund,[1] which provides $150 billion in direct aid for COVID-19-related expenses to states, tribal governments, and local governments with populations of 500,000 people or more. The amount of funds available to each state through this program is formulated based on population, with no state receiving less than $1.25 billion. Eligible local governments must first submit a certification to the Treasury Secretary stating that it will use the funds in accordance with the law, and if approved, will receive a portion of its state’s allocated funds. The funds provided to each eligible jurisdiction must be used for necessary expenditures due to the COVID-19 public health crisis incurred between March 1, 2020 through December 30, 2020 that were not accounted for in the most recently approved budget for that jurisdiction.

Economic Stabilization Fund

Within the CARES Act is the Coronavirus Economic Stabilization Act of 2020.[2] This program provides $500 billion to the United States Treasury to provide loans, guarantees, and investments to support eligible businesses, states, and municipalities for “losses incurred directly or indirectly as a result of the coronavirus.”[3] Of the $500 billion allocated in the Economic Stabilization Fund, $454 billion is to be used by the Treasury for loans, guarantees, and investments in programs or facilities established by the Federal Reserve “for the purpose of providing liquidity to the financial system that supports lending to eligible business, States, or municipalities.”[4] Any loans provided to a state or municipality through this program will not be eligible for loan forgiveness.

Law Enforcement Assistance

As part of the CARES Act, an additional $850 million has been allocated to the Edward Byrne Memorial Justice Assistance Grant (“JAG”) Program for use by state and municipal law enforcement agencies in response to the coronavirus.[5] Funds will be awarded based on the formula used in Fiscal Year 2019 for JAG allocations.

Community Development Fund

Another component of the CARES Act is the $5 billion available for the community redevelopment block grant (“CDBG”) program.[6] Of the amount allocated for the CDBG program under the CARES Act, $2 billion will be provided to states, counties, and municipalities that received funds under the FY 2020 CDBG formula already, $1 billion will go directly to states to support a coordinated response, and $2 billion will be allocated to states, counties, and municipalities based on the prevalence and risk of the coronavirus and related economic and housing disruption, to be determined by the Department of Housing and Urban Development on a rolling basis.

What the CARES Act Means for Municipalities in ME

The State of ME will receive $1.25 billion from the Coronavirus Relief Fund pursuant to the CARES Act. With no local governments with populations of 500,000 or more within ME, the State will receive the entirety of that amount and has discretion over how to allocate such funds in compliance with the law. In other words, municipalities in ME are not guaranteed any direct federal aid through the Coronavirus Relief Fund. It is unclear at this time how and whether local governments will be able to receive funds through the State pursuant to this program.

Municipalities are eligible to receive loans through the Economic Stabilization Fund, however. The intent behind the Economic Stabilization Fund is to provide liquidity to municipalities (as well as to states and eligible businesses) through direct loans or by the purchase of existing financial obligations. Any loan granted to a municipality through this fund would not be eligible for loan forgiveness.

Certain towns and cities in ME may also receive funds through other programs included in the CARES Act, including the JAG and CDBG programs outlined above. Other funds allocated to states through the CARES Act for education, transportation, and election security—just to name a few—may also eventually get funneled to municipalities in ME.

Given that local governments (at least those with populations under 500,000) were largely left out of the direct aid opportunities through the CARES Act, there are efforts underway in Congress to include smaller cities and towns in future federal stimulus packages enacted to combat the COVID‑19 public health crisis.[7]

If you have questions or need assistance, please contact us.

[1] CARES Act, Division A; § 5001.

[2] CARES Act, Division A; § 4001 et seq.

[3] CARES Act, Division A; § 4002(3).

[4] CARES Act, Division A; § 4003(b)(4). 

[5] CARES Act, Division B; Title II. 

[6] CARES Act, Division B; Title XII.

[7] For example, on April 7, 2020 Representative Chellie Pingree joined four other congressmen in introducing the Coronavirus Community Relief Act. The bill, as proposed, would provide $250 billion in funding to smaller units of government—those left out under the Coronavirus Relief Fund of the CARES Act.

Governor Issues Third Executive Order Changing Property Tax Application Deadlines

By: N. Joel Moser

In Brief

Superseding an earlier Executive Order regarding ME’s property tax laws (dated March 31, 2020), Governor Janet Mills signed a new Executive Order changing the extended application date for ME’s Current Land Use Tax Programs due to the COVID-19 civil emergency. Effective April 9, 2020, the new Executive Order now extends the application deadline for the Current Land Use Tax Programs from April 1st until (1) the commitment date of the municipality or (2) 30 days after the termination of the emergency—whichever occurs first. The Current Land Use Tax Programs affected by this Executive Order include:

• Farm and Open Space Tax Program (36 M.R.S. § 1109),
• Tree Growth Tax Program (36 M.R.S. § 579), and
• Working Waterfront Tax Programs (36 M.R.S. § 1133).

What’s Next

With three property tax-related Executive Orders recently issued, assessors and taxpayers therefore should recognize the fluid nature of property tax deadlines for the April 1, 2020 tax assessment date and be prepared for late-filed applications that may affect a municipality’s valuation.

Please contact N. Joel Moser at (207) 228-7155 or jmoser@bernsteinshur.com with any questions regarding current land use applications or property tax assessment.