Press Release: Texas 2036 Analysis: Texas Expenditures of $11 Billion CARES Act Funding

For Immediate Release

Media Contact
Merrill Davis, Director of Communications, Texas 2036
Ph: 713-213-7297
Email: Merrill.Davis@Texas2036.org

Texas 2036 Analysis: Texas Expenditures of $11 Billion CARES Act Funding

Among the many funding streams in the CARES Act, Texas state and local governments received $11,243,461,000 via the Coronavirus Relief Fund (CRF).[1]

Texas’ CRF allocation is split into three main categories:

1.$3.2 billion allocated directly to cities and counties with populations greater than 500,000;

2.$1.85 billion allocated to the state, available for use by cities and counties with populations less than 500,000; and

3.$6.18 billion allocated to the state for state use.[2]

The CARES Act and subsequent Treasury guidance have provided broad guidance regarding allowable uses for CRF funds. As a general rule, the CRF may be spent on “necessary expenditures incurred due to the public health emergency” that were not accounted for in pre-pandemic budgets and were incurred between March 1, 2020 and December 30, 2020.[3]

With 14 weeks remaining before the expenditure deadline, much of the CRF remains unspent. As of June 30, only 16.6% of category one funding – for larger cities and counties – had been expended. And as of August 31, 2020, only 20% of category two and three funds – those administered by the state for state and local use – had been expended.

Category 1: Cities and Counties with Populations Greater than 500,000

With regards to the first category, the 18 jurisdictions[4] with greater than 500,000 residents have received 100% of their CRF allocations directly from the federal government. However, as of June 30, the jurisdictions had reported wide variability in their utilization of the funds – ranging from just 0.1% in El Paso County and 0.8% in Fort Bend County to 45% in the city of Austin and 56.5% in Collin County.[5]

This data, displayed in Figure 1, includes important caveats: cases did not peak in Texas until after this reporting window closed[6] and these expenditure calculations do not include response efforts since July 1. These calculations will be updated by the Department of Treasury in October to reflect spending as of September 30.[7]

Categories 2 & 3: State Administered Funds

Figure 2 addresses the second and third categories, focusing on the $8.04 billion administered by the state for use both by the state and for the benefit of communities with populations less than 500,000. The two categories are combined in the state’s budget documentation because the money is deposited into the same account in the state treasury. Of the $8.04 billion in this fund administered by the state for state and local use, $6.46 billion (80%) had not yet been expended as of August 31, 2020.[8]

Category 2 – Funding for Small and Mid-Sized Communities (Below 500,000 Population): In May, the Texas Department of Emergency Management (TDEM) announced an initial allocation of $116.9 million as an “advance” to cities and counties with populations below 500,000.[9] Subsequent distributions would occur on a cost-reimbursement basis as cities and counties expended money on pandemic response beyond the initial advance.[10] However, as of September 22, only $106.8 million of the $1.85 billion available had been provided to these small and mid-sized communities, with the balance remaining in the state treasury at that time.[11]

Anecdotally, some communities have reported difficulties fronting expenditures –

beyond the amounts initially advanced by TDEM – to then later obtain reimbursement. While these communities may have reserves, they have argued that dipping too deep into their reserves would imperil their credit ratings.

Category 3 – Funding for State Use: While it is difficult to discern exactly how much of the state’s $6.18 billion allocation remains unspent due to inclusion of both Category 2 and 3 funds in the same state treasury account, there appears to be at least $4.6 billion in remaining capacity as of August 31. This assumes that all $1.58 billion in expenditures shown in Figure 2 draw from the state portion of the account and that the full $1.85 billion in local funds is separately reserved. Realistically, a portion of the TDEM calculation appears to include Category 2 funding that has passed to small and mid-sized cities and counties, meaning that the balance for state use likely exceeds $4.6 billion.

What Comes Next?

Decisions from Congress – and Austin – over the next 14 weeks will shape the use of these unspent balances. While Congressional action has stalled over recent weeks, a July draft of the Senate Republican proposal would have extended the CRF expenditure deadline into late 2021 and allowed up to 25% of a state’s allocation to be used to cover revenue shortfalls – so long as the state certified that local governments received at least 25% of the initial allocation.[12] The House Democrat proposal, which passed in May, included significant additional financial relief for state budgets, as well.

Note on Data and Dates

This analysis attempts to provide the most up-to-date figures for pots of money where reporting timelines are not necessarily synchronized. Where figures do not currently reconcile, the cause appears to be due to differing dates for the reporting of information.

About Texas 2036

Texas 2036 is a nonprofit organization building long-term, data-driven strategies to secure Texas' prosperity through our state’s bicentennial and beyond. We offer non-partisan ideas and modern solutions that are grounded in research and data on issues that matter most to all Texans. For more information visit www.texas2036.org.