How far federal coronavirus aid goes for states

Federal American Rescue Plan funding represents a huge infusion of cash for states whose economies were lagging late last year, though for most states the money represents less than 10% of fiscal 2020 spending.

Those numbers come courtesy of a Pew Charitable Trusts analysis released Monday. The $193.5 billion of aid, which states can use for a variety of purposes including replacing lost revenue and preventing government spending, ranges from as much as 22.7% of fiscal 2020 spending in Wyoming to as little as 4.9% in Wisconsin. The greatest shares relative to spending didn’t necessarily go to the states in most dire need, Pew found.

“Because ARPA’s funding does not take revenue losses into account, states receiving the most aid as a share of spending aren’t necessarily those facing the most fiscal distress,” Pew said in the report. “Alaska and Hawaii, for instance, had projected some of the sharpest declines in revenue of any state over this and last fiscal year, but their aid nearly matches the national rate of 8.5% of total fiscal 2020 spending, in part because they had the two highest spending totals per capita.”

Bloomberg News

The analysis pointed out that the funding formula Congress adopted in the legislation contained a provision beneficial to states with smaller populations. The majority of funding was based on each state’s share of the nation’s unemployed workers from October through December. Then each state gets an additional $500 million, regardless of population, and it’s that last part that provides a substantial boost to less populous states.

“Wyoming has the fewest people but is slated to receive nearly $1.1 billion, an amount equivalent to 22.7% of its total spending in fiscal 2020 — the largest percentage of any state,” Pew said.

South Dakota got the second-largest share of funding, a total representing 20.1% of fiscal 2020 spending, even though it did not have the serious budgetary pressures Wyoming faced.

“The fifth-least populous state, South Dakota has had some of the strongest year-over-year tax revenue growth since the start of the pandemic, and its unemployment rate was tied for the lowest nationally as of April.”

Pew found that for 37 states, ARPA funding is equivalent to between 5% and 10% of total spending last fiscal year, including capital expenditures and spending from federal funds and bonds.

Aid to New York represented 7.4% of fiscal 2020 spending, while California got 8%, Florida 9.7%, and Texas 12.2%.