The Federal Government just signed into law the CARES Act, which provides over 2 trillion dollars in relief to households, governments, and agencies. How will the relief package affect Chicagoland's social and physical infrastructure?
On Friday, Congress approved and President Trump signed a bill to provide relief to Americans during the ongoing pandemic. The 880-page, roughly $2 trillion Coronavirus Aid, Relief, and Economic Security Act (CARES Act) is touted as the largest economic aid package in US history. The Act covers everything from small business loans to hospital grants and transit. It’s a monumental disaster aid package.
The CARES Act is the largest economic aid package in US history
What does this aid package mean for Illinois and the Chicago region? The funding is too vast to fully know yet (although we at MPC will continue to work through it). What we can say right now? The bill is likely to affect some of the major infrastructure and racial equity issues that MPC advocates.
There has rightly been much discussion of the need for housing-related assistance owing to the massive economic hit that many households throughout the nation are facing. The CARES Act provides substantial funding to the Department of Housing and Urban Development in order to keep people sheltered. Major highlights include:
- $4 billion for homelessness assistance grants
- $5 billion in Community Development Block Grants
- $1.25 billion for the Housing Choice Voucher program
- $1 billion for project based rental assistance
- $685 million for public housing
- $300 million for tribal nations
In addition to the financial resources above, the CARES Act also places a moratorium on foreclosures and eviction filings for residents in homes with a federally backed mortgage. See the National Low Income Housing Coalition for a detailed explanation of all the housing measures in CARES Act. These eviction and foreclosure moratoria are critical, yet they will also need to be matched with further assistance so that renters and homeowners are not met with a bill they cannot pay once moratorium is lifted, leaving them prone to eviction/foreclosure again.
MPC Research Director Dan Cooper recently observed that “our existing patterns of inequality are likely to get much worse unless we make addressing them the number one priority in our policy responses.” Although the CARES Act doesn’t change the underlying policies that enable racial and economic inequality, it does provide some immediate relief to qualifying low-income households.
The omission of undocumented immigrants from relief, even those who pay taxes, is especially egregious, as these residents are over-represented in essential and otherwise impacted jobs like grocery workers, delivery people, and restaurant workers.
Major direct assistance programs include:
- $1,200 direct payments to Americans earning less than $75,000 per year. Given the high variation in living cost from region to region, this assistance will go much farther in some places than others.
- $15.5 billion for the Supplemental Nutrition Assistance Program, plus an additional $100 million for SNAP participants on Indian reservations
- $8.8 billion for the Child Nutrition Programs
- $900 million for the Low Income Home Energy Assistance Program, to ensure that low-income ratepayers can continue to meet their heating and cooling needs
- Expansion of unemployment benefits, including coverage of independent contractors and self-employed workers
Unfortunately, “qualifying households” excludes undocumented immigrants from receiving relief—even those who have paid taxes through Individual Taxpayer Identification Numbers (ITINs). This omission is especially egregious, as these residents are over-represented in essential and otherwise impacted jobs like grocery workers, delivery people, and restaurant workers.
Transit agencies in the Chicago region have seen 59-75% declines in normal ridership over the past weeks. Those sorts of declines mean substantial revenue losses. Farebox losses, coupled with declines in sales tax revenues, imperil our region’s and nation’s transit agencies. Former MPC Associate and transportation expert Yonah Freemark noted, “We should be incredibly nervous, since the transit agencies are playing an incredibly important role making sure people can get around who need to, like health care workers.”
The CARES Act provides sorely needed relief to transit agencies, to the tune of $25 billion in grants administered through the Federal Transit Agency. Early estimates suggest that Chicago transit agencies will see $1.6 billion of that funding to meet basic operating needs.
Unfortunately, water utilities appear to be getting no direct relief in the CARES Act. Water utilities nationwide are facing at least three problems right now.
Residents in cities including Chicago and Detroit are currently without water, their supply shut off before the moratorium took effect.
- Utilities are facing declining revenues, as water consumption has eased up in light of reduced manufacturing and reduced social congregation. As with transit agencies, a sudden revenue shift like this can put utilities in a precarious financial position.
- Utilities face staffing challenges to keep their utilities operating. Small utilities are especially vulnerable to these challenges: if their staff fall sick, replacements may not be available.
- Residents in cities including Chicago and Detroit are currently without water, as their water was shut off before government agencies issued moratoriums on shutoffs. This means that unknown numbers of residents are without clean water for drinking or for hand washing.
MPC is advocating for funding for safe, affordable water in any future relief package. As millions of Americans stay at home, we need to ensure our utilities can continue to provide them with the water they need for drinking and hand washing.
State and Local Goverrnments
State and local governments are going to feel long-term economic ramifications from the present moment. In addition to the tens of millions of dollars that states are pumping into direct coronavirus relief, they are also going to see major hits to revenue sources like sales tax, amusement and tourism taxes, and income taxes. Every state is going to feel this pain, as states burn through their rainy-day funds in order to provide basic public services.
To stem some of that tide, the CARES Act is establishing the Coronavirus Relief fund to provide $150 billion to state, local, and tribal goverments for emergency expenditures related to coronavirus relief. Expenditures cannot include already-budgeted items, so no spending on general operations.
By our calculations, Illinois state and local governments will see approximately $5 billion in aid (Patch reports a similar figure).
Overall, the package provides some badly needed relief, but it can’t alone address the longterm fallout for households, businesses, and governments.
There’s reason to believe that it’s just one in a series of forthcoming stimulus and aid bills. There are reports that this is a relief bill, and recovery bills to get the country back on its feet are being drafted as we speak. MPC and our partners will continue to advocate for funding and policies to help our region stay afloat during coming hard times and recover when the time is right.