Yesterday, the U.S. Treasury updated its Frequently Asked Questions CARES Act guidance. This revision will provide CARES Act recipient States (including New Jersey), and recipient units of local government (including New Jersey’s nine most populous counties) with greater flexibility in the use of those funds.
In addition to giving State government greater flexibility for its own purposes, all New Jersey municipalities should be aware of this advice regarding fund usage.
May a State receiving a payment transfer funds to a local government?
Yes, provided that the transfer qualifies as a necessary expenditure incurred due to the public health emergency and meets the other criteria of section 601(d) of the Social Security Act. Such funds would be subject to recoupment by the Treasury Department if they have not been used in a manner consistent with section 601(d) of the Social Security Act.
Municipalities in the counties of Bergen, Middlesex, Essex, Hudson, Monmouth, Ocean, Union, Camden, and Passaic, should consider this.
May a unit of local government receiving a Fund payment transfer funds to another unit of government?
Yes. For example, a county may transfer funds to a city, town, or school district within the county and a county or city may transfer funds to its State, provided that the transfer qualifies as a necessary expenditure incurred due to the public health emergency and meets the other criteria of section 601(d) of the Social Security Act outlined in the Guidance. For example, a transfer from a county to a constituent city would not be permissible if the funds were intended to be used simply to fill shortfalls in government revenue to cover expenditures that would not otherwise qualify as an eligible expenditure.’’
The same restrictions that apply to original recipients would apply to secondary recipients.
Contact: Jon Moran, Senior Legislative Analyst, jmoran@njlm.org, 609-695-3481 x121.