The Senate version does not allocate aid based upon NEU populations. It directs the Treasury Department not to allocate funds based on non-metro population of states, a designation that overlaps slightly with NEUs but which is not synonymous. Civilytics, a data consulting firm, first identified the new terminology. It created a new aid formula that moved $5 billion or 25% of the program. This creates sharp discrepancies depending on how states categorize their communities.The American Rescue Plan Act of 2021 provided $19.53 billion for local governments to distribute to small towns and cities with populations of less than 50,000. These units are known as non-entitlement unites (NEUs) in government jargon. The House version of the bill would have provided $178 per person to each NEU in every state.The $1.9 trillion stimulus package Congress passed in March contained a well-known amendment. It was proposed by Senator Majority Leader Chuck Schumer (D-N.Y.) and supported by 13 members of the Democratic caucus. This amendment rerouted billions to small towns for economic recovery. This obscure amendment changed five words and could take more than 25% of recovery funding from 23 states, which includes Schumers New York.The new formula will see Nevada's 1,327,951 unincorporated residents quadruple the federal aid that the state receives under the new formula. Small towns in Nevada could receive over $1,300 per resident right now, but the unincorporated population will not.According to Civilyticss analysis, 25% of the U.S. population resides in unincorporated areas which would be exempt from funding. This is not only in small rural communities. More than 1 million people live in unincorporated areas of Miami-Dade County. Los Angeles County has more than 65 percent.Residents in small towns can get hundreds more dollars per person in states such as California, Maryland and Georgia. Residents in unincorporated areas are effectively denied federal aid because there is no funding allocation from local governments.Jared Knowles, Civilytics researcher, and Hannah Miller from Civilytics claim that states with large unincorporated populations will receive more per capita funding than states without them.Many states will receive much less.New York, Massachusetts and Rhode Island are just seven states that have no residents who live in unincorporated areas. The proportion of residents living in unincorporated areas is less than 1 percent in nine other states, including Michigan, Pennsylvania and Minnesota. All of these states have set up a program to provide assistance for small-town residents. It will cost about $104 per person under the American Rescue Plan.If the Houses funding formula had been kept by the federal government, Pennsylvania would have received nearly $689 million more in aid. New York and Ohio would also have received more than $500 million. Under the House version, 16 states would have received about 70% more federal aid to their small-town economic recovery. The Senate amendment, however, gives Nevada, Maryland, Virginia, and more than four-times the amount.According to a Democratic aide, the senators collaborated with the Biden administration in the creation of the amendments. According to an aide, the change was motivated by the desire to quickly get federal funds out and to reflect the differences in how states categorize small towns and cities, and how they may overlap.The aide stated that the goal was to distribute the money to small communities as efficiently as possible. Treasury, the states and local communities all work together to ensure that local and state governments get their fair share of stimulus funding. Public comment is accepted by Treasury Department until July 16.Miller and Knowles told The Intercept they don't think that many jurisdictions are aware that they are being underutilized. Many local governments lack the research capabilities to crunch the numbers like larger metropolitan areas. They believe that the Treasury Department published the information in opaque and obfuscatory manners.The Intercept reached out and asked all 14 senators that sponsored the amendment if they knew that the legislative change would have that effect, as well as if the Senate's formula was better that the Houses. Democratic Senators Schumer, Tom Carper of Delaware; Brian Schatz from Hawaii; Ben Cardin in Maryland; Gary Peters & Debbie Stabenow in Michigan; Jon Tester in Montana; Sherrod brown of Ohio; Ron Wyden (Oregon); Maria Cantwell & Patty Murray (Washington) all declined to comment.Robert Julien, the spokesperson for Senator Bob Menendez (D-N.J.), declined to comment. Jay Tilton (a spokesperson for Senator Patrick Leahy D-Vt. who chairs the Senate Appropriations Committee) referred questions the Senate Finance Committee. Tilton didn't answer any questions about Leahys involvement in the amendment that bears his name.One Democratic aide to the Senate Finance Committee said that the Senate's changes were more reflective of senators' interests in representing whole states rather than just districts. The Senate amendment for small town aid does not benefit more states than it benefits districts. It simply alters which states are more fortunate than others. The aide didn't answer any follow-up questions.It is possible that nobody analyzed the numbers to determine how each state would be affected by the stimulus bill passed in the rush to pass it. Schumers' amendment strips his state of $541million in federal aid. This is a decrease of more than 40 percent from the House version. The amendment was sponsored by senators from Ohio, New Jersey and Michigan. They also transferred hundreds of millions of dollars away from their respective states.Sources in the Senate said that the Treasury Department and Department of Housing and Urban Development pushed for the change. They claimed that shifting funds to non-metro areas could be more efficient than using NEUs because the latter is used in programs such as HUDs Community Development Block Grant. This doesn't explain why the Treasury Department published guidance restricting NEUs from receiving funds. States that otherwise could have directed money to unincorporated areas are now restricted.A spokesperson for Treasury Department stated in an email that it distributed funds in accordance with the American Rescue Plan's plain meaning. The spokesperson didn't acknowledge that the agency was involved in the creation of the amendment.According to the spokesperson, it is clear that the non-entitlement units (NEUs), which are local governments, do not cover all unincorporated areas. Treasury worked with Census Bureau to give guidance to states about the number of NEUs that are eligible. Each state and county can help unincorporated areas within their borders with its portion of the $195.3 Billion and $65.1 Billion provided to them, respectively.Maryland's NEUs will now be receiving close to $1,000 per resident. The Senate amendment provided $433 million more aid than the House version. This is a 450% increase over the House allocation.It's great for [Maryland small town], they're going to receive a lot of funds, said Marc Nicole (deputy secretary at the Maryland Department of Budget and Management). I'm going to say that some of them will do a great deal [with the funding]; they'll have really good ideas. But for others, it might overwhelm them. One municipality has a population that is 15. They will get around $14,000. They'll get about $14,000.Maryland, like all states, recently received half of its allocated funds. The money will be distributed to local governments within 30 days. Next year will bring the second installment.Michael Wallace, National League of Cities' legislative director, described the American Rescue Plan to be a significant victory for all local governments and a vital lifeline for small towns. He acknowledged that there is much more to do. NLC will continue to fight for fair and reliable funding formulas in economic recovery legislation. This will ensure that all small municipalities can get the funds they need to rebuild their communities and provide support to their residents.
