States Can Now Start Claiming Their Share of $10 Billion in Tax Relief
The U.S. Treasury Department began the process of distributing $10 billion in temporary fiscal relief payments to states under the Jobs and Growth Tax Relief Reconciliation Act signed into law by President Bush on May 28, 2003.
"The Treasury Department will ensure that payments are made available as quickly as possible," said Treasury Secretary John W. Snow in a letter sent to state governors.
Under the Act, which provides for a $5 billion payment to states in each of fiscal years 2003 and 2004, payments will be made to the 50 states, the District of Columbia, the Commonwealth of Puerto Rico, the U.S. Virgin Islands, Guam, the Commonwealth of the Northern Mariana Islands, and American Samoa.
The Treasury letter to the governors outlined the steps that states must take to receive payments, which are determined by a state population-based formula included in the Act. In order to receive a payment, states must provide the Treasury with a certification that the state’s proposed uses of the funds are to 1) provide essential government services, or 2) cover the costs to the state of complying with federal intergovernmental mandates, if the federal government has not provided funds to cover the costs. In addition, a state may only use the funds for types of expenditures permitted under the most recently approved budget for the state.
The Treasury letter included a certification form that states are asked to use to certify compliance with the statutory requirements. The certification must be printed on state letterhead, signed by the state’s governor and the certification must be attested by the state’s secretary of state in accordance with state law. The form also requests electronic routing information for the payments, which will be made in a lump sum.
A state may use a single certification for both FY 2003 and 2004 funds, or it may provide separate certifications for FY 2003 and 2004 funds. Once the Treasury receives a properly executed state certification for FY 2003 (whether separately or together with its FY 2004 certification), the state’s designated account will be credited with the FY 2003 payment within two business days. If a state sends the Treasury a single certification for both FY 2003 and 2004, the Treasury will process that state’s payment for FY 2004 on October 1, 2003.
If a state delays sending its certification to the Treasury (either for FY 2003 or 2004, or both), that state’s payment also will be delayed. The Treasury must receive a state’s FY 2003 properly executed certification no later than September 30, 2003 because the Treasury’s authority to make the FY 2003 payment legally expires after that date. Similarly, the Treasury must receive a state’s FY 2004 certification no later than September 30, 2004 because the Treasury’s authority to make the FY 2004 payment legally expires after that date.