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House Members Push to Allow Payroll Credits for Public Employers

Posted on Apr. 20, 2020

More than 70 House members have asked congressional leaders to make state and local governments eligible to claim payroll tax credits for providing emergency paid leave to their employees during the COVID-19 pandemic.

The Families First Coronavirus Response Act (P.L. 116-127) requires public and private sector employers to offer emergency paid leave to employees during the health crisis, and it provides payroll tax credits to help employers offset the mandate’s costs, the House members noted in an April 13 letter to House and Senate leaders.

However, public employers are excluded from the credits, according to the letter, which was initiated by Reps. T.J. Cox, D-Calif.; John Katko, R-N.Y.; Diana DeGette, D-Colo.; and Bradley Scott Schneider, D-Ill., who is a member of the Ways and Means Committee.

The omission amounts to an unfunded federal mandate for state and local governments and should be amended in subsequent COVID-19 economic stimulus legislation, the signatories said.

Without a fix, “these severe costs will undermine the ability of state and local governments to provide the critical public services necessary in the nation’s COVID-19 response,” they said.

“My mission in Washington, D.C., is to cut bureaucratic red tape to make sure all employers in the Central Valley have the resources they need to carry out a successful Coronavirus response,” Cox said in an April 15 release. “That is why I strongly supported emergency paid leave for employees, and a legislative fix allowing public employers to recoup these costs through the same tax credits already offered to private employers.” 

Cox, Katko, DeGette, Schneider, and Rep. Peter King, R-N.Y., recently circulated a “Dear Colleague” letter asking other House members to sign on to legislation that would make public employers eligible for the credits.

In a March 21 letter to congressional leaders, groups representing state and local governments said omitting public employers from the credits “will have devastating consequences on communities nationwide.” They asked Congress to clarify that state and local government employers qualify for the credits.

Higher education groups have also expressed concern about the exclusion of public colleges and universities from the credits.

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