Lawmakers' Bill Would Make State and Local Governments Eligible for Emergency Paid Leave Payroll Tax Credits

WASHINGTON, D.C. [02/9/21]—U.S. Senators Tina Smith (D-Minn.) and Dick Durbin (D-Ill.) introduced a key measure to help state and local governments provide paid leave to public employees who can’t work due to the coronavirus (COVID-19) pandemic. A bipartisan House companion bill was introduced by U.S. Representative Brad Schneider (IL-10).

The Families First Coronavirus Response Act, enacted last year, provided tax credits to private-sector employers to cover the costs of paid leave during the pandemic. Congress also extended those tax credits through 2021 in a bipartisan measure enacted in December 2020. But those measures did not make public-sector employers eligible for paid leave credits. The lack of access to the paid leave credits is putting stress on state and local governments at a time when many are grappling with additional costs brought on by the pandemic. This legislation will fix the problem by making state and local governments eligible for paid leave payroll tax credits.

The federal government needs to help state and local governments as they navigate the devastating public health and economic crisis of COVID," said Sen. Smith. “It’s unfair that state and local governments aren’t currently eligible for tax credits to help give public employees paid leave when they need it most. They should receive relief to help offset the additional cost of paid leave, just like private companies. My bill will fix this problem and help provide paid leave to Americans affected by the pandemic.”

“Our state and local governments are hurting from the impact of this pandemic. We can support essential workers in our states, like police, firefighters, teachers, and other public employees, by making state and local governments eligible for tax credits to help cover the cost of providing paid leave. This is a commonsense measure that I’m proud to introduce with Senator Smith and Rep. Schneider,” said Sen. Durbin.   

“Our states and local communities are leaders in our fight against the coronavirus, and they are being stretched thin on the frontlines of this crisis. Congress has to do more to support them during this pandemic. Allowing public employers such as state and local governments and public schools, utilities, and transit agencies to access the same payroll tax credits available to private businesses is a straightforward and bipartisan way to help our communities during this time of need,” said Rep. Schneider.

“I’m proud to reintroduce the Supporting State and Local Leaders Act, bipartisan legislation that makes state and local governments eligible for emergency paid family and sick leave payroll tax credits. Since the start of this crisis, our local governments have played a key role in our pandemic response and recovery efforts. They have continued to provide essential services, supported healthcare providers, and relayed important information to keep our communities safe and healthy. However, due to the economic impacts of this crisis, many local governments will soon be forced to make tough decisions if we don’t offer additional support. By providing payroll tax credits to offset paid leave expenses, we will ensure local governments are able to protect employees and continue their work to serve our nation through the duration of this crisis,” said Rep. Katko.

In addition to Sens. Smith and Durbin, the Supporting State and Local Leaders Act is supported by Sens. Amy Klobuchar (D-Minn.) and Richard Blumenthal (D-Conn.).  

In addition to Rep. Schneider, the House companion bill has bipartisan support from Reps. John Katko (R-NY 24), and Diana DeGette (D-CO 1).

The Supporting State and Local Leaders Act is supported by AASA, The School Superintendents Association, American Council on Education, America's Essential Hospitals, American Federation of Teachers, American Library Association, American Public Power Association, American Public Transportation Association, American Society of Civil Engineers, Association of American Universities, Association of Educational Service Agencies, Association of Metropolitan Water Agencies, Association of Public and Land-grant Universities, Association of School Business Officials International (ASBO), Council of the Great City Schools, Government Finance Officers Association, International City/County Management Association, National Association of Clean Water Agencies, National Association of College and University Business Officers, National Association of Counties, National Association of Towns and Townships, National Community Development Association, National Conference of State Legislatures, National League of Cities, National Rural Education Association, National School Boards Association, National Special Districts Coalition, State Higher Education Executive Officers Association and the U.S. Conference of Mayors. 

You can read the bill text here.