The Biden administration is giving states and municipalities extra flexibility to hoard cash from a $100 billion pot of unspent pandemic aid by 2024 after billions have been spent on golf programs, lottery prizes in New Mexico for individuals vaccinated for COVID-19 and authorized companies for asylum-seekers in Illinois.
Just a little-noticed rule from the Treasury Department, revealed earlier than Thanksgiving, relaxes how states and municipalities should legally obligate cash from the $350 billion Coronavirus State and Local Fiscal Recovery Fund by the top of subsequent 12 months. The fund was created as a part of the $1.9 trillion American Rescue Plan signed by President Biden in 2021.
The rule change creates an election-year “Bidenomics slush fund,” in keeping with a report by the Economic Policy Innovation Center, a right-leaning assume tank. It says the rule change permits state and native governments to rely funds as obligated past 2024 if they’re merely reported to Treasury by April.
“In essence, Treasury is offering a slush fund pathway to state and local governments as a way to ensure at least the covered billions of SLFRF dollars are not left on the table when it could be spent on the salaries of local bureaucrats and other loosely administrative or compliance expenses,” the report stated.
A Treasury spokesperson instructed The Washington Times that the prevailing deadline for state and native governments put in place by Congress has not modified.
“To address grantee questions, Treasury clarified what recipients must do to meet a particular December 2024 cost incurred deadline that was established by Congress,” the spokesperson stated.
Based on the newest knowledge from Treasury, about $90 billion of the unique $350 billion appropriation has not been accepted by an adopted price range, authors Paul Winfree and Brittany Madni wrote of their report. “This pot would likely be impacted by the Hoarding Rule.”
Further, states and native governments have obligated solely 56% of the entire appropriation for the $350 billion program. The new rule guarantees to offer them extra time and wiggle room to spend the cash somewhat than return it to the federal authorities, which ran a deficit of about $1.7 trillion in fiscal 2023.
The pot of cash was created largely to assist state and native governments exchange misplaced tax income through the financial downturn of COVID-19 lockdowns. The pandemic’s affect on income was not as dangerous as feared, the report stated, partly due to “shifting work from home during the pandemic and rising property values.” It stated state and native income elevated 24% general from 2020 to 2022 and state wet day funds doubled throughout the identical interval.
A Government Accountability Office report this 12 months discovered that, as of March 31, states spent $88.2 billion, or 45% of their awards from the restoration fund, and localities spent 38% of their awarded cash. The GAO stated 14% of localities had not reported to Treasury how they spent their cash, as required by legislation.
Mr. Winfree, a price range official within the Trump administration who now serves as president of the Economic Policy Innovation Center, and Ms. Madni, the middle’s government vp, stated the restoration fund “is funneling taxpayer money into projects that have limited connections (at best) to the COVID-19 pandemic.”
They stated greater than $185 million has been accepted for initiatives associated to golf programs, corresponding to updating irrigation programs or shopping for golf carts, greater than $400 million has gone to enhance swimming swimming pools, practically $80 million has gone to sports activities stadiums, $34 million has gone to constructing tennis and pickleball courts, and $10 million has gone to rodeos.
“One town even got $15 million to install showers and a commercial kitchen at a site to host the circus and local flea market,” they wrote. “[And] $4 million even went to the Field of Dreams in Iowa,” the place Major League Baseball hosts its annual late-summer sport.
As for “politically controversial purposes,” they wrote, Treasury accepted $4.2 million to offer authorized companies for immigrants, refugees and asylum-seekers in Illinois. Another $12 million was accepted to offer housing for refugees and asylum-seekers in Massachusetts, and $2.2 million has been accepted to offer a neighborhood house for asylum-seekers crossing the southern border into Arizona.
“The SLFRF is also being used to fund diversity, equity, and inclusion (DEI) coordinators in at least three states whose job is to apply for additional grants from the federal government,” their report stated.
In New Mexico, state officers used $16 million from the pandemic restoration fund to run a lottery for individuals who acquired the COVID-19 vaccine.
Gov. Michelle Lujan Grisham, a Democrat, promoted the “Vax 2 the Max” sweepstakes, with $10 million in money and different prizes accessible and a grand prize of $5 million.
In a June report, the National Association of Counties stated many counties and municipalities deployed a “dual track” technique by spending to stabilize native authorities budgets and investing in “a more equitable economy.” The group studied spending in 17 counties and cities.
“Localities have been impressively entrepreneurial and innovative in setting priorities for SLFRF dollars in ways that drive greater inclusion and equity in their communities,” the affiliation stated. “Local leaders arrived at these priorities amid considerable uncertainty in the SLFRF rulemaking process and broader political debates in their communities.”
The Economic Policy Innovation Center’s report stated an excessive amount of of the spending isn’t documented.
“There is also much that we do not know simply because the reporting, including by Treasury, has been so poor,” the report stated. “How is this possible? The Treasury Department does not just enable it; the agency is actively encouraging this sort of taxpayer abuse.”
Treasury’s new rule amends the definition of obligated funds to incorporate “any additional costs of ‘terms and conditions’ that are associated with approved programs and activities,” the report said.
“The possibilities for how these dollars could be spent are vast; we are yet to see a limitation on how state and local governments are to interpret reasonable parameters for meeting these ‘terms and conditions’ requirements,” the report stated.
In a discover revealed within the Federal Register late final month, a Treasury official stated the brand new rule is important “to provide additional flexibility to recipients, providing clarification regarding the application of the obligation deadline to subrecipients, and providing guidance regarding the amendment and replacement of contracts and subawards.”
Treasury initially outlined “obligation” for spending the cash as “an order placed for property and services and entering into contracts, subawards, and similar transactions that require payment.” The division has set a deadline of Dec. 31, 2026, for spending the cash.
For extra info, go to The Washington Times COVID-19 useful resource web page.
