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Looming Deadline Could Push States to Misspend CARES Act Money

Looming Deadline Could Push States to Misspend CARES Act Money
NFL player carrying American flag
Justin Watson of the Tampa Bay Buccaneers carries the U.S. flag before the game between the Los Angeles Rams and the Bucs in November at Raymond James Stadium. The stadium, which is slated to host the Super Bowl in 2021, received CARES Act funds to make modifications, including no-touch restrooms and other safety precautions, to more safely hold games. But critics say that may not be a good use of the emergency COVID-19 funding.
Cliff Welch Icon Sportswire via The Associated Press

States and localities are scrambling to pour $150 billion in federal CARES Act dollars into the COVID-19-ravaged economy before the end-of-year deadline, raising concerns that the money may not go to the recipients most in need.

If states don’t allocate the money by Dec. 30, they must return it to the U.S. Treasury.

That means businesses from ski resorts to football stadiums, restaurants to laundries—as well as people behind on their rent and utility payments—are being urged in public service announcements and public statements to apply for the money.

Critics and some state officials say the haste may prevent sufficient scrutiny and result in money being funneled to businesses that can work the system, rather than those with the greatest need. The stakes are high, with each state racing to spend $1.25 billion plus additional money they received based on population.

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Critics Question CARES Act Spending in Some States

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Critics Question CARES Act Spending in Some States

“I’ve yet to meet a pothole that has the coronavirus.”

Vermont, for example, which received the second-highest amount of money per capita, is under particular pressure to get the money out. Stephen Klein, chief fiscal officer for the Vermont legislature, said only about $700,000-$750,000 is already “out the door,” with another $200,000-$300,000 going out the week of Dec. 7.

Tom Kavet, state economist and principal economic adviser to the Vermont legislature, noted that the state would normally do “a lot of analysis” on even small expenditures.

“There has not been time for any of that,” he said. “It’s just … which lobbyists have the loudest voices and the most pull. Put money here, put it there, it’s just been very quick. Those are the rules of the game. But does that optimize efficiency and impact? No.”

The federal guidelines for using CARES Act money are extremely broad, and allow spending on everything from sick leave for public employees to “expenditures related to the provision of grants to small business” and “economic support in connection with the COVID-19 emergency.”

Governors of both parties are pushing to use every cent, arguing that the need is too great to slow the money flow. In August, Tennessee Gov. Bill Lee, a Republican, urged caterers, event venues, travel agencies and other businesses to take advantage of the relief funds available through a recently expanded state program using CARES Act money.

"We don't want to have any funds left on the table when this is over," he said.

Maine Gov. Janet Mills, a Democrat, announced this week she is dedicating $10 million in CARES Act funds to help Maine’s food and agriculture industries pay for infrastructure purchases or projects to address supply chain disruptions resulting from the COVID-19 pandemic.

In Vermont, the Burlington Electric Department and the city’s Department of Public Works called on customers who are behind on their utility bills to apply for aid before the deadline, saying the qualifications for relief include “unemployment, layoff, reduced work hours, inability to work because of unavailability of childcare or school closures, or health issues.”

Critics say that kind of “raise your hand” allocation means those who apply for the money get it, rather than those who may have the greatest need but weren’t able to apply or were unaware of the program. And it’s highly likely that all who apply will get money, since there’s a small window to evaluate whether they have severe need.

“There’s very limited time, and you have to get the money out in a quick way,” Klein said. “Major parts of the business community are affected. How do you make sense [of applications] in a world when you can’t do a complete business analysis … how do you make choices in a world that’s not perfect?”

He also noted that the state has no idea when, or if, Congress and the president will agree on a second COVID-19 stimulus bill, which is now being negotiated. In addition, a bill to extend the deadline on the CARES Act money has been stuck in a Senate committee.

Mellissa Chang, a research analyst at Good Jobs First, a nonprofit group based in Washington, D.C., that tracks government subsidies and tax preferences, said speedy spending is risky.

“That sort of ‘use it or lose it’ does put pressure on governments to find a way to use the money. They don’t want that money to slip out of their hands,” she said. “When governments are trying to spend a lot of money in a short period of time, there’s always a risk it will make it into the hands of the wrong people.”

The good news, she said, is that the allocations must be reported to the federal government, which will audit the allocations. Making those allocations public “helps hold them accountable,” she added.

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The 1,400 centers serve more than 29 million low-income patients.

When it became public that some larger or richer businesses received aid from the federal Paycheck Protection Program, some of them gave the money back. It’s not logical to expect CARES Act recipients to take the same approach, Chang said, but the idea is to make policymakers aware of past mistakes so that they won’t repeat them if more money is forthcoming.

Some cases already have sparked controversy, including the $10.4 million in CARES Act money that went to Raymond James Stadium in Tampa, Florida, home of the NFL’s Buccaneers.

The Hillsborough County Board of Commissioners voted 6-1 in July to allocate the money to the stadium, which is slated to host the Super Bowl in February, even though in-person attendance at football games is severely restricted. Backers of the allocation successfully argued that the modifications it paid for, including no-touch restrooms and other safety precautions, were necessary to allow some stadium workers to retain their jobs and to bring some economic activity to the county.

But Commissioner Stacy White, who cast the only “no” vote, said the money mostly benefits the team owners, a few workers and a few fans, not the county.

“I think if they want to equip the stadium to handle COVID protocols, and make the urinals touchless, they should incorporate that into the cost of tickets,” White said in a phone interview.

“It should not be on the taxpayers. I have a lot of constituents in the county who can’t afford to go to a game at that stadium.”

“When governments are trying to spend a lot of money in a short period of time, there’s always a risk it will make it into the hands of the wrong people.”

Mellissa Chang, research analyst at Good Jobs First

Neil deMause, editor of the “Field of Schemes” website, which opposes public financing for sports facilities, argued that getting a few workers “in the stadium to sell hot dogs” is not a good reason for the county to give away that much money.

“There’s the question of whether $10 million is both necessary and useful to reopen a stadium during a pandemic,” he said in a phone interview. “You gain a little bit in hot dog sales, but you lose because you bump up your community infection rate.”

He also speculated that the team would have paid for the improvements had the public money not been there.

Bobby Silvest, vice president for marketing and communications for the Tampa Sports Authority, which runs the stadium, said in an email that the facility will be using only about $6.5 million of the allocation, with the rest going back to the county.

The stadium has been at between 20%-25% capacity for events, with about 16,000 fans for Buccaneers games and 17,000 for University of South Florida games. Staffing can range from 2,500 to 3,000 employees, Silvest said in the email. He also pointed out that parts of the facility were used as an early voting site and a COVID-19 drive-by testing site. But he declined to say whether the improvements would have been made absent the public money.

According to AARP, a nonprofit that advocates for older adults, about $21.5 billion in CARES Act money has gone to nursing homes. So far, according to Elaine Ryan, vice president of government affairs, there has not been enough accounting of how those dollars were spent.

She cited some states, such as New Jersey, that enacted legislation designed to increase staffing in nursing homes. The New Jersey law says nursing homes must spend any new government money on salaries and protective equipment for staff. But other states don’t have such prescribed requirements.

“That keeps me up at night,” she said in a phone interview. “You have to ask yourself, where did that money go?”

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