Local governments still have a lot of federal dollars to spend on their COVID-19 response and not a lot of time to do it. Meanwhile, the pandemic continues to move at its own deadly pace.
Complicating matters are inconsistent messages and a perceived lack of trust coming from state leaders that has at least some county officials feeling confused, if not irked.
“We all recognize this is our first pandemic, whether you’re at the federal level, the state level or local level,” said Davis County Clerk and Auditor Curtis Koch. “It’s a hard situation for everybody, but sometimes we make it harder than it needs to be.”
At issue is the $1.25 billion that went to Utah as part of the Coronavirus Aid, Relief, and Economic Security (CARES) Act. All that money needs to be spent by a Dec. 30 deadline set by Congress. About $315 million of the bundle went directly to Salt Lake and Utah counties because of their population size. The rest went to the state to decide how to divvy it out among the remaining 27 counties and hundreds of municipal governments.
Taking a cue from Washington, the Governor’s Office of Management and Budget, or GOMB, opted to allocate funds based on population size and funnel the money out in three installments. Davis County, for example, had just over $30 million earmarked, and it has received about two payments of roughly $10 million each to date.
“If we could spend it over an 18 month period, this would be a lot easier,” said Davis County Commissioner Bob Stevenson. “But you’ve got to remember the first tranche came to us … [around] the first of June. So we’ve got to have it all spent in five months.”
As government leaders scramble to figure out the best way to make use of their funds, they said the rules seem to change weekly, if not daily. And if they don’t know the rules, local governments run the risk of an unfavorable audit once the U.S. Treasury Department looks into where all the CARES cash went.
“The last thing we want is for the federal government to step in three years from now and say ‘you owe us a million dollars back, you did not spend this correctly,’” Stevenson said.
Broadly speaking, Congress wants CARES funds to go to costs directly incurred from the pandemic, things like personal protective equipment and contact tracers. It can’t go to backfilling budget shortfalls caused by loss of tax revenue when businesses shutter or slow down.
While that might seem clear-cut on the surface, governments have found many unknowns as they dig through all the red tape. In response, the U.S. Treasury Department has pushed out an unending flood of guidance and clarifications.
One of the big ambiguities includes whether the money can go to pay front-line municipal workers like law enforcement and public health professionals. Governments have already budgeted salaries for those employees, but at the same time, their jobs have changed drastically since COVID-19 started spreading in Utah.
If cities and counties could use CARES to cover those paychecks, then the money budgeted for payroll could be set aside to cover COVID-19 costs and deferred projects next year.
“This pandemic does not end December 30,” with the CARES spending deadline, Koch said. “If we need to provide funding for mass vaccinations, I want to have funds from CARES ready to move so we’re not taking a tax increase.”
Crossed signals from entities doling out the funds, however, have made it difficult for local governments to plan ahead.
Koch provided a June 30 transcript between a counselor to the secretary of the U.S. Treasury and numerous other county leaders in the nation. The counselor told counties that public health and safety workers' payroll costs could be covered by CARES funds. An Aug. 28 question and answer sheet from the Treasury Department also noted that public safety employees could be reimbursed with CARES funds, as long as governments could show that those workers' duties were “substantially dedicated" to mitigating COVID-19.
That prompted the state of Utah, specifically GOMB, to send an email on Sept. 2 telling cities and counties not to use CARES dollars on entire police forces and health departments without first finding a way to prove that workers' roles had substantially changed on an employee-by-employee basis.
But on the same day, Treasury issued another guidance document stating that state and local governments could just “presume” their payroll costs for public health and safety workers were substantially dedicated to the pandemic. Finally, on Sept. 21, Treasury issued another document saying that those workers wouldn’t need proof their roles had changed.
“At this point, if anyone were to push back at the state level, I’d say ‘you’ve got to be kidding me,’” Koch said.
Responding by email, a spokesperson for GOMB said the state was trying to avoid the “significant risk” that comes from failing to comply with federal rules.
“Unfortunately, the federal government’s written guidance has not always been clear and has been continually evolving,” GOMB wrote.
Davis County elected officials also took issue with GOMB’s decision to divide up spending into three installments, saying it gives them little time to budget the funds and little certainty as to whether they could depend on future payments. The third and final tranche has yet to be released.
“Sometimes we feel like [the state has] been a little overprotective of the dollars,” Stevenson said. “They need to trust the cities and counties more in this process.”
Congress is the problem
GOMB decided on a three-payment model to maintain flexibility in how CARES funds can be spent until the December deadline. It’s a decision Lincoln Shurtz from the Utah Association of Counties said he supports.
“The thought behind it was to make sure we could be nimble if the dynamics of the virus changed,” Shurtz said. “Things are moving so quickly.”
Some government leaders felt confident this fall that federal lawmakers would extend the December deadline for spending CARES funds. But as congressional gridlock dragged out over the summer, those hopes began to fizzle.
“I was feeling extremely confident about it until a vacancy in the Supreme Court,” Shurtz said, referring to the open seat left by the death of Justice Ruth Bader Ginsburg. Senate Republicans have made filling that seat a priority ahead of the November presidential election.
“It’s not the state’s problem, they’re not the bad guys in this,” Shurtz said. “It’s inaction from Congress.”
Cameron Diehl with the Utah League of Cities and Towns said despite frustrations on the federal level, GOMB has served as a good partner to smaller governments in the state.
“We wanted to get some money out to every community because everybody had needs” at the start of the pandemic, Diehl said.
But as COVID-19 spiked and ebbed over the summer, then spiked against at the start of autumn, the state has collected more data and identified shifting needs. Rather than running the risk of spending all the state’s CARES dollars upfront, Diehl said, GOMB now has money left to help areas currently seeing more impacts.
Lingering pandemic pain
Some of those hot spots include Utah County, which has seen a surge in infections in recent weeks. Others include counties that have lower cases but are still experiencing economic fallout.
Summit County, for example, had one of the nation’s earliest COVID-19 outbreaks last winter. Its cases have since fallen and health officials eased stay at home orders this spring, but the coronavirus continues to strike. The county expects a 10% hit to its budget due to lost revenue from waning tourism, according to county manager Tom Fisher.
“Those areas of the state that are more consistent each month in sales tax revenues, because they are not as dependent on hotel occupancy, probably have a little different picture,” Fisher said.
The state indicated Summit County will get about $6 million in CARES funds, Fisher said, which county officials are working on directing to local businesses and eventual mass vaccinations.
“There are far-reaching impacts to this [pandemic],” Fisher said. “Right now, this money has to be expended before the end of this year. Well, there are going to be impacts well into 2021, probably into 2022 from the standpoint of the economy.”
In its email response, GOMB said it is considering adjusting its formula for the third round of local government payments to adjust for disproportionate impacts, but has yet to make a decision. The office expects that final tranche of payments to go out in mid-October.
Another county bracing for long-lasting economic fallout is Grand County, which expects revenues to take a 25% dive with visitors staying away from Moab and nearby national parks. The county is eligible for about $1.2 million in CARES funds, but has only received $400,000 to date, according to county administrator Chris Baird.
“However, the CARES Act doesn’t allow us to use that money for lost revenue replacement,” Baird said. “If you look at all the restrictions the money can be used for on a local government level, it’s pretty difficult to spend it all.”
Given all the local residents adversely impacted by mandated closures and slowed tourism, Baird estimates the county will be able to channel a large share of its CARES dollars to businesses in the area. But, he added, just because some regions in the state have managed to keep their COVID-19 cases low doesn’t mean they don’t need ongoing help.
“It is what is,” Baird said. “We’ll do the best we can. We’ve had to make major cuts.”