U.S. Senator Joe Manchin says he can’t figure out why West Virginia’s state government isn’t going ahead and spending $1.25 billion in relief funds from the federal government.
“It is time for the state of West Virginia to put that money out into communities all across the state,” Manchin said on MetroNews’ “Talkline.”
“To be honest with you, I’m a little bit embarrassed that we’re still sitting on $1.25 billion, waiting to get the go-ahead to use it to fill state budget holes.”
Gov. Jim Justice this past week said it’s not so simple.
“It’s impossible to answer that question from the standpoint of all the different things because we’d be here for hours in order to try to adequately answer the question,” Justice said during a Thursday briefing.
West Virginia started receiving millions of dollars in federal relief on April 16. State officials described two draw-downs of $625 million each.
“I have asked the President to give us, as a State, as well as our counties and cities, more flexibility with how we can use this money to reopen and rebuild,” Justice stated then.
“We need the flexibility to put this money where it’s needed most to help us rebuild stronger than ever.”
Since then, the Republican governor has repeatedly described a desire to use the money to backfill state revenue lost to decreased economic activity that has resulted from coronavirus response.
State revenue leaders have described a possible $500 million budget hole by the end of the fiscal year, much of it caused by delaying income tax deadlines. Officials last week announced that collections for April had come in $192 million under projections.
The federal CARES Act provided $150 billion to the states, but the U.S. Department of Treasury last month interpreted it to be only for the direct expenses of coronavirus response or secondary expenses of supporting businesses and individual suffering economic effects of the response.
“Funds may not be used to fill shortfalls in government revenue to cover expenditures that would not otherwise qualify under the statute,” wrote the treasury department.
Instead, the treasury department concluded, funds may be used only for direct expenses for coronavirus response or “second-order effects of the emergency, such as by providing economic support to those suffering from employment or business interruptions.”
This past week, Justice several times publicly discussed the need for additional federal guidance about how the money may be used. He said that guidance may come as Congress reconvenes.
“I really believe that we’re going to learn real live rules that we can act on a little bit prior to there and very much after that,” he said.
Justice said each day or every other day, he meets with state revenue officials. Justice said he is also having discussions with consultants, specifically mentioning BDO, which is an international accounting and tax advisory network, “or whoever it may be.”
“I am trying to ensure that our state is backfilled lost dollars that we lost because of this terrible tragedy,” he said. “I am trying to keep our state from taking a blow, a cannonball to the stomach, that at the end of the day would reel this state into a very, very difficult position.”
Justice acknowledged that relief funding is also needed for counties, cities, hospitals, higher education institutions and other entities.
The governor used an extended metaphor to describe the layers of financial need.
“What we’ve got to do is, we’ve got to ensure first and foremost that the mother ship stays stable. The mother ship is the state,” Justice said. “The state has got to stay stable before we branch off in a lot of directions and then we sink the mother ship and then the tentacles die.”
Manchin, D-W.Va., said 40 percent to 50 percent of the federal relief money should help the state. The remainder, he said, should flow to counties, cities and other entities with financial strain.
“Let’s make sure all 55 counties, the other $600 million, are being treated fairly and equally, every municipality to help their people get back,” said Manchin,
Manchin said he is in favor of another large federal allocation to states.
“A lot of states have used most of their money that were hit hard by the coronavirus,” he said.
State Delegate Mick Bates, D-Raleigh, said he agrees with Manchin.
“I can guarantee if he was governor this money wouldn’t be sitting in a bank account,” Bates said in a telephone interview.
“Push some of this out the door. At least cover the costs being incurred by all these entities. At least send dollars to them so they can be made whole. There are mechanisms already in place to do that.”
Asked about whether the state should be cautious about following federal rules, Bates said there are pressing needs right now.
“I just don’t get it. I don’t understand the logic of waiting and waiting and waiting for some additional guidance,” said Bates, the lead Democrat on West Virginia’s House Finance Committee.
“We’ve spent money the wrong way in this state plenty of times before. Interpret the guidance, make your best decisions, spend the money and in the event that you misinterpreted the guidance then correct the error.”
State Senator John Unger, D-Berkeley, said a portion of the federal relief should go toward bolstering the available coronavirus testing in West Virginia.
“The $1.25 billion from the federal government was meant to be spent on this immediate response to the covid-19 pandemic,” Unger, who serves on the state Senate Finance Committee, stated Friday.
“However, it just sits in a bank, not being spent, in hopes the state can get permission to spend it to backfill state government shortfalls instead of using it for the intended purpose for public health and economic protections for the people as we open up. Our state must stop hoarding it.”