Treasury Department: States, local governments spend only 25 percent of CARES Act subsidies


(The Center Square) – — As deliberations continue in Congress over how to allocate another $1 trillion worth of stimulus money, governors and mayors say they need more than the $139 billion already allocated to their states in March to cover revenue shortfalls.

A total of $150 billion was allocated to help state, local and tribal governments with specific COVID-19 response programs.

But according to a new report published by the U.S. Treasury Department’s Office of Inspector General, states have spent only 25 percent, or roughly $34 billion of $139 billion allocated to states through the CARES Act.

The National Governor’s Association says states need an additional $500 billion, and have already allocated roughly 74 percent of CARES Act funding.

The U.S. Conference of Mayors argues cities need an additional $250 billion to cover their budget shortfalls.

Demand for more federal money from Congressional Democrats includes another $915 billion for states and cities, a total higher than these groups’ combined requests.

The National Conference of State Legislatures also argues that states need more money. In an appeal to Congress and the White House, it argued, “The economic impact of the coronavirus recession varies by state. However, every state is coping with revenue shortfalls and more than half the states, from all parts of the nation, are looking at severe budget problems that will certainly lead to dramatic cuts in critical services.”

According to the Treasury Department, municipalities and cities with populations of 500,000 or more were eligible to receive direct federal funding.

The Treasury report is based on data that was self-reported by states and cities, reflecting money spent between March and June 30.

Of states and cities that spent the majority of their allocated funds, it found that California had used the most – 75 percent of its $15.3 billion worth of federal COVID-19 funds. Other top spenders are Colorado, which has spent 56 percent of its $2.2 billion; New York, 53 percent of its $7.5 billion; West Virginia, 49 percent of its $1.25 billion; Iowa, 46 percent of its $1.25 billion; and Maryland, 43 percent of it $2.3 billion.

Several cities spent half or all of the money they received in three months. Nassau County, New York, spent the most – 100 percent of its funding; followed by New York City (99 percent); Las Vegas (93 percent); Detroit (90 percent); Sacramento County (82 percent); San Francisco (65 percent); Phoenix (58 percent); and Los Angeles (50 percent).

CARES Act funding could only be used for COVID-19-related expenses, not toward budget holes or lost revenue.

Senate Republicans argue their newly proposed “HEALS Act” would give states flexibility on how to use the unspent COVID-19 funding.

“We’re not going to have a no strings attached bailout for states that have longstanding fiscal problems,” Sen. Tom Cotton, R-Ark., told Fox News.

By Bethany Blankley

The Center Square

Bethany Blankley is a contributor to The Center Square

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