Looming deadline for CARES Act money sparks debate between Northam and General Assembly

Looming deadline for CARES Act money sparks debate between Northam and General Assembly
Gov. Ralph Northam speaks at a press conference in August. (Source: (Ned Oliver/Virginia Mercury))

How Virginia spends remaining coronavirus relief funds provided through the federal CARES Act has become a point of contention between Gov. Ralph Northam and the General Assembly — now in the final stretch of finalizing a two-year budget plan amid a special session that’s lasted for nearly two months.

Looming in the minds of many legislators is a Dec. 30 deadline set out in the federal stimulus bill — the date by which states are expected to spend the money they received. For months, state governments, including Virginia’s, held out hope that Congress might pass another aid package that would extend the deadline or give them more flexibility in how to spend the money, which can’t be used to cover revenue losses.

Those hopes were largely quashed Tuesday with a series of tweets from President Donald Trump, announcing he was putting a stop to negotiations until after the November election. Trump later called on Congress to pass relief for airlines and small businesses, among other stimulus funds, but the erratic messaging from the White House sealed the sense, for many lawmakers, that additional federal aid won’t be coming anytime soon.

“That Dec. 30 deadline is really solid now that Trump’s pulled out of the talks,” said Del. Mark Sickles, D-Fairfax, a member of the Virginia House Appropriations committee. “So, making sure that all these relief funds can be used for useful, legitimate purposes is really key.”

But right now, there’s disagreement between the governor, who can veto or request amendments to the final budget agreement, and General Assembly lawmakers over how remaining CARES Act funding should be allocated. At the beginning of the special session, the administration had left a little more than $1 billion of federal funding unallotted — a point of frustration both for many legislators and people across Virginia who are struggling amid the ongoing COVID-19 pandemic, Sickles said.

On Wednesday and Thursday, as House and Senate conferees continued budget negotiations, the Northam administration made a flurry of new announcements on CARES Act spending, including $220 million on K-12 education, $30 million to fast-track broadband projects and $12 million in additional funding for a rent and mortgage relief program first announced in June.

Despite the spending announcements, Virginia still has about $700 million in remaining federal funding and, as of Thursday, 84 days left to find a use for it. It’s money that both the House and Senate budgets propose spending on specific line items, such as unemployment insurance and a utility debt forgiveness fund in the House spending plan — which would leave a little more than $110 million unallocated — and support for tourism and recreation industries in the Senate’s.

But in a Wednesday letter to General Assembly leaders and the chairs of both budget committees, Northam indicated he might not sign off on a spending plan that left the administration less flexibility to administer the money.

“An emergency response needs less bureaucracy, not more,” he wrote. “As an Army veteran, I know that wars fought by committee are losing battles.”

Virginia Finance Secretary Aubrey Layne said there’s several reasons why the administration wants to avoid what he described as “authorizing” the remaining federal funding for specific purchases or programs. One is that while the CARES Act only covers COVID-specific expenses incurred from March to December, he said the federal government gives states an extra month to spend the money on any costs that arise from their response to the pandemic.

“The expenditures have to be incurred by Dec. 30,” Layne added. “But you can pay for them up to 30 days after that. So, we know right now that agencies are incurring additional costs related to COVID-19, but we don’t have to pay for those now because they can be reimbursed after the deadline when we know the actual amounts.”