RICHMOND — Virginia plans to send $650 million in federal financial aid to local governments to pay the costs of responding to the coronavirus pandemic that has crippled the economy and collection of tax revenues essential to delivering public services.
Gov. Ralph Northam informed local government of the state’s plan in a conference call on Friday afternoon, but he has made no decision about the remaining $650 million allocated — but not guaranteed — to local governments under the $2.2 trillion CARES Act signed into law on March 27.
At the same time, Northam’s administration has given state agencies until May 18 to submit requests for use of the $1.8 billion in federal aid sent to Virginia under the CARES Act.
The state’s priorities for the money are clear — expanding testing for the COVID-19 virus and more public health staff to trace the personal contacts of those who test positive for the disease.
“Testing and contact tracing are going to be reserved right off the top,” Secretary of Finance Aubrey Layne said Monday. “That’s going to be the No. 1 priority because that’s the key to both the health and economic situation going forward.”
The administration plans to formally notify localities on Tuesday about how it plans to distribute the money among them. It also will ask each locality to certify that it understands and accepts the rules for using the money to cover only the expenses allowed under the federal law.
“That was the big thing there, making sure we had some accountability measure in place,” House Appropriations Chairman Luke Torian, D-Prince William, said Monday.
“All of this is new to us,” Torian said. “We’re glad we’re able to get some money to the localities. A lot of them are hurting right now.”
The Virginia Municipal League and Virginia Association of Counties welcome the initial shipment of federal aid, but they remain keenly interested in how the state will distribute the rest of the money initially identified for local governments in the federal law. “What happens to the other half — designated under the federal CARES Act for localities — will be decided at some future date,” said Neal Menkes, a veteran fiscal analyst and consultant to the municipal league.
Dean Lynch, executive director of the Virginia Association of Counties, said the local government organizations offered to form a task force to help the administration in working with localities to handle the public health emergency and protect their finances.
“We’re hopeful we can be of assistance,” Lynch said.
Sen. Janet Howell, D-Fairfax, chairwoman of the Senate Finance & Appropriations Committee, supports the governor’s plan to distribute the first pot of federal aid on the basis of population.
“It’s a wise and cautious approach,” she said in an interview Monday.
Howell said the next step is likely to take a different approach by overlaying aid to localities that have been hit hardest by the coronavirus, but that is not likely to happen until the General Assembly meets in special session to revise the two-year state budget.
“That is not something we will be able to even think about until the end of summer,” she said of the plan to distribute the remaining federal aid to localities.
Northam expects to call the legislature into session by August or September to revise state revenue expectations and the two-year budget that it adopted on March 12, the same day he declared the public health emergency. The assembly agreed last month to suspend $2 billion in new spending that it had included in the budget when the state’s revenues and economy were growing.
“Going through the reforecast is going to help us determine what the next fiscal year is going to look like and what we’re up against,” Torian said.
The CARES Act does not guarantee financial aid to localities of fewer than 500,000 people. In Virginia the guarantee applies only to Fairfax County because of its population of 1.2 million. Fairfax, leading the state in COVID-109 cases and deaths, already has received $200 million in direct aid under the law, leaving about $1.3 billion initially designated for the state to distribute to local governments as it sees fit.
It’s up to counties to distribute money they receive to incorporated towns within their borders.
The law imposes tight constraints on how state and local governments can spend the money, which the state must enforce to ensure that the money is used properly to cover eligible expenses incurred between March 1 and Dec. 30. Neither the state nor localities can use the money to replace tax revenues lost because of the economic shutdown in response to the public health crisis, even though they face potentially deep program cuts and layoffs if they cannot bolster their budgets.
Source: www.dailyprogress.com
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