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New Jersey Has Spent Only a Fraction of $2.4B Federal COVID-19 Aid, Legislative Sources Say

Thursday, July 23, 2020  
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Colleen O'Dea - July 23, 2020 - NJ Spotlight

It’s difficult to follow the money, but evidence is that Murphy administration has used less than 3% of state’s allotment

While Gov. Phil Murphy complained Wednesday about the latest federal stimulus proposal from Senate Republicans and its lack of funding for states, New Jersey has spent less than 3% of the almost $2.4 billion it has received from the federal government to cover general needs created by the COVID-19 pandemic.

As of Wednesday, the state had spent $229 million from the Coronavirus Relief Fund (CRF), the federal assistance giving states and local governments the most flexibility to use the money to offset impacts from the novel coronavirus, and allocated another $51 million for spending, according to legislative sources. That leaves almost 97.7% untouched about four months after the state learned how much it would receive.

The state treasurer’s office did not respond to a request for comment about the spending figures.

Last week, Murphy signed a bill that allows the state to borrow up $9.9 billion to cover what he and sponsors say are emergency costs associated with the coronavirus crisis. But speaking on the floor of the state Senate as that house debated the borrowing bill, Sen. Anthony M. Bucco (R-Morris) said, “$2.1 billion of federal CARES Act block grant money sits in treasury accounts today.”

Republicans and some Democrats, as well as numerous groups — including those representing immigrants, businesses and counties — have been calling on the governor to spend this money, and soon, because there are so many needs throughout the state.

“That money should have been out on the street as soon as we got it,” said Assemblyman Hal Wirths (R-Sussex), the Assembly Republicans’ budget officer. “I actually think he is hoarding that money.” Murphy disputed that during a briefing on the viral pandemic last Friday.

Murphy: State still needs guidance from the feds

“The extent to which money is spent is overwhelmingly due to … still needing guidance from the feds on how we can spend it,” he said. “All federal money comes with very strict regulations, and there’s approval processes … We don’t know if any additional federal money is coming.”

The U.S. Treasury department has issued guidance about how funds from the CRF, which was part of the major stimulus bill known as the CARES Act, can be spent. In brief, the money can be used to cover necessary expenditures due to the pandemic that were not already budgeted for and incurred between March 1 and Dec. 30, 2020. The guidance provides examples of permissible spending — such as for coronavirus testing and telemedicine, disinfection and quarantining, and grants to businesses and to county and local governments.

In remarks at his media briefing Wednesday, Murphy said the state received some “flexibility” in spending the $2.4 billion after fighting with the Trump administration for that. But he complained the latest proposal from U.S. Senate Majority Leader Mitch McConnell (R-Kentucky) for a new stimulus bill would allow “zero flexibility” and that New Jersey and other states need more financial help.

“What New Jersey has gotten back is a drop in the bucket compared to our needs,” Murphy said. “Moreover, you would be hard-pressed to find a state that would say differently.”

The state has so far received a total of $5.3 billion from close to 50 separate federal relief programs, a majority of which is earmarked for specific purposes such as K-12 school reimbursements and emergency food assistance. Included in that total is the almost $2.4 billion CRF money from the CARES Act that the state has some leeway in spending.

CRF money was distributed to states and to county and local governments based on population. All government entities with a population of at least 500,000 were eligible for funding. In addition to the $2.39 billion the state received, nine counties — Bergen, Camden, Essex, Hudson, Middlesex, Monmouth, Ocean, Passaic and Union counties — shared another $1.05 billion.

Republican criticism

Some Republicans say they think Murphy is holding tight to that money in the hope a change of heart from the Trump administration will allow him to spend it to make up for lost revenues in the current and next budgets. Although Murphy and other governors have said this is where they most need the money, such spending is expressly prohibited by federal guidelines.

“Funds may not be used to fill shortfalls in government revenue to cover expenditures that would not otherwise qualify under the statute,” according to U.S. Department of the Treasury guidance.

“I think he is just hoping to be able to use that money for the budget,” Wirths said.

A report last month from S&P Global Ratings suggested another reason why the administration may not have spent much CARES Act funding: “This money does not provide state budget relief as it can only be spent for additional coronavirus related expenditures and must be completely spent by Dec. 31, 2020. However, as these funds can be held in the state general fund, they can be co-mingled with other investments and will have the effect of improving cash liquidity, at least until December.”

The Democratic-controlled House of Representatives has passed legislation, known as the HEROES Act, that would provide money to help states ($500 billion) and localities ($375 billion) to close budget gaps. But the Republican-controlled Senate has refused to take up the measure. McConnell discussed his plan for a new stimulus bill earlier this week and while he said it has money for individuals, businesses and schools, it does not have general aid for states.

With restrictions on spending CRF money well-known, lawmakers and various organizations continue to call on Murphy to spend the money.

“The money in that treasury account needs to be put out on the street to do exactly what it was designed to do: Help small businesses and the hospitality industry,” Bucco said of the $2.11 billion in unspent CARES Act funds.

Relief for restaurants proposed

Bucco is a co-sponsor, along with Sen. President Steve Sweeney (D-Gloucester) and others, of a bill (S-2704), introduced last Thursday, that would spend $30 million of CARES Act funding to provide relief to restaurants that had geared up to open indoor dining July 2 only to have Murphy change his mind a few days beforehand and keep indoor dining shut.

Bucco said he hears every day from business and restaurant owners who say they are in dire financial straits and may not be able to survive without help from the state.

Sen. Troy Singleton (D-Burlington) wrote to Murphy and the leaders of both houses of the Legislature in May asking them to use some of the federal stimulus funds to provide “hazard pay bonuses” for essential workers, including grocery store cashiers, chefs, health care workers and others.

“I hope that you will agree that these frontline workers are absolutely deserving of recognition that goes beyond the symbols of community gratitude already shown to them — thank you signs, drive-by parades, and donated meals,” Singleton wrote. “While these gestures are undoubtedly appreciated and significant, the state of New Jersey should properly compensate these heroes financially for their courageous efforts and provide them with a hazard pay bonus.”

Murphy has not been receptive to legislative requests for additional spending related to COVID-19. Since early May, he has vetoed six measures that sought to provide more than $245 million to such diverse interests as the unemployed, health care facilities, food banks, hospitality businesses and renters. In some cases, he said the relief was duplicative of other programs; in others, he said the state could not afford the expenditure.

The New Jersey Association of Counties has been pleading with the governor for months to use CARES Act funds to reimburse the dozen counties that received no direct help from the federal government for the millions they have spent responding to the pandemic. Counties with populations of more than 500,000 got direct federal assistance for testing, personal protective equipment, disinfecting county facilities, collecting and sharing public health data, providing shelter and many other purposes.

Counties clamor for assistance

“Although the United States Department of Treasury authorized states to provide much needed relief for local governing bodies that did not meet the above noted population threshold, the State of New Jersey has yet to release any CRF monies for COVID-19 related expenses,” wrote John Donnadio, the association’s executive director, in a July 10 letter to Murphy. “NJAC is once again urging Governor Murphy to release this critical funding in a timely manner to help alleviate the daunting fiscal burden imposed on local governing bodies and property taxpayers.”

A May 22 report from the state treasurer on the state’s finances contains a preliminary plan for spending CRF money. That includes $250 million to reimburse local and county governments for pandemic-related costs for which no other funding was available. It “may prioritize” giving money to the 12 counties that did not get any direct federal stimulus funding. But it is unclear when, or if, Murphy will make that money available: The introduction to the proposal notes that it is only a “framework” and could change.

It is hard to know exactly how the administration has spent any of the money it has gotten so far from the federal government to deal with the viral outbreak. The administration currently has no central source for income and spending data related to COVID-19, but Murphy announced on Friday plans to set up a website to “track” the progress of the new Governor’s Disaster Recovery Office, which will coordinate all recovery programs funded through federal sources.

An NJ Spotlight analysis of available public information — mostly press releases or contracts obtained through the state’s open records law — found that about $406 million has been spent to date on items ranging from a special voting app for the disabled ($89,000) to emergency food assistance to school children and families receiving Supplemental Nutrition Assistance Program (SNAP) support (at least $143 million as of early July). The total also includes money spent on personal protective equipment, lawyers and consultants and a database to assist with contact tracing. It is likely that the state has spent, or at least allocated, significantly more than that.

It is unclear whether some of this is being funded with CRF dollars or from other, earmarked grants.

As far as money coming specifically from the CRF is concerned, Murphy has so far announced two fairly large expenditures. Two months ago, he announced plans to spend $50 million for small business grants and loans. And last Thursday he said he will commit up to $50 million — along with another $10 million from funding targeted for school relief — to help schools improve internet connectivity and provide digital devices to all students who need them.


 

 


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