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State and local governments looking for ways to spend CARES funds before next stimulus

The $2 trillion CARES Act was passed back in March, with almost $150 billion allocated to state and local governments. With any unspent money set to return to the US Treasury at the end of the year, states are working to find ways to use their funds (https://www.foxnews.com/politics/congress-coronavirus-stimulus-state-local-governments).


The stipulations for the use of this money are listed on the US Treasury website and read:


The CARES Act requires that the payments from the Coronavirus Relief Fund only be used to cover expenses that—

1. are necessary expenditures incurred due to the public health emergency with respect to the Coronavirus Disease 2019 (COVID–19);

2. were not accounted for in the budget most recently approved as of March 27, 2020 (the date of enactment of the CARES Act) for the State or government; and

3. were incurred during the period that begins on March 1, 2020, and ends on December 30, 2020.

(courtesy of https://home.treasury.gov/policy-issues/cares/state-and-local-governments)


Some states have used the funds appropriately, however others have taken a looser understanding of the guidelines in order to fund specific programs and initiatives. Michigan Gov. Gretchen Whitmer is offering free college to over 600,000 essential workers. Mayor Kirk Caldwell of Honolulu is hiring 15 community relations specialists, costing over $600,000. St. Paul Mayor Melvin Carter is using $300,000 to set up a guaranteed income program for low-income families.


While many of the programs are well intentioned, these state and local governments could face litigation from the US Treasury if it is determined that their spending is not in line with the regulations. Sen. Rick Scott (R-FL) has been critical of this spending. His office released the following statement: "Senator Scott supports using CARES Act funding for its intended purpose to help those struggling due to the coronavirus. He does not support using funds intended for the coronavirus to bail out the poorly-managed budgets and pension plans of liberal states." Some Democrats have also been critical, citing the potential cost to taxpayers if the Treasury pursues legal action. Analysts have warned that this increased spending could lead to higher taxes as funds run out. If a new relief bill is passed will the Treasury crack down or will we see even more spending like this? Is this spending controversial, or should the states be given more autonomy to support their residents as they see fit?

Image Credit: Michigan Office of the Governor via AP

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