Members of Virginia Delegation Urge Treasury to Provide the Commonwealth Flexibility to Use Federal COVID-19 Funds, Help Prevent Budget Cuts to Vital Services
Washington, April 7, 2020
Washington, DC – Today, U.S. Senators Mark R. Warner and Tim Kaine, as well as Representatives Bobby Scott, Gerry Connolly, Don Beyer, A. Donald McEachin, Elaine Luria, Abigail Spanberger, and Jennifer Wexton sent a letter urging Treasury Secretary Steven Mnuchin to provide Virginia maximum flexibility to use funding from the coronavirus economic relief package to help address budget shortfalls and prevent harmful budget cuts to services vital to addressing the economic and health crises.
“We are writing to request that you provide guidance on the State and Local Coronavirus Relief Fund that maximizes the flexibility state and local governments have in utilizing the funds,” the members wrote. “The nation’s governors and mayors are on the frontlines of fighting the COVID-19 pandemic, and are in the best position to know where this funding can be most useful in protecting Americans.”
“Getting the relief funding to state and local governments quickly, and with few restrictions, will allow governors and mayors to best address the crises they are facing,” the members continued.
The full text of the letter can be found here and below.
April 7, 2020
The Honorable Steven Mnuchin
Secretary of the Treasury
U.S. Department of Treasury
1500 Pennsylvania Ave., NW
Washington, D.C. 20220
Dear Secretary Mnuchin,
We are writing to request that you provide guidance on the State and Local Coronavirus Relief Fund that maximizes the flexibility state and local governments have in utilizing the funds. The nation’s governors and mayors are on the frontlines of fighting the COVID-19 pandemic, and are in the best position to know where this funding can be most useful in protecting Americans.
The fund is intended to cover costs that were unbudgeted for and that are necessary expenditures related to COVID-19. Unbudgeted costs include spending needs that have sprouted up related to addressing the health care crisis. The burden on state and local medical systems, emergency systems, and other services has increased tremendously. This funding will provide a crucial lifeline that supports the ramp up in these services.
Unbudgeted costs can also come in the form of unexpected and precipitous revenue declines that would otherwise force budget cuts, thus diminishing necessary services that states and localities are providing to help people during the pandemic. State and local governments rely heavily on sales taxes and user fees, with most people sharply cutting back on spending and transit usage during social distancing, these revenue sources are declining rapidly. The cost of these revenue declines will manifest in constitutionally-required budget cuts to balance budgets. Allowing this to happen will exacerbate both the health and economic crises in this country.
Guidance provided to state and local governments on this fund should be broad. It should allow them to cover both unbudgeted costs that arise from new spending necessary to address COVID-19 and unbudgeted costs that arise from unexpected revenue declines, which would otherwise force cuts to safety net services at a time they are needed the most to respond to COVID-19. The guidance should also give states the flexibility to transfer funds to units of local governments for similar purposes.
Virginia is already facing large revenue shortfalls – with the expectation that revenue may be $1 billion lower than expected in the final quarter of this fiscal year alone. Inhibiting the use of Coronavirus Relief Funds to address revenue shortfalls is likely to lead to cuts in services and programs that otherwise can mitigate the indirect impact of COVID-19 at the state and local level; that will only make the health and economic crises worse. Getting the relief funding to state and local governments quickly, and with few restrictions, will allow governors and mayors to best address the crises they are facing.