Daily Progress: Virginia counties ‘very frustrated’ by lack of state plan for federal aid

DAILY PROGRESS (RICHMOND TIMES-DISPATCH), MICHAEL MARTZ

Rep. Abigail Spanberger, D-7th, is part of a bipartisan congressional quartet calling on leaders of the U.S. House of Representatives to direct financial aid to counties, especially those in rural counties that haven’t benefited from the stimulus package Congress adopted in late March in response to the economic calamity caused by the coronavirus pandemic.

Spanberger said in a letter to House Speaker Nancy Pelosi, a California Democrat, and House Minority Leader Kevin McCarthy, a California Republican, on Friday that smaller, rural counties have been left out of emergency relief efforts to boost state and local governments facing massive budget shortfalls because of the shutdown of businesses and consumer spending to stop the spread of COVID-19.

“Today our county governments are not only dealing with an unprecedented uptick in the demand for essential services but are doing so during an unprecedented economic downturn that has caused considerable hardship and growing shortfalls in tax revenue,” she said in a letter also signed by Reps. Rodney Davis, an Illinois Republican; Peter DeFazio, an Oregon Democrat, and John Katko, a New York Republican.

“These realities place a strain on the budgets of our counties at a time when our constituents need their support the most,” they said.

The $2.2 trillion CARES Act that President Donald Trump signed into law on March 28 includes $150 billion for state and local governments, but it does not allow them to use the money to offset impending shortfalls in tax revenues that threaten to force budget cuts and layoffs the governments contend will further cripple the economy and delay recovery.

Virginia has received $3.1 billion from the U.S. Treasury, which separately sent $200 million to Fairfax County, the only locality in the state that qualified for direct federal aid under a minimum population threshold of 500,000.

“We are particularly concerned that smaller and more rural counties … receive adequate resources to successfully address the needs of their residents,” Spanberger and the other representatives said. “As such, we urge you to disburse funding directly to localities to ensure that these allocations more closely reflect the special role and critical responsibilities of county governments of all sizes during this public health crisis.”

Virginia faces its own projected revenue shortfall of up to $1 billion through the end of the fiscal year on June 30, as well as an additional $1 billion in each of the next two fiscal years.

The state cannot use its estimated $1.8 billion share of the stimulus funding to replace lost budget revenues. Instead, the state must allocate the money for itself and local governments to pay for specific services related to the COVID-19 response, subject to audit by a federal inspector general and potential requirement to repay the money.

“We know they need the money,” Secretary of Finance Aubrey Layne said Friday. “There’s no doubt in my mind they’ve got some qualifying expenses.”

Layne said the federal government apparently will make counties receiving the money responsible for allocating it to towns and other municipalities within their borders.

For example, he said towns within Fairfax, such as Vienna and Herndon, would have to rely on the county’s share of federal funding.

“The counties will have to take care of the towns,” Layne said.

State and local government leaders have called unsuccessfully for greater freedom to use the federal funds to avoid budget cuts and layoffs. They also are hoping for another potential federal funding bill that Pelosi and other House leaders are preparing to help state and local governments with budget shortfalls.

The package is likely to include at least $500 billion, although Pelosi said Thursday that it could be as high as $1 trillion. However, some congressional Republicans say they are reluctant to use federal funds to pay for state and local budget priorities.

“We’re not trying to bail anybody out,” Layne said.

“If they just gave us more flexibility that would change the conversation with our budget,” he said. “If they added to it, that would really change it.”