04.27.20

As Trump Seeks to Limit Governors’ Ability to Spend COVID-19 Relief Funds, Baldwin and Senate Democrats Urge Administration to Remove Needless Restrictions

Trump administration tries to interpret law in a way that would impose overly restrictive limits on states that could trigger a vicious cycle: forcing cuts to public services & leading to layoffs of public employees on front lines of COVID-19 response

WASHINGTON, D.C. – U.S. Senator Tammy Baldwin (D-WI) joined her colleagues, led by Senator Jack Reed (D-RI), in responding to the Trump administration’s needless bureaucratic restrictions on how governors can distribute Coronavirus Relief Funds to their states, sending a letter to Treasury Secretary Steven Mnuchin calling on him to revise initial guidelines so that they can provide essential public services amid the COVID-19 global pandemic, as the law intends.

Congress unanimously passed the Coronavirus Aid, Relief, and Economic Security (CARES) Act, including a $150 billion Coronavirus Relief Fund for states, to help provide a measure of certainty and economic stability to all fifty states. But one month later, President Trump has reignited feuds with governors and is now trying to impose overly restrictive regulations that were not part of the bipartisan CARES Act. This could cripple each state’s ability to respond and recover.

The Coronavirus Relief Funds may be utilized by states and local governments to help with urgent needs and cope with the public health and economic impact of the novel coronavirus (COVID-19). Under the law, states may use the federal funding for costs related to the COVID-19 public health emergency incurred between March 1 and December 30, 2020. This federal funding is provided to relieve pressure on state budgets and meant to ensure they can maintain public services.

But when U.S. Treasury issued its initial Coronavirus Relief Fund guidance for State, Territorial, Local, and Tribal Governments, it included limiting language not found in the law.

Now, 46 Democratic Senators are calling on the Trump administration to reverse course and revise the overly restrictive guidance. In their letter to Secretary Mnuchin, the Senators urged the Trump administration: “to follow the law as written instead of creating more bureaucratic red tape in the middle of a public health emergency and ensuing economic crisis. Of all the regulations that this Administration seeks to cut, it should start with this one.”

State and local governments are being pushed to the financial brink by skyrocketing costs and plunging revenue, and they need stability in order to have a chance at recovery. Senate Democrats resoundingly reject Senate Republican Majority Leader McConnell’s (R-KY) suggestion that states go into bankruptcy as a preferable alternative to additional flexible federal assistance. The Democratic Senators say this pandemic is a truly national emergency that requires a bipartisan national response and strong support from the federal government.

The Democratic Senators note that the new limits the Trump administration is seeking to impose on states is counterproductive and creates needless obstacles: “In the midst of an economic collapse, the intent of the entire CARES Act is to provide flexible help to a wide range of Americans. To prevent the flexible use of these relief funds is a choice that is neither required nor intended by law,” the Senators wrote.

The Senators also write “that the Treasury Department should publicly confirm that states, Tribes and localities may use these funds to maintain their essential services as the CARES Act clearly permits.”

If the Trump administration insists on imposing its overly restrictive interpretation of the law, it could severely limit states’ abilities to respond and recover, forcing states and communities to cut public services, and lead to layoffs of public employees on the front lines of COVID-19 response.

In addition to Senators Baldwin and Reed, the letter was signed by Senators Michael Bennet (D-CO), Richard Blumenthal (D-CT), Cory Booker (D-NJ), Sherrod Brown (D-OH), Ben Cardin (D-MD), Tom Carper (D-DE), Bob Casey (D-PA), Chris Coons (D-DE), Catherine Cortez Masto (D-NV), Tammy Duckworth (D-IL), Dick Durbin (D-IL), Dianne Feinstein (D-CA), Kirstin Gillibrand (D-NY), Kamala Harris (D-CA), Maggie Hassan (D-NH), Martin Heinrich (D-NM), Mazie Hirono (D-HI), Doug Jones (D-AL), Tim Kaine (D-VA), Angus King (I-ME), Amy Klobuchar (D-MN), Patrick Leahy (D-VT), Joe Manchin (D-WV), Ed Markey (D-MA), Bob Menendez (D-NJ), Jeff Merkley (D-OR), Chris Murphy (D-CT), Patty Murray (D-WA), Gary Peters (D-MI), Jacky Rosen (D-NV), Bernie Sanders (I-VT), Brian Schatz (D-HI), Chuck Schumer (D-NY), Jeanne Shaheen (D-NH), Kyrsten Sinema (D-AZ), Tina Smith (D-MN), Debbie Stabenow (D-MI), Jon Tester (D-MT), Tom Udall (D-NM), Chris Van Hollen (D-MD), Mark Warner (D-VA), Elizabeth Warren (D-MA), Sheldon Whitehouse (D-RI), and Ron Wyden (D-OR).

Full text of the letter is below and available here.

 

April 26, 2020

The Honorable Steven T. Mnuchin
Secretary
Department of the Treasury
1500 Pennsylvania Avenue, N.W.
Washington, D.C. 20220

Dear Secretary Mnuchin:

We write regarding the Treasury Department’s Coronavirus Relief Fund Guidance to urge you to promptly revise your interpretation so states, Tribal, and local governments can use these funds to prevent further economic damage.

While the term “lost revenue” does not appear specifically in Title V of the Coronavirus Aid, Relief and Economic Security (CARES) Act, a plain text reading of the law leads to the logical conclusion that lost or delayed revenues are a direct cost created by the coronavirus that were never accounted for in any budget.  Therefore, we believe it is fully within your authority and the intent of the CARES Act that these funds may be used to replace lost or delayed tax revenues and maintain public services.  In the midst of an economic collapse, the intent of the entire CARES Act is to provide flexible help to a wide range of Americans.  To prevent the flexible use of these relief funds is a choice that is neither required nor intended by law.

We are not alone in this view.  Governors and Senators from both sides of the aisle have set aside ideology and urged you to follow the law as written instead of creating more bureaucratic red tape in the middle of a public health emergency and ensuing economic crisis. Of all the regulations that this Administration seeks to cut, it should start with this one.

We all have a common interest in preserving as much of our economy as possible so that we are well positioned for a robust recovery.  A critical component of our economy is our state, Tribal, and local governments as they not only serve as customers for our local businesses, but also provide the essential services, such as effective law enforcement, public infrastructure, a strong education system, and other necessary conditions that provide the business certainty that make our country attractive to businesses and investors throughout the world.  We should preserve and maintain this critical comparative advantage.

To avoid distracting states, Tribes, and localities from meeting the crisis at hand, the Treasury Department should publicly confirm that states, Tribes and localities may use these funds to maintain their essential services as the CARES Act clearly permits.

We thank you for your consideration and urge you to act promptly.

Sincerely,