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Raimondo, Reed say she can allocate $1.25B without lawmakers’ OK

Politics

PROVIDENCE, R.I. (WPRI) — On the eve of Rhode Island lawmakers’ first hearing to scrutinize her coronavirus emergency spending, Gov. Gina Raimondo planted a flag to insist she has the right to allocate the entire $1.25 billion pool of emergency funding provided by Congress last month.

The $2.2 trillion federal CARES Act includes a new Coronavirus Relief Fund, negotiated in part by U.S. Sen. Jack Reed, that provides $150 billion to help states cover the costs of dealing with COVID-19. Reed helped include a so-called “small-state minimum” in the statute so Rhode Island would get $1.25 billion from the fund.

That money has now been transferred into the state’s bank account by the U.S. Treasury Department, but the political fight over spending it is clearly just ramping up.

General Assembly leaders — who have stayed almost entirely on the sidelines of the crisis since Rhode Island’s first coronavirus case was confirmed March 1 — last week announced creation of a new Joint Legislative COVID-19 Emergency Spending Task Force to scrutinize the Raimondo administration’s spending of those and other funds. It will hold its first meeting Thursday.

On Wednesday morning, Raimondo’s office held a conference call with all four members of Rhode Island’s congressional delegation — Reed and U.S. Sen. Sheldon Whitehouse, plus Congressmen David Cicilline and Jim Langevin — to highlight their advocacy on Rhode Island’s behalf in Washington and to start discussing how the $1.25 billion will be spent. All five are Democrats.

Asked by WPRI 12 what role she sees for the General Assembly in determining how the money gets spent, Raimondo noted that U.S. Treasury guidance says none of the $1.25 billion can be used to “backfill” the state’s widening budget hole, only for coronavirus-related spending. At last check, the administration had already committed to roughly $150 million in emergency COVID-19 expenses.

“As you heard from Senator Reed and Congressman Cicilline, the intention of the $1.25 billion is to be spent or allocated at the governor’s discretion according to the emergency needs of the crisis,” she said. “So these monies won’t go through a typical appropriation process.” She said she hopes that potential future federal relief money for states will be available to be applied to regular costs.

“All of that being said, I’ve talked in the past few days to the Senate president, the speaker, and obviously we’ll seek their input as I look to allocate these funds,” she said.

Reed added, “As someone who was involved in drafting this provision, the intention throughout was for these funds to be used by the governors to respond to an emergency, that they would be under the discretion of the governor — not just Governor Raimondo but every governor in the United States. Not only would they have the discretion to spend it, they’d also have the responsibility to spend it wisely and according to the statute.”

The actual text of the CARES Act says states can use the Coronavirus Relief Fund “only” to cover costs that were “necessary expenditures incurred due to the public health emergency with respect to the Coronavirus Disease 2019 (COVID-19); were not accounted for in the budget most recently approved as of the date of enactment of this section for the State or government; and were incurred during the period that begins on March 1, 2020, and ends on December 30, 2020.”

The Coronavirus Relief Fund section does not explicitly mention either governors or legislatures.

Spokespersons for House Speaker Nicholas Mattiello and Senate President Dominick Ruggerio declined to comment, but it’s unlikely legislative leaders will easily acquiesce to giving the governor unilateral power over such an enormous amount of money — equivalent to over a tenth of the annual state budget.

“While allowing governors to spend the CARES Act money unilaterally has its benefits, including flexibility, it raises important questions about oversight,” John Marion, executive director of Common Cause Rhode Island, said in an email.

“While there is oversight within the various federal offices of inspectors general, Rhode Island has long lacked necessary oversight capacity,” Marion continued. “Other state legislatures have been holding oversight hearings for weeks, and have significant staff resources that are being utilized for policing the use of the CARES Act money.”

Reed reiterated his position, shared by a number of Democrats, that Treasury should give states more flexibility to apply Coronavirus Relief Fund money to the sharp drop in revenue that has thrown their budgets out of balance, noting that the financial problems are coronavirus-related. But Treasury Secretary Stephen Mnuchin has so far indicated previously budgeted items cannot be covered by it.

The $1.25 billion is just one stream of federal cash — though by far the single largest — flowing into Rhode Island right now through the various coronavirus spending bills that have passed in recent weeks. An analysis by WPRI 12 found over $1.6 billion in new federal funding has been announced since March 1, a figure that doesn’t include $540 million in rebate checks, unemployment benefits or enhanced matching funds for Medicaid.

Outside the $1.25 billion from the Coronavirus Relief Fund, the largest pots of federal money for Rhode Island so far include $115 million for education, $104 million for RIPTA, and $90.5 million for the state’s hospitals. All three allocations were funded under the CARES Act.

During her daily coronavirus briefing later Wednesday, Raimondo spent a significant portion of her remarks starting to lay out her plans for how the state will spend what her administration estimates is roughly $1.57 billion in new federal relief aid that has flowed into the state so far due to COVID-19.

Offering a “very preliminary” look at her priorities for that money, Raimondo said it will be applied toward “very direct costs” of the crisis such as buying personal protective equipment and boosting pay for front-line workers, as well as “secondary effects” including help to industries hit hard by the economic shutdown.

The state plans to create an online portal within a month where residents will be able to see exactly how the money is spent, according to the governor. The federal government will also be requiring monthly reports on how it is used starting this summer.

Whitehouse said the congressional delegation has been consulting with Raimondo regularly to understand how federal money could be most useful to the state as the coronavirus crisis continues.

“It is very helpful to us to understand the state spending plan, because it helps us advocate for Rhode Island in future legislation, knowing what gaps we may need to fill, and where we should put our focus,” he said. “I want to thank the governor for the transparency she is bringing to the state spending plan.”

Ted Nesi (tnesi@wpri.com) is WPRI 12’s politics and business editor and a Target 12 investigative reporter. He is a weekly panelist on Newsmakers and hosts Executive Suite. Follow him on Twitter and Facebook

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