Gov. Mark Gordon last week defended his administration’s progress toward distributing $1.25 billion in federal CARES Act money provided to the state.
“There is kind of a narrative going on that the money is’t going out fast enough,” Gordon said Wednesday during remarks to the Cheyenne Rotary Club. His administration had sent $300 million “out the door,” he said, with much more on the way.
Gordon’s figure, however, applies to money that has been allocated to agencies — not money that has been spent. The sum total of checks that have been cut is less than half that amount, according to figures compiled from the state auditor’s office and other agencies.
In interviews last week, lawmakers, the governor’s staff and other officials cited a variety of reasons that only a small portion of the $1.25 billion has been spent, including strategic pacing, excessive process hurdles and federal uncertainty.
Congress voted in March to inject $2.2 trillion into American businesses and governments as the economy teetered and healthcare providers and municipal systems at every level scrambled to respond to COVID-19. More than $1 billion went directly to businesses, hospitals and other institutions in Wyoming, along with supplemental unemployment benefits and stimulus checks to households.
Another $1.25 billion was handed to the state to distribute as it saw fit. The Legislature met in May to appropriate the money to the governor, ultimately granting him wide latitude on how to spend it.
Though Gordon and his advisors say the administration has plans to spend all the money — which comes to around $2,000 per Wyoming resident — some lawmakers worry it isn’t hitting the ground fast enough, or that the state won’t spend it all by the end-of-the-year deadline set by the feds.
What has been spent
The amount of money spent by the state — whether through grants to businesses, expenditures by agencies on testing and tracing supplies or in response to a changed work environment — was close to $137 million by the end of last week, according to State Auditor Kristi Racines. By that measure, the state has only spent around 10% of its CARES money more than two months after the special session and four months after the federal act was signed into law.
Of that, the vast majority was spent through a single business relief program.
The Wyoming Business Council distributed $98.4 million to businesses through a program called the Interruption Fund, the first of three distributions the business council plans. The council is preparing to begin distributing hundreds of millions more in relief soon, including to nonprofit businesses.
On top of the business money, the Department of Health has spent $8.2 million, the judicial branch has spent $1.4 million and several other agencies have spent amounts in the hundreds of thousands of dollars, Racines said.
Even the $137 million figure inflates the amount of CARES Act money that has truly been spent. The figure includes $15 million to the Wyoming Community Development Association and $13.4 million to the University of Wyoming. Those two entities keep their own books, the auditor said, and her accounting indicates only that they received the money from the state, not that they had spent it.
Indeed, the WCDA had only spent $341,550 of the $15 million as of Friday afternoon, Deputy Executive Director Lesli Wright said. Lawmakers gave the agency the money to provide emergency assistance to renters and homeowners unable to make rent and mortgage payments.
AT UW, “costs/expenditures are happening by the day” as the university prepares for students’ return, spokesperson Chad Baldwin wrote in an email. He was unable to say how much had been spent to date, he wrote.
The checks for some other recent grant awards simply haven’t been cut yet, Racines said, like a number of awards to hospitals the State Land and Investment Board approved on July 16. The SLIB board meets again on August 6, and will consider applications from hospital districts and local governments for relief totaling more than $109 million.
Just looking at the dollars paid out doesn’t capture the picture of a strategic disbursement of funds by the governor’s office, Gordon’s policy advisor Renny MacKay said.
Gordon’s $300 million figure included allotments of $7 million to the Judiciary Branch, $5 million for supplies to reopen state offices, $50 million for K-12 education, and $5 million to help local tourism, MacKay said, to name a few.
The sum also included $40 million for the Department of Health for testing and contract tracing. An additional $20 million was allocated for those purposes last week.
The DOH will spend around $40 million on testing and other supplies in the next few weeks, MacKay said. More money will be allocated as needed to maintain contact tracing and testing well into the future, MacKay said, as the virus shows no signs of abating.
“That is where we definitely want to have money at the ready,” MacKay said.
The executive branch is pursuing a “thoughtful response to this crisis,” MacKay said, and “that involves keeping some money back.”
A summary of the allocations provided to lawmakers by the Legislative Service Office fiscal staff Friday also noted $50 million for a program to expand broadband connectivity around the state and $4.1 million for Wyoming’s air service programs. Wyoming has capacity purchase agreements with some airlines — putting the state on the hook to pay for some seats in order to keep planes flying to the state’s small airports.
As for broadband, expanding good connectivity to rural areas has been a goal of state policy makers for sometime. The COVID-19 response, which has moved so much of American life online, has made connectivity even more essential.
The executive branch has a plan to spend nearly all the money, Gordon said. Congress put a deadline on the end of 2020 for states to spend the money or return it. The funds also cannot be used for state expenses budgeted before the pandemic began, meaning Wyoming can’t use it to shore up its tottering revenue streams.
In his remarks to the Rotary, Gordon outlined eventual destinations for the vast majority of the money that added up to around $1.16 billion. He ran through a list of “approximate targets” that included a total of $325 million for business and economic relief programs, up to $100 million for COVID-19 testing and contract tracing programs and $300 million for local governments, to name just a few of the big ticket items.
“If you’re hearing stories about ‘how are we going to spend this cash?,’ just keep that in mind,” Gordon said.
Audits and hurdles
Spending has been slowed by caution over following CARES Act rules, officials said, or in some cases, by the restrictions Wyoming has placed on the money.
The WCDA’s rent and mortgage assistance program, for example, has seen less demand than expected, with only 551 applicants for the relief as of Friday. Part of the low participation may come from a copay requirement the state inserted into the program’s rules.
The program requires a person seeking the relief to pay in 30% of their monthly income. With increased unemployment payments, the copay can be around $700 for many people who are out of work. The high payment — for many equivalent to a rent payment — has discouraged applicants, Deputy Director Wright said. The WCDA is rewriting the rules of the program to lower the copay, she said.
More broadly, spending caution from the Gordon administration spawns from concerns about a federal spending audit the governor and officials in his administration describe as inevitable.
“We’re all aware that audits are going to be coming,” MacKay said. “This isn’t just pouring money out the doors. This is … doing this responsibly.”
Gordon believes the state could be an audit target because it received so much money per capita, he said Wednesday.
One lawmaker suggested the governor is being more cautious than the Legislature intended when it handed him the spending reins.
“The governor hasn’t been really aggressive,” for example, when it came to allocating money for the state’s hospitals to make pandemic-related improvements, Senate Appropriations Chairman Eli Bebout said.
Audit concerns are legitimate but shouldn’t be overblown, he said.
“Down the road are [the feds] going to take that money back and shut that hospital? No way,” Bebout said. “I just don’t see that happening. I’m willing to take that risk as a member of the Legislature.”
The Speaker of the House agreed. “I’m not worried about [audits] one bit,” he said. “I’m just not. I want to get it out to our people, our communities, our businesses and our institutions,” Steve Harshman (R-Casper) said.
Another lawmaker, however, said the Legislature played a role in slowing the process. Lawmakers passed a statute that requires the Wyoming Attorney General to review CARES Act spending proposals — largely with future audits in mind. They also made sure many of the applications would be routed through the State Land and Investment Board, made up of the governor, auditor, treasurer, secretary of state and superintendent of public instruction. The board only meets once a month.
“Am I a bit frustrated at the pace of the spend?” House Speaker Pro Tempore Albert Sommers (R-Pinedale) asked. “Yea. I would like to see more of it going out faster and get more projects done. At the same time we wrote a bill that has to be followed.”
Even while scrambling to get money moving, Wyoming’s conservative Legislature helped erect the hurdles to distribution, one longtime statehouse observer suggested.
“In their attempt to be really cautious and conservative and asserting themselves as the fiscal authority holding the pursestrings of the state, maybe they own a piece of it,” Marguerite Herman, legislative liaison for the League of Women Voters of Wyoming, said.
What is the Legislature doing?
Despite such concerns, the Legislature has for now chosen not to convene again. At the end of the May special session prompted by the pandemic, leading lawmakers said they would be back again by the end of the July. They subsequently abandoned that proposal and have announced no firm plans for another session. Some lawmakers say one is likely for the fall.
“We’ll probably come back together,” Harshman said.
“When we first were getting together we thought this money was going to go out really fast,” Harshman said. “I think we thought ‘Geez, he’ll spend a billion in June.’”
The Gordon administration, and lawmakers, are also waiting to see what the federal government does next.
Congress is back in session, and is considering both new stimulus money for state governments and tinkering with the rules attached to the CARES Act. A bill passed by the Republican-controlled Senate included extending the end of year deadline. Negotiations between House Democrats, Senate Republicans and the White House are ongoing and seem for the moment embittered.
“The biggest challenge has been federal guidance and waiting for how that changes,” MacKay said.
Legislative committees continue to draft bills in response to the crisis. Many of those measures would develop new avenues for spending the CARES Act money.
The Labor, Health and Social Services, for example, passed a bill to allocate $15 million in CARES Act to the Department of Health for direct distribution to rural and community health clinics. The committee hoped to take some smaller CARES Act distributions for healthcare “off SLIB’s plate,” House Labor Committee Chairwoman Sue Wilson (R-Cheyenne) said, and “route [them] through an agency that is already familiar with the people and the programs.”
At the time, the committee anticipated another session, and a chance to tweak the CARES Act payments, was just around the corner. “We were all ready to go,” Wilson said. “We said ‘we want to run these,’ but now we don’t have a session to run them in.”
The Wyoming Tomorrow Task Force, which Harshman sits on, endorsed a measure to spend $116 million helping UW and community college students with tuition payments. Enrollment has dropped at Wyoming’s institutions of higher learning as students are wary about returning to campuses.
Harshman is optimistic Gordon will take up the measure without the Legislature passing it into law, he said. But colleges begin in just a few weeks, he noted, meaning the executive branch will have to act quickly.
“I’m looking at the calendar and going ‘well, we gotta get going,’” he said.