With $1.3 billion in coronavirus cash left to spend, the Pa. government might be the big winner

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Update, 12:45 p.m.: Pa. lawmakers plan to use remaining $1.3 billion in coronavirus aid to prop up state budget

HARRISBURG — For months, Mark Davis has urged lawmakers to spend $270 million in coronavirus relief dollars to support groups that serve people with autism and intellectual disabilities. Without more aid, he said, providers will be at risk of shutting down for good.

But as lawmakers and Gov. Tom Wolf face a looming deadline to pass a budget for the back half of the fiscal year, Davis and other interest groups are growing worried the remaining $1.3 billion in federal money will instead be spent on propping up the state government.

Representatives for Wolf and Republicans who control the General Assembly were tightlipped Wednesday evening on the ongoing budget negotiations and their plans to use that remaining money. But no one contacted by Spotlight PA ruled out using it to pay for government costs.

“It’s not like I’m blaming anybody,” said Davis, president and CEO of Pennsylvania Advocacy and Resources for Autism and Intellectual Disability. “But I just worry about what position that leaves us in and what position that leaves people with disabilities.”

In May, lawmakers approved a plan to spend about $2.6 billion sent by Congress on nursing home aid, small business grants, and funding for child care providers. But they’ve sat on the remaining $1.3 billion for months, watching to see if Washington would send another federal relief bill or provide more flexibility in how to spend those remaining dollars.

Now, lawmakers are running out of time and facing a Nov. 30 deadline to pass a budget for the next seven months.

The U.S. Treasury has issued guidance saying that states can’t use CARES Act money to make up for lost revenue, and the federal government has already rejected a plan from Pennsylvania lawmakers to use up to $300 million to ensure residents received property tax breaks.

But states have been given broad discretion to use these funds to pick up payroll costs for a range of employees who spend substantial time responding to the pandemic, including for public safety, public health, health care, and human services.

And that’s why lawmakers believe the CARES Act money opens up a range of possibilities for balancing this year’s budget.

“Yes, we believe the guidance from [the] U.S. Treasury allows us to use CARES Act dollars to fund the core functions of government impacted by COVID-19,” said Neal Lesher, a spokesperson for House Appropriations Committee Chairman Stan Saylor (R., York). “It is critical that we are able to continue to fund the front-line workers who have been at the forefront of battling the pandemic.”

Earlier in the week, Lesher said House Republicans planned to pass a budget without tax increases or public borrowing, while also fully funding education and public health and safety.

Jenn Kocher, a spokesperson for Senate Republicans, said Wednesday negotiations continue and many options are on the table.

A spokesperson for Gov. Tom Wolf said the state could use CARES Act money to fund some employee costs. She wouldn’t say whether the governor supported doing so, only that the “administration is working with the General Assembly to complete a balanced budget by the end of November.”

House Democrats contend that the remaining $1.3 billion in CARES dollars should not be used to offset “fixed personnel costs of the state government,” said Megan Augustine, a spokesperson for Rep. Matt Bradford, minority chair of the House Appropriations Committee.

“House Democrats believe we have a basic duty to support Pennsylvanians through the pandemic and to use the Coronavirus Relief Fund (CRF) dollars as they were intended by Congress,” she said.

Senate Democrats have also advocated for using CARES Act money for direct aid, instead of filling budget holes.

The state has faced severe budget challenges. Pennsylvania finished the fiscal year that ended in June with $3.2 billion less in tax collections than expected, as the coronavirus led people to spend and earn less, and lawmakers moved back deadlines for paying taxes.

And even though revenue collections have improved in the months since then as more businesses have reopened, the state’s Independent Fiscal Office recently estimated the state would receive about $600 million less through June 2021 than was estimated before the pandemic began.

Matthew Knittel, the office’s director, said federal stimulus programs have helped boost sales tax revenue. But as those programs end, Knittel warned, that growth is in jeopardy.

But there has been sustained pressure on Wolf and lawmakers to provide more direct assistance to affected groups and industries, rather than use the money to prop up the state’s finances.

“I think every group’s probably trying to get assistance at this point,” said Chuck Moran, executive director of the Pennsylvania Licensed Beverage and Tavern Association. “The thing about this industry, though, is it has been the tip of the spear since day one, and they have sacrificed the most of any industry.”

His group held a rally outside the Capitol on Wednesday asking the General Assembly to bail out the restaurant industry and provide other legislative changes to help restaurants and bars stay in business during COVID-19 mitigation efforts.

“We want our share of those federal dollars,” Tom Tyler, president of the Pennsylvania Licensed Beverage and Tavern Association and owner of McStew’s Irish Sports Pub, said at the rally. “We deserve our share of those dollars.”

Food and drink establishments aren’t the only ones hurting. Lawmakers have proposed several other measures, including more money for hazard pay for workers, hospitals, tourism marketing, broadband internet access, and nonprofits.

A group of mostly Republican lawmakers proposed using $500 million to provide money for parents of school-age children to pay for tuition, textbooks, uniforms, tutoring fees, curriculum, and other education expenses.

Wolf, in August, proposed spending more on hazard pay for frontline workers, child care, and a rent relief program that has been plagued with problems.

Lawmakers in Harrisburg already approved using $260 million in CARES Act money to support providers of services for people with autism and intellectual disabilities. But providers, like Programs Employing People in Philadelphia, continue to struggle.

Executive Director Robert Scott said the organization went from having about 55 employees before the pandemic to fewer than 40.

“And frankly, we’re about to make another cut,” Scott said.

Cynthia Fernandez of Spotlight PA contributed reporting.

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