Critics question Justice’s CARES Act priorities, unspent funds

Douglas Soule, Reporter
Mountain State Spotlight

Keeley Steele’s Charleston businesses have survived multiple hardships.

“We’ve made it through the derecho, the floods, the water crisis,” she said. 

But that was before 2020.

“All of them just couldn’t make it through the pandemic, unfortunately.”

Before COVID-19 began its spread, Steele owned a trio of businesses, all within sight of the West Virginia Capitol: Bluegrass Kitchen, Tricky Fish and Starlings Coffee and Provisions.

In May, Steele closed the doors of the 15-year-old Bluegrass Kitchen, and she is uncertain whether it will ever reopen. She recently sold Tricky Fish, which had been open for 13 years, to reduce overhead costs and her employee base. Starlings Coffee and Provisions has remained open, but that doesn’t mean things are looking good: surviving and thriving are different, she said. 

“No one’s crushing it right now,” said Steele, who is also a Charleston city council member. “We’re dipping into our own pockets, and our own savings, or our own retirement, just to keep our business afloat.”

During a press briefing on Wednesday, Gov. Jim Justice acknowledged the struggles of business owners like Steele and other West Virginians, pinning the blame on Congress’ delay in passing a second economic stimulus bill.

“The people are up there playing their games and during their typical politic junk,” he said. “And it makes me sick, to tell you the truth, because we got a lot of people really, really hurting.” 

State advocates agree the stimulus bill delay has hurt West Virginians. But they also point to something else: of the $1.25 billion in CARES Act funding West Virginia got from the federal government in April, the state still had $819,769,216 left as of Nov. 30 — money that could be used to help those hurting people. Critics say the money should have already been put to use, and that some of the previously-allocated funds could have been better spent.

Steele takes issue with the governor devoting $50 million of the funds to road construction meant to increase access to medical centers. The propriety of using the relief funds for road work has been criticized by others as well.

“I think that there is some responsibility on the state, if they have monies that can help small businesses stay afloat until we see the end of this pandemic, then they should do that,” Steele said. “And what that is, I’m not sure. But certainly an influx of cash is not going to hurt.”

Justice had initially set aside $150 million in CARES Act funding to give small businesses grants of up to $5,000. After reviewing applications, Justice later said only $40 million would be needed.

Yet, Steele said the state could do a lot more.

“I know that I’m probably not just speaking for myself when I say those monies have been gone through by most businesses,” she said. “For the restaurant business, $5,000 might help a restaurant stay in business for a week.”

Suffering in more ways than one

Steele isn’t alone in feeling the state should reprioritize how it spends the CARES Act money. 

With each passing day, the COVID-19 pandemic intensifies, and West Virginians are suffering in more ways than one. 

Not only is there a surge in the number of state residents infected and dying from the virus, but there are a large number of West Virginians struggling to meet their basic needs. 

Twenty-nine organizations signed off on a letter to Justice in mid-October that advocated for the money to be used to help West Virginians pay for necessities like rent, mortgages and child care. 

“Each of these areas must be funded with a recognition that Black, Brown, and low-income communities are disproportionately negatively impacted by this virus,” the organizations wrote.

The letter urged the governor to redesignate CARES Act money away from the unemployment trust fund, which the largest portion —  $587 million —  goes to. The letter mentioned other options to keep the fund solvent. 

Justice has said putting the money toward the unemployment fund will reduce the taxes on businesses that typically fund unemployment benefits.

But Mike Leachman, vice president for state fiscal policy at the Center on Budget and Policy Priorities, agreed that the money should go elsewhere.

“Allocating a large portion into the unemployment trust fund is in my view a poor use of the fund, given the immediate needs of so many people during a pandemic,” Leachman said. “It merely means that in the future the businesses that support the fund will pay less in future taxes.”

According to a survey from the U.S. Census Bureau conducted from Nov. 11 to Nov. 23, more than 34% of surveyed adults in West Virginia reported it had been somewhat or very difficult to pay for usual household expenses during the coronavirus pandemic. 

More than 14% reported they were in households where there was either sometimes or often not enough to eat in the last week, and 8% reported they were not current on rent or mortgage payments or had slight or no confidence that their household could pay next month’s rent or mortgage on time.

“I think that the $1.25 billion that was allocated to West Virginia was really intended to address the urgent needs of families and individuals and businesses in our state,” said Kelly Allen, the executive director of the West Virginia Center on Budget and Policy, which is a state partner of Leachman’s organization. “And the longer that it sits unspent, the less likely it is that there will be time for it to be allocated to the people who really need it the most.”

Allen said she did not know why the available money had not yet been used.

Pam Garrison of the West Virginia Poor People’s Campaign said that, other than the $25 million Justice allocated for utility relief, she didn’t believe the CARES Act money has been used to help individual West Virginians in need.  

“I know we’ve all got hope that this vaccine will do something, but we know we’re looking at some bad months [ahead],” she said. “We’re looking at winter months. I know people right now that are trying to figure out how they’re gonna get heat and fuel.”

Garrison said she also knows West Virginians trying to figure out how to get winter clothing for their kids. The Poor People’s Campaign has pushed for winter clothing vouchers to be distributed, similar to the vouchers that the state distributed to children at the beginning of the school year, but Garrison said they never got a response when contacting the governor’s office.

“There’s just so many different areas that the money could be spent on that will directly help the people,” Garrison said.

Justice: ‘There’s no money being hoarded’

Justice has had the CARES Act funds since April. The majority of it remains unspent. Right now, the state has a deadline of Dec. 30 to use it, though public officials across the political spectrum are trying to get that extended. 

Allen said waiting until the last minute means the state will have to scramble to disperse the funds. 

“We might not spend it in the places most urgently needed,” she said. 

Deadline pressure has already had an effect on the spending. Of the $50 million devoted for broadband, Justice said only around $32 million or $33 million would be awarded for the purpose because of time constraints. 

“We just couldn’t quite fit all this into a bucket and move it fast enough right now before that Dec. 30 cut off,” Justice said. 

Other programs haven’t garnered enough applicants to spend all the money that was allocated. Only about $16.4 million of the $25 million devoted for utility aid was requested by those eligible, said West Virginia Public Service Commission Chair Charlotte Lane. She said she didn’t know what the remaining money would be used for. 

Justice said the road repair funds, criticized by Steele and others, would be on budget, falling “right in the bucket of the $50 million.”

The largest expenditure Justice has pledged is $587 million to the unemployment trust fund. The second largest is $225 million to reimburse cities and counties for pandemic-related expenses. Other expenditures, some of them pledged and some already distributed, include the following:

• $153 million to reimburse state pandemic-related expenditures 

• $50 million to the National Guard for COVID-19 testing and personal protective equipment (PPE)

• $50 million for road construction projects mean to increase access to medical centers

• $50 million for broadband development to improve telehealth and virtual class opportunities (now $32 or $33 million)

• $40 million to give small businesses grants

• $25 million to help pay defaulted utility bills (now about $16.4 million)

• $25 million for emergency reimbursement fund

• $10 million COVID-19 triage center at Fairmont Medical Center

Justice said in an October press briefing this plan keeps tens of millions of unpledged money on standby for any expenditures that may come up. Justice defended allocating but holding off spending some of the money. He said doing so gives the state more flexibility with those funds.

“There’s no way on this planet that I’m going to send the money back to the federal government,” he said. “There’s no money being hoarded.”

Congress has not passed an economic stimulus bill since March, though there are efforts to change that.

Federal programs created to aid those struggling will expire at the end of December.  That includes the Pandemic Emergency Unem- ployment Compensation and Pandemic Unemployment Assistance; the West Virginia Center on Budget and Policy estimates around 75% of West Virginians will see their unemployment benefits expire without Congressional action.  In addition, programs to give some workers paid sick leave or expanded family leave for pandemic-related reasons and delay some evictions are set to end as well. A suspension on federal student loan payments lasts until the end of January.

“I think we’re in a really dangerous spot where all of the relief that we’ve been relying on has either expired or is expiring,” Allen said. “The prospect for additional federal COVID relief is kind of unclear at this point. And of course, we’re seeing this huge spike in cases. So I think we’re definitely in a spot where things could get worse for families in West Virginia.”

And the same goes for owners and employees of the approximately 100,000 small businesses in the state.

Charleston restaurant owner Keeley Steele said while money from federal programs like the Paycheck Protection Program was helpful, that money is gone, like the $5,000 grants given out though the governor’s office. And businesses are still struggling.

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