Governors in a handful of states are raising concerns about restrictions on the federal stimulus checks they have started to receive to help cover the costs of combating the coronavirus.
New Jersey Gov. Phil Murphy, a Democrat whose state has had nearly 100,000 confirmed COVID-19 cases, the second-most in the country, said Thursday that much of the $1.8 billion heading there is “unusable” and might have to be returned to the U.S. Treasury. Tennessee Gov. Bill Lee, a Republican, made similar comments the day before.
Those doubts come even as states are expecting tax revenue to crater, leading to layoffs and budget cuts.
The $150 billion in aid to state and local governments is part of the $2.2 trillion relief bill passed by Congress last month. Every state is getting at least $1.2 billion, while the most populous cities and counties also receive a share.
In guidance issued Wednesday, the Treasury Department told states that the money had to be used to deal with the medical emergency caused by the outbreak. It generally could not be used for expenses that were accounted for in budgets adopted by March 27.
But the department did leave some wiggle room: First responders and other government employees "whose services are substantially dedicated to mitigating or responding to the COVID-19 public health emergency” can have their salaries paid with the aid from March through December, according to the guidance.
Shelby Kerns, executive director of the National Association of State Budget Officers, said in an email that states are still reviewing the documents but that “we expect most to be able to use the full allotment.”
Virginia Secretary of Finance Aubrey Layne said he was surprised at how restrictive Treasury’s rules for the state aid are and understands why governors wonder if they might have to return some of the money.
"I’m going to try my best not to do that,” he said.
The National Governors Association is pushing Congress to approve an additional $500 billion to replace state and local revenue that has evaporated amid the business closures and record job losses during the pandemic.
Mulvihill reported from New Jersey.
Associated Press writers Mike Catalini in Trenton, New Jersey; Kimberlee Kruesi in Nashville; and Alan Suderman in Richmond, Virginia, contributed to this report.