Legislature earmarking $600 million in COVID money

The Vermont House is racing to craft a roughly $600 million spending package using nearly half of the $1.25 billion the state received from the federal government in April to cover expenses related to the COVID-19 pandemic.
As of Thursday, House committees had publicly put forward more than $600 million worth of spending proposals that rely on the state’s Coronavirus Relief Fund, which was established by the federal CARES Act this spring.
Committees have proposed using the money for a variety of pressing needs — from helping schools cope with the expenses of adapting to the pandemic, to providing financial assistance to struggling health care providers, to helping Vermonters cover the costs of rent.
The House Appropriations Committee is reviewing the proposals this week and House Speaker Mitzi Johnson, D-South Hero, said that in the coming days her chamber will pass legislation for $575 million and $600 million in spending.
Johnson said she doesn’t want to spend all of the COVID-19 dollars at once. She said she wants to have the flexibility to set hundreds of millions of the federal funds aside in the event that the federal government gives states the ability to use the money to fill holes in the state budget.
The latest projections from analysts show that Vermont will contend with a $332 million budget hole in the upcoming fiscal year because of the economic impacts of COVID-19.
At this point, federal guidance prohibits states from using Coronavirus Relief Fund dollars to plug budget gaps. But Johnson and other lawmakers are hopeful that Congress or the Trump administration will remove that restriction.
“It makes sense to make sure that there’s some money available, so that in the midst of a crisis or not cutting back a whole bunch of jobs because $50 million worth of transportation projects just evaporated, we’re not having to scale back health insurance for Vermonters at a time when Vermonters have just lost a bunch of their health insurance because they lost a job,” Johnson said.
Because Johnson isn’t sure about whether the state will be able to backfill budgets with the federal money, she has asked committees to split proposed spending into two “tiers.”
Proposals in the second tier of spending could only move forward if the Coronavirus Relief Fund dollars can’t be used to fill holes in the state budget.
About $280 million of the Coronavirus Relief Fund money has already been spent or allocated by the Scott administration and or the Legislature, according to the Joint Fiscal Office.
The Senate has also been working to spend the Coronavirus Relief Fund dollars, and this week passed a bill with $70 million in emergency grants to businesses, and $23 million to rehabilitate affordable housing.
Sen. President Pro Tem Tim Ashe, D/P-Chittenden, said the House and Senate are planning to send each other different spending proposals as they are completed.
On Friday, the Senate will pass a $30 million package of financial assistance for dairies and other farms. Ashe said the House could soon send over a major relief package for the health care industry.
But the House and Senate are still discussing whether it makes sense to send spending proposals over in separate installments, “rather than one large bill.”
In its proposal to spend the federal money, the House Health Care Committee has recommended giving $139 million in financial assistance to health care providers whose finances have been strained by the pandemic.
The Scott administration has pitched a proposal to provide health care providers with about $300 million.
The House’s proposal also includes $75 million in “tier two” funding that would go towards additional grants for members of the health care industry.
“We recognize the need is so much more than what we have available in the health care system right now,” Rep. Bill Lippert, D-Hinesburg, the chair of the House Health Care Committee, said.
Ashe said that he expects spending on the health care industry will be among the largest of any sector.
“And that’s not just hospitals, but it’s dentists, it’s independent providers, it’s federally qualified health centers, all of whom have suffered substantial revenue losses as a result of COVID-19,” he said.
The House Education Committee is proposing that the state spend $50 million on the state’s K-12 and higher education systems to cover costs related to the pandemic.
For the current fiscal year, K-12 schools would receive $25 million. In the next fiscal year they would receive $20 million.
The University of Vermont and the Vermont State Colleges, which have already received some funding to address COVID-19 expenses, would split $5 million.
The House Energy and Technology Committee’s $43 million plan would put $20 million towards helping Vermonters cover utility bills that weren’t paid during the pandemic. It would also create a new program that would spend $11 million by the end of the year to expand internet access to Vermonters who lack it.
“This is a program that is looking to extend service where it doesn’t exist with a couple of caveats,” Rep. Tim Briglin, D-Thetford, the chair of the energy and technology committee, told the appropriations committee on Thursday.
“Prioritized customers would be low-income households, and households that have remote learning needs, that have telehealth needs, that have public health workers who live there,” he said.
If tier two funding was made available, the committee proposes spending more than $50 million on additional broadband expansion.
The House Ways and Means Committee is floating two ideas for how to spend $5 million in funding. One is a grant program or tax credit for restaurants. The other is helping Vermont’s nonprofit sector pay off the debt it will owe the state’s unemployment insurance system.
According to a memo from the committee, unlike other businesses, nonprofits are exempt from paying into the unemployment insurance system unless they lay off employees.
“[We] selected these two options because we saw them as essential sectors of our community and economy that produce substantial revenue that we need today and into the Future,” Rep. Janet Ancel, D-Calais, the chair of the Ways and Means Committee, wrote in a memo to the appropriations committee.
Rep. Michael Marcotte, R-Newport, the chair of the House Economic Development Committee, said his committee will be proposing an additional $80 million economic relief package that relies on the federal COVID-19 dollars.
The committee is continuing to work through the $400 million economic relief proposal the governor pitched last month.
Parts of this proposal have already been placed into other legislation, including the package of business grants that passed the Senate this week.
Marcotte said his committee’s forthcoming economic development package may include aid for micro-businesses and to minority and women-owned companies.
He says it will also contain additional grants for businesses that have seen revenue losses of 50% or more due to the pandemic.
While the Scott administration has pitched loan programs for businesses hit hard by the coronavirus, the House has concerns that companies can’t afford to take on debt.
“The majority of testimony that we’ve taken so far from businesses is that ‘We don’t need to take on additional debt and we can’t. If we’re going to survive we need grant money,’” Marcotte said.
More money will be forthcoming after the initial round of aid is issued for struggling businesses, Ashe said.
“We were very clear that that was the first of what will be more than one waves of grant funds to support our economy,” the Senate leader said.
Other proposed spending:
— $30 million to help tenants cover rental arrearages
— $9 million to help the state rehabilitate its homeless shelters for social distancing measures
— $9 million in “restart grants” for summer camps, after school programs and child care providers
— $4.6 million for the Vermont Foodbank

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