State getting $200M extra in federal COVID relief

WASHINGTON — Connecticut will receive about $200 million more in direct pandemic aid to the state government than initially expected, according to an announcement from the U.S. Treasury Monday.

The state has now been allocated $2.8 billion and that money could flow into state coffers later this month.The news surprised Connecticut officials who did not know about the increase until it was announced.

“We are thrilled that there is more money coming to Connecticut which means there is even more of a task at hand to spend these funds in equitable and transformative way to accelerate the recovery in Connecticut,” Gov. Ned Lamont’s Communication Director Max Reiss Monday evening.

Asked about additional funds, state Sen. Cathy Osten, a Democrat who leads the state Appropriations Committee, said “It will certainly probably ease some the tensions we have relative to where the dollars would go.”

“It will allow us to address some other issues that we have relative the nursing homes and non-profits and some workforce development issues,” Osten added. “This will be the first time I have more money to deal with than less and I am finding that people have greater expectations of the dollars.”

The relief for state governments is tied to the average number of unemployed persons in states in the last three months of 2020. The U.S. Treasury used the latest available data to calculate Connecticut’s share of relief money, a spokeswoman at the Treasury said, but earlier estimates produced by Congress may have used out-of-date information.

Some states will receive half their funds in May and the other half a year later. But Treasury decided states that have experienced a net increase in the unemployment rate of more than 2 percentage points from February 2020 to the latest available data will receive their full allocation of funds in a single payment. As of May 10, Connecticut’s unemployment data indicates it will be eligible to get its full $2.8 billion in this month, a Treasury memo shows.

The Treasury is now starting the process of pumping $350 billion in relief funds from the American Rescue Plan to state and local governments with the first payments beginning in a matter of days, senior administration officials said.

On Monday, Treasury opened its portal for states, territories, counties and city governments to request their aid from the American Rescue Plan. Treasury also released guidance on how the funds can be spent.

Lamont’s Chief of Staff Paul Mounds told press Monday that the state Office of Policy and Management is reviewing that guidance now. A spokesman for OPM did confirm Monday evening that $2.8 billion was more than state officials were expecting to receive.

The state is currently in the process of finalizing its budget and a key committee vote to pass it is expected on Friday.

Connecticut is now embroiled in a tug-of-war between the legislature and Lamont over how to spend the incoming federal funds and whether to raise taxes on the wealthy. Lamont released a plan to spend the money in late April that featured continued COVID-19 testing, expanded access to broadband internet service, “premium pay” for front line state employees and $20 million in nursing home infrastructure improvements.

Around the country, state, counties, cities and towns are wrestling with big decisions on how to disperse what is for most governments an unprecedented windfall.

Like states, cities will soon receive direct payments, while small towns will receive their funds from their state government. In Connecticut, funds allocated for the counties will be subdivided among towns by population.

New Haven is slated to receive $90.5 million, Hartford will get $88.5 million, Bridgeport $82.6 million, Stamford $23.8 million, Greenwich $19.1 million and Danbury $15.6 million, plus additional funds from the county allocations. About $202 million in federal dollars will be distributed by the state to towns in Connecticut.

Mayor Justin Elicker of New Haven said his city will be engaging in a community conversation with numerous stakeholders to decide how to spend its most of its funds. The city has already decided to direct $6.3 million toward summer youth activities and public safety.

“This is one of the most important decisions our city will make because the investment has the potential to be a game changer,” Elicker said in an interview. “I believe the funding should not just be invested in things that don’t just benefit the community once but give back for generations,” he said, listing workforce development, support minorityowned businesses and investments in broadband.

Governments can use the money to pay for public health expenses, address negative economic impacts from the pandemic on workers, businesses, and the public sector, replace lost government revenue, give premium pay to essential workers and invest in water, sewer and broadband infrastructure, the Treasury said Monday.

Governments cannot use the money to directly or indirectly reduce taxes before all the money is spent. They also cannot use the money to make a deposit to a pension fund.

Recipients have until Dec. 31, 2024 to obligate the funds, Treasury said.

Although governments have previously been awarded pandemic relief, this round will mark the first time that all cities and towns will be eligible for money.

Local governments should expect to receive funds in two parts with half provided beginning in May 2021 and the balance delivered a year later.

“We’re certainly grateful for the money,” said Greenwich First Selectman Fred Camillo. “A lot of departments lost revenues.” He said his town government is just starting a collaborative process of sorting out what to do with the funds.

In total, the federal government will distribute $195 billion to states, $65 billion to counties, $45.6 billion to cities, $20 billion to towns and local governments, $20 billion to tribes and $4.5 billion to territories.

"Since Covid-19 hit, the need for services provided by state, local, territorial and tribal governments have increased dramatically, including setting up emergency medical facilities, standing up vaccination sites and supporting struggling small businesses," said Deputy Treasury Secretary Wally Adeyemo. "At the same time, these governments have faced significant revenue shortfalls because of economic fall-out from this crisis."

Republicans opposed the idea of providing this much government aid to states and local governments calling it a "blue state bail-out" when negotiating COVID-19 relief this winter. Meanwhile, many Democrats cheered the Treasury roll-out of the funds on Monday.

"With the Treasury Department’s announcement today, we can say: help is on the way," said Senate Majority Leader Charles E. Schumer, D-N.Y.