The Federal Government Needs to Hold States Accountable for Relief Spending | Citizens Against Government Waste

The Federal Government Needs to Hold States Accountable for Relief Spending

The WasteWatcher

Since the beginning of the coronavirus pandemic, states and the federal government have used the pandemic as an excuse to spend on “wish list” projects and programs, including free college and government-run broadband.  Regardless of the nature of an emergency, the federal government needs to hold states accountable for coronavirus relief spending.

On March 27, 2020, former President Donald Trump signed the Coronavirus Aid, Relief, and Economic Security Act (CARES Act) (Pub. L. No. 116-136) giving states $150 billion in relief funding.  The Department of the Treasury reported that as of August 24, 2020 (the most recent information available), only three states had spent more than 50 percent of this money and 23 states had spent less than 10 percent.  Other reports cited examples of wasteful spending, like in Hawaii, which used $200,000 in relief funding for cleaning the streets of Chinatown and in Michigan, where Governor Gretchen Whitmer (D) launched a program to spend $24 million to provide essential coronavirus workers free college tuition.

Despite the outstanding funds that states had not spent and the waste of money they had spent, on March 11, 2021, President Joe Biden signed the $1.9 trillion American Rescue Plan Act of 2021 (ARP Act) (Pub. L. No. 117-2) into law.  Unlike prior COVID-19 relief bills, all of which were bipartisan and divided money to the states based on population, the ARP allocated $350 billion for states based on unemployment.  There are 33 states that will receive less money compared to the amount they received under the CARES Act and other legislation.  For example, Florida, which has a larger population than New York, will receive only $17.3 billion while New York will receive $23 billion because it has a higher unemployment rate.

The ARP Act also gives the states far more flexibility to spend money than the prior relief bills.  Through December 31, 2024, the money can be used “to respond to the public health emergency . . . including assistance to households, small business, and nonprofits” or “to make necessary investments in water, sewer, or broadband infrastructure,” among other purposes.  A state can transfer funds to certain other entities, including a “private nonprofit organization” or a “special purpose unit of State or local government.” 

This kind of broad latitude, along with the fact that many states have budget surpluses and don’t need this money, will undoubtedly lead to billions, if not tens of billions, in wasteful and unnecessary spending that will also be unrelated to the coronavirus pandemic.  In order to be provide greater transparency and accountability for how states spend taxpayer resources from the ARP, the federal government needs to re-establish a centralized source of information like the Obama administration’s Recovery.gov website.

Recovery.gov showed how money from the American Recovery and Reinvestment Act (ARRA) was spent and provided data that enabled citizens to “evaluate the American Recovery and Reinvestment Act (ARRA) progress and provide feedback.”  The primary purpose of the ARRA was to stimulate the United States economy and save jobs that were impacted by the 2008-2009 Great Recession.  While many ARRA projects were not as “shovel-ready” as the administration claimed, the Recovery.gov website added much-needed transparency to the funded programs and allowed taxpayers to judge for themselves whether the programs were a success. The ARP allocates more than twice as much money as the ARRA, making it essential for taxpayers to have at least the same level of access and information on how the money is being spent. 

A website like Recovery.gov would help prevent states that have plans in the works from irresponsibly spending funds from the ARP Act, particularly when there is little will within a state to rein in this spending.  Governor Tony Evers (D-Wis.) vetoed a bill that would have enabled legislative oversight of the governor’s spending of the $3.2 billion in ARP Act funds being provided to Wisconsin.  In 2020, he spent $5 million of the $2 billion in CARES funding the state received on broadband internet expansion.  Gov. Whitmer has pushedthe Michigan legislature to use ARP Act funds for state roads and bridges, as allowed with the flexible language in the legislation, rather than provide coronavirus relief to the state’s citizens. One can expect more of the same from these and other states, since the ARP Act rewards states that have neglected sound fiscal policy and hurts states that have shown financial restraint.

The $350 billion in the ARP Act has justifiably and accurately been called the “Blue State Bailout.”  This misallocation of funds is unfair to taxpayers in fiscally responsible states. 

The federal government must hold states accountable for ARP Act spending. An easily accessible website like Recovery.gov will increase transparency for the distribution and use of taxpayer dollars and help to expose wasteful spending on any “wish list” of projects and programs that achieve political, rather than practical objectives. 

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