Paving the road with good intentions
As the old proverb goes, “the road to hell is paved with good intentions.” Gov. Jim Justice’s plan to used federal coronavirus relief funds for road repair sounds great in theory, but how they think they’re able to use those funds is unclear.
I said last week that I would dive into this subject. As I’ve written about in these pages frequently, the state received $1.25 billion from the federal C.A.R.E.S. Act back in April from Congress (really from ourselves, as it is taxpayer dollars) to be used for state, county and municipal expenses due to the COVID-19 pandemic.
There is a long list of hoops the state and local governments have to go through to justify reimbursement for expenses, but those hoops boil down to three things: they have to be necessary expenditures caused by responding to the coronavirus, they can’t be expenses accounted for in the state budget (outside of $2 million put in the Governor’s Civil Contingency Fund by the Legislature for the current fiscal year 2021 budget for COVID response, the state didn’t set aside any other funds for COVID response) and expenses incurred between March 1 and Dec. 30.
As previously stated, West Virginia received its C.A.R.E.S. Act funding in mid-April. It didn’t create an application process for local governments to apply for reimbursement until May 15. Reimbursements didn’t start getting approved until June. The Friday before the end of June and the previous fiscal year, Justice unveiled plans for how the $1.25 billion would be spent.
Only $200 million has been set aside for reimbursements for county and municipal governments, though based on the number of applications so far I don’t expect they’ll blow through that. Even if they do, it sounds like Justice will move more money into that program if needed. It’s also likely that county health departments and non-government-funded ambulance authorities could be added as recipients of this funding stream.
The largest amount – $687 million – is parked in WorkForce West Virginia, allegedly to keep the state unemployment compensation trust fund solvent. The state’s fund – which comes from revenue from special taxes on businesses – was exhausted back in May with the state taking out a $125 million loan through the U.S. Department of Labor. So far, the state has only used about $13 million of that, and with employment numbers slowly improving, revenue into the trust fund is also improving.
So, why is all that money parked there? Basically, it’s just sitting there in case the U.S. Treasury or Congress changes its tune and allows the C.A.R.E.S. Act funds to be used for backfilling state and local government budgets. Justice has been hoping for this to happen since the C.A.R.E.S. Act was first passed by Congress at the end of March. So far, there is no sign that the C.A.R.E.S. Act guidelines will be loosened anytime soon to help ease budget issues caused by loss of tax revenue due to coronavirus shutdowns and uncertainty.
Of the $1.25 billion, Justice set aside $100 million for “COVID-19 related highway projects.” Yes, really.
I asked Justice to explain how this works last week. I got a broad explanation about how they plan to use that funding to repair roads that lead to hospitals. What that means, I don’t know. I’ve not seen any specific plans for what projects or roads would qualify. Let’s be honest, any road can lead to a hospital or clinic. The goal seems to be to use this money in order to free up additional dollars to do other road projects.
How did the Governor’s Office determine that the U.S. Treasury guidelines for the C.A.R.E.S. Act allows them to use money meant for coronavirus expense reimbursement for road repair? It wasn’t through the state’s legal counsel, the Attorney General’s Office, even though Attorney General Patrick Morrisey was involved with some of the early executive orders that came out of the Governor’s Office in March.
Nope. Instead, the Governor’s Office sought a legal opinion from the Bailey Glasser law firm. There are several problems with this. First, Bailey Glasser had an incentive to give the Governor’s Office the legal opinion it wanted because the Governor’s Office hired Bailey Glasser to manage the state’s handling of C.A.R.E.S. Act disbursements. Keep in mind, state code allows the governor to ignore certain laws, such as going through the Purchasing Division and putting out requests for proposals and taking the low bid.
Second, it’s one thing if Bailey Glasser is one of several law firms bidding on a state project and wins the bid. It’s another thing when the Governor’s Office gives a contract to Bailey Glasser on its own, especially when one of Bailey Glasser’s attorney’s – Steve Ruby – represented Justice during the U.S. Department of Justice Public Integrity Unit investigation into Justice’s charity. Ruby is also the husband of Tourism Commissioner Chelsea Ruby. As near as I can tell, Ruby is not involved in the C.A.R.E.S. Act project, but appearances matter.
Lastly, there are issues on whether Justice has the authority in the state Constitution and state code to even decide on his own where to send C.A.R.E.S. Act funding without approval of the state Legislature. They have a legal opinion – again from Bailey Glasser – saying that state code allows them to use non-discretionary federal funding sent to the state for emergencies. Some lawmakers believe that the funding is obviously discretionary, meaning the authority for spending that money lies with the Legislature.
Lawmakers of both parties are expressing frustration at being kept out of the decision-making process. One cannot govern on good intentions alone.