State legislators on the Joint Finance Committee are the latest government body to question New Castle County's allotment of federal CARES Act money to pay for coronavirus-related expenditures.
The county was eligible to apply for CARES Act funding because it has a population of more than 500,000. The local government received $322.8 million from the federal government.
"The $322 million represents a more than 100% increase in New Castle County's revenue--even if you add the sewer fund money into the calculation," noted Senator Harris McDowell, chair of the JFC, on Tuesday, June 3, 2020--the first day of JFC meetings.
In a letter, dated May 26, 2020, obtained by WDEL, the state has requested 85% of the county's share of funds, in large part to replenish the rapidly draining Unemployment Insurance Trust Fund. Officials have estimated that fund could be empty later this month amid record claims.
In the first month of the pandemic, there were 85,000 claims against the Unemployment Insurance Trust Fund, which cost the state $63 million, not including the federal pandemic unemployment compensation.
"A normal month is approximately $4 million," said Jackson. "I usually use a calculator when I'm doing math. On this one I'm not sure that you have to. At a rate of almost $60 million net a month--beyond what we're paying--if the current rate continues just through August that's an initial $300 million. If it occurs through October, it could be as high as over $400 million. If it occurs through the end of December it could over a half-billion in claims, so it is significant," he said.
While discussions between the county and the state are "ongoing," according to both County Executive Meyer and Jackson, at this point, no deal has been struck. McDowell described those discussions as "up and down."
"The nearest I can figure the county is not extremely cooperative at this point," McDowell said.
The state received $927 million in CARES Act funding, independent of New Castle County's funding.
"At this point our only avenue is to just plan on using the state share...to be able to apply to the Unemployment Insurance Trust Fund, and there are New Castle County businesses, that will obviously, benefit from that in the long-run as much as there are in Kent and Sussex," said Jackson.
Using CARES Act funding towards covering additional unemployment claims will help businesses in the long-run, Jackson noted.
"Because if we did not use these funds for that purpose, the way that our Unemployment Insurance Trust Fund works is that as our businesses are trying to come out of the impact of the virus, there would be triggers in place to raise the unemployment insurance tax to be able to help replenish the fund, which is a regressive approach as we're trying to do everything we can to help our businesses."
The JFC is not the first government body to question New Castle County's allotment of CARES Act funding. The money came up at a DEFAC meeting last month, where that body's chair, Mike Houghton, asked: "How the hell's New Castle County going to spend half-a-billion-dollars, and can't you take some of that money back?"
Jackson's letter to Meyer, requesting 85% of the share of funds, came the following week.
New Castle County Council has already allotted $85 million of its CARES Act funding on various items, including testing, leaving less than the 85% the state wanted in the first place. Some on council like Councilman George Smiley balked at the state's request.
"I'll tell you where I'd like to stick that letter from OMB," said Smiley, who co-chairs the county's finance committee, at a recent meeting.
McDowell wasn't the only member of JFC to comment on New Castle County's funding.
"There should be more information given to us, at this body, knowing how this money is being used when we have to do the budget [for the entire state], which includes New Castle County," said State Rep. Stephanie Bolden.
CARES Act funding must be used by the end of the calendar year and cannot be utilized for revenue loss tied to coronavirus pandemic; any expenditures later deemed ineligible must be repaid to the federal government.
Meyer, who didn't immediately answer WDEL's question on whether he plans to give any portion of the county's funding to the Unemployment Insurance Trust Fund, has previously said:
"There's no place for us to bicker or disagree over who controls the dollars; the most important thing is that we find those most in need in our community; we have strategies to eradicate this virus from our community, and we have strategies to incentivize small business and create jobs in our communities, and we put these resources, where they are most needed as quickly and efficiently as we can," said Meyer.
Jackson remains hopeful the state and the county will come to agreement.
"It's a question of as we learn more, they develop further plans, and I think, hopefully, there will be a point where we come to a place of consensus with the county."
Lawmakers on JFC also questioned whether local nonprofits can get a share of the state's federal CARES Act funding as well.
Senator Trey Paradee, on JFC, pointed to the Modern Maturity Center in Dover, which is providing significantly more meals daily in the community as a result of the pandemic.
"Not yet. It is an ongoing discussion and the primary reason is...as we know more and we know more of what some these programs are going to cost us that allows us to be kind of say, go a little bit further with the funding that we have...to be able to help supplement that."
Jackson also pointed out some non-profits did receive direct funding through federal stimulus money too.
"It's going to continue to be looked at, I just don't have definitive answer for you today."