The bulk of Louisiana’s approximately $500 million in coronavirus relief funding for local governments will go to public safety and criminal justice system costs, unless Congress and President Donald Trump expand the way the money can be used.
Louisiana received a total of $1.8 billion in coronavirus relief money, and the federal government required that the states set aside a portion of it to reimburse local governments for pandemic-related expenditures. Louisiana set aside $500 million for that purpose.
For many Louisiana parishes and city governments, more than half the budget funds the police and other public safety costs so those local governments may have significant expenses that qualify for reimbursement. Many local district attorney offices, clerks of court, sheriffs and fire districts have also applied for — and received — financial assistance independently from their municipal government, according to information provided by the Louisiana Division of Administration.
Even though flexibility is given to public safety expenses, the rules around what other spending qualifies for reimbursement are strict. A government has to provide documentation that it has already paid out money specifically for a coronavirus expense that was not included in its original budget plans.
The funding can be used to purchase personal protective equipment or to pay expenses related to employees who are out on sick leave, quarantined or unable to work due to the virus. But the money cannot be used to fill financial gaps left by a loss of tax collections or fees due to the pandemic. Local school districts and courts also don’t qualify.
The limitations on how the funding can be spent may have tamped down some of the original enthusiasm for the program. The made $394 million of the money available to cover local government expenses from March 1 to June 30, but only received reimbursement requests totaling $367 million, according to information provided by the Division of Administration. Government offices in 12 parishes — many in rural Northeast Louisiana — haven’t sought relief at all, said Commissioner of Administration Jay Dardenne.
Other coronavirus relief programs have been extremely popular and overwhelmed. The state expects to run through the $50 million set aside for $250 payments to pandemic “frontline” workers — such as grocery store employees and delivery people — shortly. A program for rental assistance has been temporarily suspended already because 40,000 people applied for the 7,500 slots available.
The state has already turned down at least some of those $367 million worth of local government reimbursement requests. While it made $236 million available for local government coronavirus expenses accrued in March and April, the state only sent out $127 million worth of reimbursements for that period.
Some entities got a fraction of what they were seeking. The Allen Parish District Attorney’s office, for example, sought $177,000 worth of reimbursements for March and April, but was only approved for $14,000, according to information provided by the Division of Administration.
Dardenne has fewer than 20 people reviewing the local government’s funding requests to make sure they meet the regulations outlined by the federal government. An auditor also has to sign off on the request. Local governments may have gotten turned down for funding because they submitted an expense that didn’t qualify or because they haven’t produced the proper documentation yet. It doesn’t mean that expense won’t be approved at a later date, Dardenne said.
Dardenne also said he’s confident the state will run through $500 million available for local governments by the time the program expires at the end of the year. He said some governments are still working through which of their expenses might be covered. Dardenne talked to sheriffs earlier this week, for example, to make sure they were aware of what type of reimbursements might be eligible.
“I really don’t know that there is going to be any leftover money at the end of the day,” Dardenne said during a conference call with reporters Thursday.
The money is even more likely to run out if the federal government expands the ways in which it could be used, said John Gallagher, executive director of the Louisiana Municipal Association, which advocates for local governments.
Democrats in Congress are pushing for state and local governments to receive additional federal funding to help cover revenue they lost because of the pandemic and related business shutdowns. Several local government entities — including sheriffs — rely heavily on sales tax to fund their operations.
But Republican leaders in Congress prefer giving local governments more flexibility to use the existing money to fill the gaps caused by loss of tax revenue.
Under that proposal, local governments in Louisiana would be able to use the $500 million for a much wider range of expenses, and it would likely increase the demand for the money, Gallagher said.
That proposal — floated by Louisiana Sen. John Kennedy — would help keep the overall cost of a second coronavirus package down. Conservatives in Congress are worried about sending out a second round of massive financial relief and driving up the country’s debt, according to several news reports. Negotiations are underway.
If enough money isn’t made available for lost revenue, local governments will likely have to lay off workers. Both Shreveport Mayor Adrian Perkins and Baton Rouge Mayor-President Sharon Weston Broome said in a virtual town hall this week that they would have a hard time avoiding job cuts if they can’t use federal funds to fill budget gaps.
“There are jobs on the line,” said Perkins, a Democrat who is running for U.S. Senate against Bill Cassidy this fall.
“We will have to take drastic measures to avoid layoffs,” Broome said. “Our local budgets were not designed for a pandemic.”
Initially, Gov. John Bel Edwards, a Democrat, had intended to use over $800 million for local government coronavirus relief, but the Louisiana Legislature, controlled by Republicans, siphoned off about $275 million to give directly to private businesses with pandemic expenditures.
Republican State Treasurer Schroder oversees that business reimbursement program, which launched this month and lasts through the end of the year. Money used to send $250 checks to frontline workers also came from that $800 million Edwards originally slated for local governments.
The administrative costs to run the local government and business relief programs also come from that money. The Division of Administration will receive up to $2.5 million for running the local government program. Schroder is paying three private vendors up to $9.3 million to run the business relief program and state agencies up to $3.1 million to help with the review needed to make it work.
Even though the local government relief program still has money available overall, some local parishes are already hitting their individual cap for relief. Each parish has a limit on how much funding for reimbursements it can receive based on its population and the number of coronavirus cases in its community.
During the first round of allocations that covered early March and April, Bossier, Orleans and East Baton Rouge parishes either hit their limit — or came close to it — in terms of funding they were able to receive. In the second round of funding — that covers expenses from May and June — both Orleans and East Baton Rouge are asking for millions more than they are eligible to get.
New Orleans Mayor LaToya Cantrell has complained there isn’t more money available in large part because the Legislature has allocated the funding toward helping individual businesses rather than parish governments.