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CARES money uncertain: State budget woes might eat into neighbor island money

As the state struggles to resurrect an economy sucker-punched by the coronavirus, there were no guarantees Thursday that the neighbor islands will see their fair share of a federal bailout of local governments.

The state is trying to patch a $1.5 billion hole in its budget and there have been calls to use the federal money at the state level, rather than distribute it to counties, which must rely on the governor’s discretion to get access to the federal funding.

“Hawaii’s economy is at a complete standstill,” said Gov. David Ige said during a Thursday afternoon press conference.

Hawaii is receiving $1.25 billion from the Coronavirus Aid, Relief and Economic Security (CARES) Act of which $387.2 million goes directly to the City and County of Honolulu, the only local government with a population higher than 500,000. The $862.8 million remainder will be sent to the state, which has discretion on how to distribute it.

When asked directly how much of the $862.8 million will go to the neighbor islands and how much the state plans to keep, Ige remained unclear.

“We are in conversations with all of the counties, we continue to work with our congressional delegation,” Ige said in response to West Hawaii Today’s question. “Then we will begin to support the neighbor island counties as they fight COVID.”

With Ige contemplating pay cuts as much as 20% for state workers as one way to help balance the state budget, the Hawaii State Teachers Association said Wednesday it was looking into whether the state could use that money instead. U.S. Rep. Ed Case, a Democrat representing urban Honolulu, seemed to agree in a KHON2 article published Wednesday.

“There are some limitations to be using it, but if the available state revenues are utilized for those purposes, that might free up some space for (Ige) to come in and allocate some money and maintain some of the state payrolls,” Case said in the article.

Case’s staff clarified that response Thursday. The congressman does not think Honolulu should give up its direct allocation, said spokesman Nestor Garcia. Future emergency assistance should go directly to counties and states, he said.

“There is some flexibility in how those limitations are applied, and we are all awaiting more specific guidance from the federal Treasury Department to clarify the range of uses,” Case said through his spokesman.

U.S. Sen. Brian Schatz, D-Hawaii, during an April 8 meeting with the Hawaii County Council, assured the county that money would be distributed to the neighbor islands.

“The counties’ pro-rata share will land in the state coffers,” Schatz said. “I can assure you the governor and the mayors are working together. … Because we’re working well together, your people will see their equitable share.”

The current money can be used only for necessary expenditures incurred because of the coronavirus public health emergency that were not accounted for in the most recently approved budget as of March 27 and were incurred between March 1 and Dec. 30, according to Treasury Department guidance issued earlier this week. The money is supposed to flow to states and local governments by April 24, a National Association of Counties spokesman said Thursday.

Hawaii County Mayor Harry Kim said Ige conducted a videoconference earlier Thursday with the county mayors to talk about the funding for local governments. Kim said he was disappointed about the restrictions on the money, but he seemed confident Hawaii County will get some of it. He said Ige will be forwarding more guidance on how the money can be spent.

“We spent a lot of money that we didn’t have. We went heavy on prevention and information,” Kim said. “Yes, the money will be helpful regardless.”

The National Association of Counties, the National League of Cities and the United States Conference of Mayors want more money sent to local governments and they want it to flow directly to them. The three groups sent a joint letter Thursday to President Donald Trump and congressional leaders asking that an additional $250 billion in “robust, dedicated, and flexible funding” for cities and counties of all sizes be included in the next federal emergency funding package.

“All local governments, regardless of population, urgently need direct federal funding to help us continue to fight COVID-19 and protect our residents through the summer and beyond,” the letter said.

Email Nancy Cook Lauer at ncook-lauer@westhawaiitoday.com.
Source: Hawaii Tribune Herald

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