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Ducey could have sole discretion over a large pot of state, federal aid funds

FILE - In this March 23, 2020 file photo, Arizona Gov. Doug Ducey, right, and Arizona Department of Health Services Director Dr. Cara Christ, left, provide an update on the coronavirus during a news conference at the Arizona State Public Health Laboratory in Phoenix. Ducey is urging Arizonans to be understanding and reasonable as people and businesses face April 1 due dates for bills such as mortgages, rent, utilities and internet service. Ducey posted on Twitter that "the world has changed since March 1" and that bills previously paid routinely "are now a struggle for many people and small businesses." (AP Photo/Ross D. Franklin, File)

FILE – In this March 23, 2020 file photo, Arizona Gov. Doug Ducey, right, and Arizona Department of Health Services Director Dr. Cara Christ, left, provide an update on the coronavirus during a news conference at the Arizona State Public Health Laboratory in Phoenix. Ducey is urging Arizonans to be understanding and reasonable as people and businesses face April 1 due dates for bills such as mortgages, rent, utilities and internet service. Ducey posted on Twitter that “the world has changed since March 1” and that bills previously paid routinely “are now a struggle for many people and small businesses.” (AP Photo/Ross D. Franklin, File)

The passage of a federal stimulus package to help state and local governments weather the COVID-19 pandemic gives Gov. Doug Ducey discretion over at least part of a $1.5 billion sum — adding to tens of millions he already had at his disposal as part of an emergency spending plan passed by the Legislature in March.

At that time, some state lawmakers on both sides of the aisle were uneasy over the size of the checks they were cutting to the governor with little direction on how to spend them. Now, the amount of money at Ducey’s disposal to help mitigate the fallout of the virus has increased significantly — and Arizona, like other states, will be in the dark about how this money can be used until late April, when the federal government allocates the funding.

Already, this has created some confusion. And while the state might have to wait the better part of a month for further instruction from the feds, nonprofits, schools and other organizations that stand to receive aid say the need for more resources is severe.

“We’re seeing double or sometimes triple the usual demand in some areas,” said Angie Rodgers, who heads the Association of Arizona Food Banks. “To sustain that demand every month is going to be a real challenge. We’re going to need the government to step in.”

The Governor’s Office declined to comment on their proposed spending priorities.

DISCRETION

When state lawmakers worked a series of late nights in March in an effort to pass a pared-down budget and a pair of $50 million and $55 million appropriations to help the state fight the novel coronavirus, some on both the left and right questioned whether they gave Ducey too much discretion over emergency funds.

On March 12, Sen. David Livingston, R-Peoria, nearly derailed a fast-tracked bill that guaranteed the Department of Health Services continues to exist for another eight years and moved $55 million from the state’s rainy-day fund to an emergency fund Ducey or the department’s  director, Cara Christ, could use to pay for public health emergencies.

David Livingston

David Livingston

Although Livingston ended up voting for the bill, he objected strenuously to the idea that the Legislature would hurry late on a Thursday to authorize $55 million with few restrictions, other than requiring that it be spent on public health and that Ducey or Christ notify the Joint Legislative Budget Committee when they planned to spend the dollars.

“I’m literally reading this as we’re handing the governor and the director a $50 million checkbook, and (saying) ‘notify us if you’re going to use it,’” Livingston said on the Senate floor.

Democrats in the House, meanwhile, were skeptical of the second $50 million appropriation, a key portion of a bipartisan budget deal struck in the Senate. That $50 million was to be used for housing assistance, homelessness prevention, food banks and economic assistance for small businesses, but House Democrats said the budget language gave Ducey too much discretion and publicly griped about the willingness of their Senate colleagues to cut Ducey a check.

“I’m always concerned when it’s up to one person,” said House Minority Leader Charlene Fernandez, D-Yuma.

House Democrats wanted to prescribe specific uses of the fund, affixing a multitude of hostile amendments to the budget deal that would direct some of those millions to specific programs — the Housing Trust Fund, for example — and to help specific groups of people — small business owners, people who use food stamps, and so on.

Pamela Powers Hannley

Pamela Powers Hannley

“We’re getting up to the $100 million number with no plan behind it,” Rep. Pamela Powers Hannley, a Tucson Democrat, said at the time.

And now that number, at least in the aggregate, far exceeds $100 million. With the passage of the CARES Act, the third COVID-19 response package to come out of Congress, the state might have more than $1 billion at its disposal, according to a preliminary estimate from the Joint Legislative Budget Committee.

The state is estimated to receive $4.2 billion in total, JLBC predicts. According to the bill, that money can only be used for “necessary expenditures” related to the pandemic. That $4.2 billion will be divvied  among the state and local governments, agencies and other funds and grants.

When the feds distribute the money in late April, Ducey will have some amount of discretion over at least $1.5 billion of it, which must be spent on coronavirus relief, and $68 million as part of an education stabilization fund that he can distribute at will.

When Ducey spends that money, his office will have to keep receipts for an eventual federal audit. But for now, he and other governors don’t yet have directions from the federal government on how they can spend it.

Arturo Perez, director of state services for the National Conference of State Legislatures, said governors should expect definitive guidelines, rules and regulations from the feds on or before April 24, when monies are expected to be given to states. Perez said states have been given vague categories like health care infrastructure and facilities, medical and sanitation supplies and first responder overtime — and it’s as of yet unclear whether states can use that money to offset declining
revenues.

That’s something the JLBC and other states are still working to clarify, as they could interpret “necessary expenditures” and costs incurred from the pandemic to include lost revenue that came as a result of it. Perez said if that coming federal guidance isn’t favorable to that interpretation, states dependent on general sales tax could suffer.

“There is nothing, nothing comparable to what’s happening,” Perez said. “No one knows what folks are spending it on or what they plan to spend it on.”

HOUSING

As he begins spending the money provided by the state and federal relief packages, Ducey has frustrated non-governmental organizations, local jurisdictions and even some in his own executive branch by not communicating ahead of time.

On the morning of March 30, the Arizona Housing Coalition was set to begin a conference call with representatives from the Department of Housing, the Department of Economic Services, landlords, homelessness advocates and other housing stakeholders on how best to use the       $50 million legislative appropriation.

Right before they began the call, they saw an announcement from Ducey’s office: $6.7 million of that $50 million was now off the table, allocated toward food banks and quarantine housing at homeless shelters. Nonprofit leaders who have been working on housing and food insecurity for years are frustrated by far-from-ideal coordination and transparency from the Governor’s Office, Arizona Housing Coalition Executive Director Joan Serviss said.

“We know that this $50 million has to do a lot of different things,” she said. “Fifty million dollars is a lot of money, but it has to go by so fast.”

Housing advocates would like to see more money available for the Department of Housing’s eviction prevention pilot program, which started with $2 million last spring to provide emergency grants and case management to families falling behind on their rent. Through a March 24 executive order, Ducey mandated a 120-day stay on enforcement of evictions for tenants who lose income or are forced to self-quarantine because of the pandemic.

But that order doesn’t prevent landlords from proceeding with evictions and charging tenants with associated legal fees. It just prevents constables and sheriff’s deputies from physically enforcing evictions.

“If there’s a moratorium on evictions, are we just delaying the impact for 120 days?” Serviss asked.

Nonprofit organizations serving people experiencing homelessness are seeking ways to expand temporary shelter space and ensure homeless Arizonans are able to get safe transportation to receive COVID-19 tests and treatment. Veterans Memorial Coliseum, which served as a temporary shelter for Hurricane Katrina refugees and hosts an annual resource fair for homeless veterans, could be an option if the Phoenix Suns and Mercury are willing to make exceptions in their contracts with the Coliseum.

FOOD

On March 30, Ducey announced a $1 million appropriation toward food banks across the state. The $290,000 earmarked for southern Arizona just about covers the cost of shifting the Community Food Bank of Southern Arizona’s five resource centers and one farmers’ market outside and complying with new Centers for Disease Control and Prevention guidelines, but doesn’t come close to covering increased demand for food, CEO Michael McDonald said.

The largest resource center in southern Arizona usually helps about 9,000 households in a month. It’s now on track to exceed 18,000, and staff who keep a database of families seeking help report that they’ve never before seen nearly one-third of the people seeking food.

“They’ve never needed to show up before,” McDonald said.

Every single dollar the state or private donors can provide helps. The organization suspended its community food drives out of caution and is focusing on purchasing and distributing frozen food provided by the U.S. Department of Agriculture and fresh produce from Mexico.

Government funding usually makes up about 20% to 25% of the food bank’s funding, with charitable giving picking up the bulk of the budget. As the economy worsens, food bank administrators question whether they’ll receive additional government support.

“People are really stretching and giving us funds now, but will they still be here six months from now when the economic effects linger?” McDonald asked.

And there’s more than just a need for food, said Tyson Nansel, communications director for United Food Bank. At United, much of the money that Ducey authorized March 30 will be used to pay for transportation and refrigeration — and possibly even staffing.

“We’re doing this almost at max capacity,” he said. “If our staff comes down ill from this, we are looking at hiring temporary workers to help fill the slots, in case this gets more serious. But it’s hard to find a Class A driver to take a semi out to rural Arizona right now.”

While the March 30 appropriation will help with immediate needs, uncertainty about the long-term demand for food banks — which has been astronomical since the virus began its spread — means that more money will likely be necessary, said Rodgers, of the Association of Arizona Food Banks.

“We’re grateful for the support we’ve received,” she said. “There will be more cost in the supply chain that we will look to cover.”

EDUCATION

And then there’s the matter of the education stabilization fund, around $68 million that Ducey can give to “local education agencies, higher education institutions, or other education-related entities,” according to JLBC.

That’s a broad list of recipients with no shortage of needs — schools are having to figure out how to maintain previous levels of education while delivering course materials in alternative formats, whether that means online or from school bus drivers dropping off packets to students’ houses.

Sylvia Allen

Sylvia Allen

Ducey should consider using at least of some of the $68 million in discretionary education spending he’ll receive from the federal stimulus package to pay for summer school, Senate Education Committee Chair Sylvia Allen said.

Allen, a Snowflake Republican, has been closely watching as schools in her northern Arizona district adapt to sending written packets and meals home to students, and as her grandchildren who live in the Valley begin taking classes online. It’s clear that at least some Arizona students will need extra instruction over the summer to keep pace during the next school year, she
said.

“If you had a student that was behind to begin with, I’m sure this has been quite a shock to change how you learn,” Allen said. “I’m talking about full-blown come into school half a day and do core subjects.”

These fluctuations could aggravate the state’s achievement gap, a measure of the disparity in education achievement between wealthier and poorer students, said Rep. Reginald Bolding of Laveen, the top Democrat on the House Education Committee.

“A crisis like this will only increase the gap if measures aren’t taken,” Bolding said. “We should invest in technology for students, but also for teachers. We don’t want to take for granted that teachers have laptops and WiFi in their homes.”

There’s the additional challenge of ensuring that these alternative delivery methods are up to snuff, especially if they’re coming from third-party online education providers.

“The worst case scenario for us is to dump millions of dollars into a provider that’s going to produce inadequate results,” Bolding said.

The discretion Ducey holds over how to spend hundreds of millions of dollars particularly troubled Democrats who already fear that the governor isn’t taking the coronavirus criss as seriously as he
should.

Fernandez, the House minority leader, drew a comparison between Ducey and the big-city mayors – Kate Gallego of Phoenix and Regina Romero of Tucson – who have emerged as some of the most vocal critics of the governor’s response to the
virus.

“Those mayors, they’re not making decisions based on political whims, they’re listening to experts, listening to the science,” said Fernandez, who agrees with Romero and Gallego that the governor’s response to the virus – whether that means allocating funding or shutting down businesses – should be more aggressive.

“I’d rather look back and say we did too much,” Fernandez said.

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