With a possible lawsuit looming, Gov. Doug Ducey on Wednesday finally let go of some of the federal cash he got for local communities.
But not all of it.
In fact, Ducey is allocating only $441 million, a quarter of the more than $1.9 billion he is getting in coronavirus relief dollars. Most of the rest, he said, will be set aside for future needs of the state, including the possibility of replenishing the state’s unemployment insurance trust fund if it runs dry.
The move comes two weeks after the Pinal County Board of Supervisors voted to file suit to force Ducey to let go of the cash.
Strictly speaking, the plan was to sue not the governor but the Department of the Treasury for the wording of its written guidance for distributing Coronavirus Aid, Relief and Economic Security Act funds. The argument is that by using the word “may” instead of “shall,” it gives governors too much leeway in deciding how much each community gets.
That amount computes out to $114.80 per city or town resident. Counties get the same amount, but only for the population living in unincorporated areas.
For Pinal County, for example, the aid is less than $27.2 million.
County Attorney Ken Volkmer told the board of supervisors that the state’s three largest cities — Phoenix, Tucson and Mesa — as well as Pima and Maricopa counties got their own direct allocation, free from gubernatorial discretion. And he said that if Pinal County got the same per capita aid as Maricopa, the distribution would be more than $69 million.
Ducey brushed aside questions about the lawsuit — as well as the fact that there was no one from the Pinal County board in his hand-picked group of seven mayors and one supervisor at the event to announce the distribution.
“There’s no lawsuit necessary,” he said. “The funds are distributed.”
And as who was present, the governor noted he had invited Christian Price, who is the mayor of Maricopa.
Strictly speaking, the dollars that Ducey is giving out are supposed to be earmarked for public safety and health needs.
But the program is set up so that communities can replace the local dollars they were using for those programs with the new state aid. That, in turn, frees up those dollars for other programs.
More to the point, Ducey said, is it gives maximum flexibility to each city, town or county to decide how best to allocate the dollars.
Sahuarita Mayor Tom Murphy said that’s appropriate, given how different are the state’s more than seven dozen cities and towns and 15 counties
“We’re a relatively young city, the fifth youngest in Arizona,” he said. Murphy said Sahuarita hasn’t taken the hit in tourism that has ravaged the economies of places like Bisbee and Tombstone.
“That flexibility will come in very handy,” he said.
Prescott Mayor Greg Mengarelli said revenues in his community are expected to be down by 10 to 20 percent due to the pandemic and the business closures and travel restrictions.
“But rather than replacing those dollars, we really want to start some projects with long-term economic benefit,” he told the governor.
Mengarelli provided no specifics.
“We have a couple of projects on the shelf that we’d like to implement,” he said. “We just haven’t had the funds to do that.”
That still leaves the question of the money that Ducey got but has not given out.
Another $150 million of that is being allocated to what the governor calls the Express Pay Program.
This is designed to provide quick cash to entities seeking public assistance from the Federal Emergency Management Agency but need the money more immediately. Eligible recipients include not just local governments but also tribes, state agencies, nonprofit hospitals, school districts, fire districts and skilled nursing and assisted living providers.
Everything else, Ducey said, is going to be banked.
“This is a significant amount of money that we get to spend once,” the governor said. But Ducey said he believes that it can’t all be given out to local governments, saying he’s waiting to see what is the state’s financial situation.
“We are going to have needs at the state level,” he said. That includes the fact that more than 600,000 Arizonans have applied for unemployment insurance since the virus outbreak.
“Those are dollars that need to be replenished” he said, if the account goes to zero.
Under normal circumstances, the fund would borrow money from the federal government. That’s what happened a decade ago when the state needed to borrow $420 million.
In that case, it took a surcharge on employers — the people who finance the fund in the first place — to repay the cash. Ducey suggested that the state might instead decide to finance the deficit, letting employers off the hook.