WV Senate Finance to hold hearing focusing on leftover $28.3M transfer in CARES Act funding into Governor’s Office fund | Legislative Session
A finance panel of West Virginia lawmakers will hold a hearing that will focus on the governor’s transfer of $28.3 million in COVID-19 stimulus funds that were unspent by the federal spending deadline.
Senate Finance Committee Chairman Eric Tarr, R-Putnam, announced Wednesday in the Senate that his committee would hold a budget hearing Friday morning that would consider moving the money into a fund controlled by the governor’s office.
That fund, the Governor’s Office Gifts, Grants and Donations Fund, distributed $10 million to Marshall University days after that transfer last fall to help build a new ballpark.
“So there were a lot of questions about how all of this happened and we’re going to try to sort that all out,” Tarr said in announcing the hearing on Friday.
The hearing is scheduled for 11:30 a.m. A review of the $28.3 million transfer will be the first item on the hearing’s agenda. Tarr said the second item will be a broader agency-by- agency budget review.
“So this could be a long finance committee meeting,” Tarr said.
As of Sept. 30, nearly a thousand days after Gov. Jim Justice declared a COVID-19 state of emergency in West Virginia, $28,375,985 remained in the state’s CARES Act cash balance, according to the State Auditor’s Office.
There was $17,864,226 in the Governor’s Office Gifts, Grants and Donations Fund as of Wednesday, according to the Court of Auditors.
The governor’s office did not respond to a request for comment Wednesday.
West Virginia received $1.25 billion in funding from the CARES Act, which passed in 2020. That means $2.26 out of every $100 the federal government gave West Virginia remained unspent by the deadline.
Under Federal Treasury Department guidelines, any remaining amount from the Coronavirus Relief Fund established by the CARES Act that is not used for eligible expenses committed by December 31, 2021 must be returned to the Treasury Department. The Feds view unreturned funds as debt owed to them.
Rather than repay the approximately $28.3 million to the federal government, the governorate transferred it to the Governor’s Office Gifts, Grants and Donations Fund, a fund that has been valued at just $50,000 in recent years.
Governor’s Office officials say the state used money from the CARES Act to reimburse itself for previously paid COVID-related expenses and therefore the funding is not subject to Treasury Department guidelines.
“Let’s assume that of the state [money is] green and federal money blue,” said Ann Urling, deputy chief of staff for the governor’s office, a former banker, in a November telephone interview. “What would happen is we would spend green dollars and then pay back us blue dollars. But as soon as you reimburse yourself with a blue dollar, it turns green because it becomes government money.”
Governor’s Office spokesman Jordan Damron said the money that will be sent to the Governor’s Office Gifts, Grants and Donations Fund will likely go toward testing, personnel costs from local health departments and other agencies, personal protective equipment and vaccine distribution costs issued. Damron reported in October that the state Department of Health and Human Resources had collected $45 million worth of bills to be processed for testing purposes only.
That same month, the judiciary approved $10 million from the Gifts, Grants and Donations Fund to be paid to Marshall University to help build a new ballpark, according to a letter from the judiciary to the Auditor’s Office.
The judiciary’s approval to transfer $10 million came on Oct. 5, five days after the $28.3 million in CARES Act funds were transferred to that fund.
On September 29, Justice announced a $13.8 million contribution to the stadium project, which is scheduled for completion in March 2024. The governor joined Marshall University President Brad D. Smith and athletic director Christian Spears to make the announcement at Marshall Baseball’s future home.
Justice, a Marshall alumnus, presented the university with an outsized check for $13.8 million before hosting a ceremonial first toss.
The governor’s office said the $13.8 million should come from the West Virginia Water Development Authority’s Economic Enhancement Grant program, which was established through the state legislature’s allocation of $250 million from the American Rescue Plan Act a comprehensive federal COVID-19 package enacted last year.
The Executive Director of the Water Development Agency, Marie Prezioso, said in a December phone interview that the governor’s office later told her that the agency needed to allocate only $3.8 million of the $13.8 million approved, leaving $10 million. Prezioso said she was not informed why.
According to the Court of Auditors, there was $252 million in the Economic Enhancement Grant Fund as of December.
The Office of the Governor has not responded to requests for comment on the transfer of $10 million from the Gifts, Grants and Donations Fund to Marshall.
Prezioso and the governor’s office attorney, Berkeley Bentley, accepted invitations to attend the hearing, Senate communications director Jacque Bland said.
Tarr asked Treasury Secretary Dave Hardy during a Senate Finance Committee meeting last month about the transfer to the Gifts, Grants and Donations Fund in late September. Tarr asked Hardy what the transfer was spent on.
Hardy, who presented a report on Justice’s proposed fiscal 2024 budget, referred the issue to State Budget Director Michael Cook, who was absent.
Cook has not responded to requests for comment.
Members of the Senate Finance Committee sharply questioned Hardy about Justice’s proposed 50 percent three-year personal income tax cut, with some arguing that it would cut key revenue for the state.
Some members of the Finance Committee expressed greater concern about the potential for federal clawbacks — recovering previously disbursed funds. But the $28.3 million transfer or $10 million endorsement for Marshall’s ballpark has received little investigation.
The $28.3 million transfer was not mentioned in Cook’s presentation to the Finance Committee last month.
It was also not mentioned during a discussion of the Water Development Authority’s funding options, including the Economic Enhancement Grant program, following a presentation Prezioso made to the House of Delegates’ Technology and Infrastructure Committee last month.
House Speaker Roger Hanshaw, R-Clay, said he has not received any documentation suggesting there are problems with funding under the CARES Act, House Deputy Chief of Staff and Communications Director Ann Ali said on Tuesday Monday when asked for comment on the $28.3 million transfer and $10 million payment to Marshall.
While Senate leadership has been skeptical about the judiciary’s budget oversight, the House of Representatives overwhelmingly passed legislation last month to cut the judiciary’s personal income tax.
Jared Walczak, vice president of government projects at the Tax Foundation, an independent nonprofit tax policy, called the state using CARES Act funds to reimburse itself for previously incurred COVID expenses “unusual.” Walczak pointed out that previously incurred expenses must be documented and eligible.
According to spokeswoman for that state’s Office of the Governor, Crystal Staley, Kentucky spent all funding from the CARES Act and did not use any CARES Act money to fund past COVID-related expenses after the September 30 deadline reimburse Ohio and Pennsylvania spent all of their CARES Act funds before the Sept. 30 deadline, according to spokespersons for the Ohio Office of Budget and Management and the Pennsylvania Governor’s Office.
Urling said global financial advisory firm BDO reviewed West Virginia’s spending. The governor’s office has not contacted the Treasury Department regarding reimbursement of funds from the CARES Act, Urling said, instead promoting the BDO guidelines.
Treasury spokeswoman Julia Krieger directed questions about monitoring and compliance with funding for Corona aid to the Inspector General’s Tax Office, which did not respond to a request for comment.
Hardy told the Senate Finance Committee last week that the Treasury Department was “fairly involved in funding the CARES Act” at the start of the pandemic through fall 2020.
“[T]Then that gradually moved to the governor’s office,” Hardy said. “But we offer calculations and advice in every way we can.”
Hardy said the governor’s office also oversaw compliance with the American Rescue Plan Act. West Virginia still has $677 million in funds from this bill, which passed Congress in 2021.
The Office of the Governor has recommended that $500 million of those remaining funds go to an Economic Development Agency fund, with most of the remaining funds going to the Water Development Agency. The House Finance Committee will hold a public hearing on Thursday at 2 p.m. in the House of Representatives on House Bill 2883, the bill requested by the Governor’s Office that would allocate the remaining funds of the American Rescue Plan Act accordingly.
