State finally gets COVID-19 relief money, not yet sure what to do with it

Georgia House Minority Whip David Wilkerson, D-Powder Springs, said he hopes state officials take their time in deciding what to do with the $4.8  billion the state will receive in federal COVID-19 relief funds. “You really need to have more of a discussion than five people sitting in a room, blowing the money,” Wilkerson said. “If you can do hearings across the state on redistricting, you can do hearings on what to do with several billion dollars.” (Alyssa Pointer / Alyssa.Pointer@ajc.com)
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Georgia House Minority Whip David Wilkerson, D-Powder Springs, said he hopes state officials take their time in deciding what to do with the $4.8 billion the state will receive in federal COVID-19 relief funds. “You really need to have more of a discussion than five people sitting in a room, blowing the money,” Wilkerson said. “If you can do hearings across the state on redistricting, you can do hearings on what to do with several billion dollars.” (Alyssa Pointer / Alyssa.Pointer@ajc.com)

Credit: Alyssa Pointer / Alyssa.Pointer@ajc.com

More than two months after President Joe Biden signed a COVID-19 relief bill that promised the state about $4.8 billion, some of the money finally found its way to Georgia on Thursday.

Gov. Brian Kemp’s office is expected to soon announce committees that will take applications for spending the money over the next few years. The committees, in turn, will make recommendations to the governor, who by law makes the final decision.

Kelly Farr, the governor’s budget director, said the state had to wait until the U.S. Department of Treasury put out guidance for how to spend the money before releasing it.

“Everybody in Washington was talking in March about needing to get money into the economy then,” Farr said before half the state’s share arrived Thursday.

Georgia House Minority Whip David Wilkerson, D-Austell, said he hopes state officials take their time in deciding what to do with the enormous federal windfall.

“You really need to have more of a discussion than five people sitting in a room, blowing the money,” Wilkerson said. “If you can do hearings across the state on redistricting, you can do hearings on what to do with several billion dollars.”

The $1.9 trillion relief package Biden signed in March is sending billions to Georgia cities and school districts as well.

When the pandemic hit in March 2020, state and local governments expected a deep recession after many businesses shut down and millions of people were thrown out of work. State leaders backed national calls for a $500 billion federal package to make up for expected lost tax revenue.

State tax revenue helps pay for k-12 schools, universities, public health care, roads and a host of other things.

While a major economic downturn was expected, economies in some states, including Georgia, bounced back relatively quickly. And now the state of Georgia is expecting a sizable tax surplus when fiscal 2021 ends on June 30.

Some states plan to use relief money to fill holes left by declining local tax collections.

Others are talking up proposals to repair aging water, sewer and transportation systems, to improve mental health programs and to create the infrastructure needed to offer high-speed internet to the millions of Americans who don’t now have it.

The U.S. Treasury Department last week came out with broad guidelines for spending the money, and Kemp said there’s a chance to use it for “generational change” with broadband infrastructure, particularly if the state can combine its allotment with other pots of funding going to local governments and schools.

”We want to be very smart and efficient, but we have a chance here,” the governor said.

The need for expanding high-speed internet access — particularly in rural Georgia — has been a hot topic at the General Assembly for years, but lawmakers could never come up with a way to pay for it without raising taxes and fees.

That talk only accelerated when schools closed down at the start of the pandemic and distance learning took the place of in-person instruction.

The money coming to Georgia can be used broadly for COVID-19 response, including making direct payments to Georgians, providing aid to small businesses and giving extra pay for “essential workers,” as well as funding infrastructure projects.

After the relief package passed and Biden signed it into law, legislators said they hoped to have some say in what to do with the money.

So Kemp announced on March 31, the last day of the 2021 General Assembly session, that he would set up committees to review applications to spend the federal relief money.

It’s unclear whether those committees will meet in public.

Last year federal CARES Act funding paid for Georgia’s response to the pandemic. Kemp also used $1.5 billion in federal pandemic relief money to shore up the fund that pays unemployment benefits after a record number of Georgians lost their jobs.

Federal relief money that went to the Georgia Department of Education was used for $1,000 teacher bonuses, and extra federal money indirectly paid for state employee bonuses as well.

As in the case of the CARES Act money, the state probably won’t use the relief money approved in March for anything that has an ongoing cost attached to it.

So, while some of the money could be spent, for instance, on one-time checks to help individual Georgians or businesses, or bonus checks to state employees, it won’t go for teacher pay raises, which would be built into the budget every year going forward.

That’s why the state will likely receive lots of applications to spend the money on one-time things, such as fixing leaky water systems, upgrading runways at rural airports or building the high-speed internet infrastructure needed to provide service to more of southwest Georgia.

The Treasury Department said the relief money can’t be used directly to cut taxes, but Republican attorneys general across the country sued the administration over that provision in the law.

And state tax revenue is coming in so fast right now, Kemp and lawmakers could make the case next year that they can cut taxes — most likely the income tax rate — without using any relief money.

The General Assembly passed and Kemp signed into law in March a modest state income tax cut that was already in the works. The federal government didn’t object.

Democrats would like the state to expand Medicaid to put hundreds of thousands of more Georgians on the public health care program for the poor and disabled. However, the state would have to commit annually to spending tens of millions of dollars more on the program, and the federal relief money runs out in a few years.

Georgia is only receiving half of its federal money this year. States where the unemployment rate now is less than 2 percentage points above the pre-pandemic level will get half this year, half next year.

States above that unemployment rate threshold — which range from California and Texas to Maryland and North Dakota — will get it all now.

Kemp said that “rewards states that are not opening back up (from COVID-19) with more federal money,” although Texas is an example of a state that lifted business restrictions quickly.

And the $2.4 billion the state is receiving from the feds this year is still a huge chunk of money it hasn’t decided how to spend.

Wilkerson said he’d hate for the state to squander a once-in-a-lifetime opportunity to make improvements to schools, health care and infrastructure it couldn’t afford without the relief money.

“The worst thing you want to do is spend the money and have people upset later on that you wasted it,” he said.

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