County gets $183M in federal funds; guidelines to use money are broad

County gets $183M in federal funds; guidelines to use money are broad

Expenses related to pandemic are eligible

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Last week, Montgomery County received $183 million from the federal government to help cover costs related to the coronavirus pandemic. Now county officials are planning how to reimburse or fund spending on efforts to assist residents and stop the spread of the virus.

Rich Madaleno, the county’s budget director, told Bethesda Beat on Monday evening that he and Dr. Earl Stoddard, executive director of the county’s Office of Emergency Management and Homeland Security, will develop a plan. County Executive Marc Elrich asked them to look at how the funds would be used across county services and community needs.

They expect to give the County Council a plan by next week. It would include the budgets for the current fiscal year and the next one.

Madaleno said he was pleased with how broad the federal guidelines are for the funds. The U.S. Department of the Treasury released the guidelines last week.

The $183.4 million came to the county through the Coronavirus Aid, Relief, and Economic Security Act, or CARES Act.

“[The guidelines] could have focused on some of the policy goals of the Trump administration, but they seemed to stay away from that,” Madaleno said. “It didn’t take shots at public sector unions, it didn’t take shots at immigrants or providing services to immigrants. There are things where I feared they… would veer into politics, but fortunately, the guidelines do not.”

The federal funds, which are the first federal aid payment to the county, will cover expenses between March 1 and Dec. 30. They must only be used for expenses not accounted for in the county’s budget for the current fiscal year, most recently approved as of March 27.

“Obviously, we want to make sure that some of it lasts because we’ll probably be needing to help with food insecurity for months to come, whereas putting money into surge capacity for hospitals might be a more immediate one-time cost,” Madaleno said.

Madaleno said he and Stoddard are working on many different approaches for how to use and spread out the funds.

“We are working in tandem with the council staff on that, as well,” he said. “So it’s not like we’re doing it in a locked box and excluding them. We’re definitely reaching out to the council in order to help shape the plan.”

Madaleno said the county is expecting additional federal funds for Montgomery County Public Schools soon. Also, more financial support is expected for transportation and housing needs.

He said the county does not know yet how much more it will receive in federal aid.

“I am assuming, I am hoping, I would be pleading with our federal representatives to make sure this is not all we get,” Madaleno said.

The National Governors Association, which Hogan chairs, asked Congress on April 11 to approve $500 billion in aid to states.

The eligible use of the funds from the CARES Act include:

● Medical expenses such as constructing temporary public medical facilities to increase COVID-19 treatment capacity, testing, public telemedicine, and emergency medical transportation
● Public health expenses that include communication and enforcement of public health orders, purchases and distribution of medical supplies, and disinfection of public areas and facilities
● Payroll expenses for public safety, public health, health care, human services, and other employees whose roles are dedicated to mitigating or responding to the public health emergency
● Expenses for facilitating compliance of public health measures, such as food delivery to residents; distance learning and technology improvements for schools; sick and paid family and medical leave to public employees complying with public health precautions; sanitation and improving social distancing in state prisons and county jails; and homeless population needs
● Expenses for provisions of economic support because of the public health emergency that include grants to small businesses for losses caused by required closures, payroll support programs, and unemployment insurance costs
● Other expenses that are related to the pandemic and are necessary to the function of the government that satisfy the fund requirements

Madaleno said the funds could be used to reimburse the council’s spending for business and nonprofits grants, individual and family grants, rental relief, purchase of masks for vulnerable residents and public transit riders, or other needs.

Some examples of what the county cannot use the funds for include damages covered by insurance, legal settlements, severance pay, payroll or benefits for employees not dedicated to the pandemic response, reimbursement for donated items or services, and workforce bonuses other than hazard pay or overtime.

“Maryland has been declared a major disaster area, so we are eligible for reimbursement for a bunch of other costs. … We’re eligible for reimbursement through FEMA (Federal Emergency Management Agency),” Madaleno said. “We also have to decide, what should we use the [Coronavirus Relief Fund] money for and what should we submit to FEMA for reimbursement?”

Madaleno said the county hasn’t heard when it can submit reimbursement requests from FEMA yet. In years past, FEMA hasn’t reimbursed the county for damages until a year after the event, he said.

“Do we have to wait until victory is declared and then submit? It’s just a different type of disaster and hopefully, the process will work itself out,” Madaleno said.

At the County Council’s April 16 meeting, some council members criticized Elrich for not sending over a savings plan for the current fiscal year or a revised budget proposal for next year.

Before the guidelines were released on April 22, Elrich told Bethesda Beat that he planned to pull together recommended revisions to the proposed $5.9 billion budget for the council once the county received the guidelines.

He said a revised budget proposal would be provided to the council before its budget vote on May 21. The county charter requires the council to adopt a budget by June 1.

“We don’t want to do things in a sense of panic not knowing everything we need to know,” Elrich said. “I think the most important thing is to produce the best budget you can produce based on the best information you have on hand. … We’ll definitely give the council a path for things they can revise.”

Council officials have discussed three scenarios for lost tax revenues from fiscal years 2020 and 2021:

● a short recession and quick recovery (until the end of FY21), with a loss of $150 million to $250 million
● a short recession and long recovery (until FY24), with a loss of $260 million to $500 million
● a deep recession and long recovery (until FY25 or FY26) , with a loss of $360 million to $600 million

None of the projections consider changes in spending or the possibility of additional federal or state aid. Craig Howard, deputy director of the council, told the council on April 16 that the first scenario is the least likely.

As far as a savings plan, Elrich said on April 22 that “nothing is hanging in the balance” based on it. A freeze on the county’s nonessential hiring and procurements was placed on March 18.

“I am loath to start cutting services to people so I can show nice, shiny, untouched reserves. … Right now, we haven’t needed to send over a savings plan. We’ve already acted on that,” he said. “We’re doing everything we can do to save money right now.”

Elrich said maintenance and utility bills for libraries and other closed facilities have gone “way down” in cost and there have been reductions in fuel costs from decreased Ride-On bus services.

When asked what items he would be willing to cut from his proposed budget, Elrich said he and county staff members will come up with suggestions.

“I don’t want to throw anything out there at this moment. I’ve assumed that they’re not going to support the [3.2-cent supplemental property] tax increase,” he said. “You can’t use that money for anything but school spending. If you’re not going to use that money for public schools, then you … lose the taxes and then we need to come up with a little bit more money because we want to maintain ‘maintenance of effort.’”

“Maintenance of effort” refers to the requirement that the county fund the school system at no less than the level of the previous year, based on per-pupil spending.

On Monday, Madaleno reiterated the county administration’s stance.

“I think there’s a growing awareness [among council members] that we don’t need a savings plan in order to save money,” he said.

Briana Adhikusuma can be reached at briana.adhikusma@bethesdamagazine.com.

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For other Bethesda Beat coverage of the coronavirus, click here.

To see a timeline of major coronavirus developments in Maryland and Montgomery County, click here.

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