With nearly a quarter of the West Virginia Legislature’s 2023 regular session over, lawmakers have expressed little concern about a $28.3 million transfer of federal COVID-19 stimulus money that was unexpended at the federal spending deadline or what became of the money afterward.
On Sept. 30, almost a thousand days after Gov. Jim Justice declared a COVID-19 state of emergency in West Virginia, $28,375,985 remained in West Virginia’s CARES Act cash balance, according to State Auditor’s Office data.
West Virginia received $1.25 billion in funding from the CARES Act, which was passed in 2020. That means $2.26 of every $100 that the federal government gave West Virginia went unspent by the deadline to spend it.
Under federal Department of the Treasury guidance, any recipient’s remaining amount from the Coronavirus Relief Fund established by the CARES Act not used for eligible expenses obligated by Dec. 31, 2021, must be returned to the Treasury. The feds consider unreturned funds a debt owed to them.
Rather than return the roughly $28.3 million to the federal government, the Governor’s Office transferred it into the Governor’s Office Gifts, Grants and Donations Fund, a fund that has been budgeted only $50,000 in recent years.
Governor’s Office staff members say the state used CARES Act money to reimburse itself for previously paid COVID-related expenses, and therefore, the funding isn’t subject to Treasury guidance.
“Let’s say the state’s green and the federal money’s blue,” Governor’s Office Deputy Chief of Staff Ann Urling, a former banker, said in a November phone interview. “What would happen is, we’d spend green dollars and then reimburse ourselves with blue dollars. But once you reimburse yourself with a blue dollar, it becomes green because it becomes state money.”
Governor’s Office spokesman Jordan Damron said the money transferred to the Governor’s Gifts, Grants and Donations Fund likely would be spent on testing, staffing costs of local health departments and other agencies, personal protective equipment and vaccination distribution costs. Damron reported in October that the state Department of Health and Human Resources had racked up $45 million in invoices to be processed just for testing.
That same month, Justice approved $10 million from the Gifts, Grants and Donations Fund to be paid to Marshall University to support constructing a new baseball stadium for the school, according to a letter from Justice to the Auditor’s Office.
Justice’s approval of the $10 million transfer came Oct. 5, five days after the $28.3 million in CARES Act money was transferred to that fund.
On Sept. 29, Justice announced a $13.8 million contribution to the stadium project slated for completion in March 2024. The governor joined Marshall University President Brad Smith and Athletic Director Christian Spears to make the announcement at the future home of Marshall baseball.
Justice, a Marshall alumnus, presented an oversized $13.8 million check to the university before throwing out a ceremonial first pitch.
The Governor’s Office said the $13.8 million was to come from the West Virginia Water Development Authority’s Economic Enhancement Grant program established this year through the Legislature’s allotment of $250 million from the American Rescue Plan Act, a sweeping federal COVID-19 package enacted last year.
The Water Development Authority approved the $13.8 million grant for the Marshall baseball stadium project at a Sept. 29 meeting — the same day as Justice’s announcement at the site.
Water Development Authority Executive Director Marie Prezioso said last month that the Governor’s Office later told her the agency only needed to provide $3.8 million of the approved $13.8 million, leaving $10 million left over. Prezioso said she wasn’t informed why.
There was $252 million in the Economic Enhancement Grant Fund as of last month, according to the Auditor’s Office.
The Governor’s Office has not responded to requests for comment on the $10 million transfer from the Gifts, Grants and Donations Fund to Marshall.
Senate Finance Chairman Eric Tarr, R-Putnam, asked Revenue Secretary Dave Hardy about the late September transfer to the Gifts, Grants and Donations Fund during a Senate Finance Committee meeting last week. Tarr asked Hardy what the transfer was spent on.
Hardy, who presented a report on Justice’s proposed fiscal year 2024 budget, referred that question to state budget director Michael Cook, who was not present.
Cook did not respond to a request for comment.
Members of the Senate Finance Committee sharply questioned Hardy about Justice’s proposed 50% reduction in the personal income tax over three years, with some arguing that it would slash critical revenue for the state.
Some Finance Committee members voiced broader concern about potential for federal clawbacks — recovery of previously disbursed money.
But there’s been little scrutiny of the $28.3 million transfer or the $10 million support for Marshall’s baseball stadium.
The $28.3 million transfer wasn’t mentioned during Cook’s presentation to the Finance Committee the previous week. It also wasn’t mentioned during a discussion of Water Development Authority funding opportunities, including the Economic Enhancement Grant program, after a presentation Prezioso gave to the House of Delegates Technology and Infrastructure Committee last week.
House Speaker Roger Hanshaw, R-Clay, has said he hasn’t received any documentation to indicate there are any problems with CARES Act funding, Deputy Chief of Staff and House Communications Director Ann Ali said Monday when asked for comment on the $28.3 million transfer and $10 million payment to Marshall.
While Senate leadership has been skeptical of Justice’s budget oversight, the House overwhelmingly passed Justice’s personal income tax cut bill last week.
Jared Walczak, vice president of state projects at the Tax Foundation, an independent tax policy nonprofit, called the state reimbursing itself with CARES Act money for previously incurred COVID expenses “unusual.” Walczak noted that the previously incurred expenses would have to be documented and eligible.
Kentucky spent all of its CARES Act funding and didn’t use any CARES Act money after the Sept. 30 deadline to reimburse itself for previous COVID-related spending, according to that state’s Governor’s Office spokeswoman, Crystal Staley. Ohio and Pennsylvania spent all their CARES Act funding before the Sept. 30 deadline, according to spokespeople from the Ohio Office of Budget and Management and the Pennsylvania Governor’s Office.
Urling said the global financial consulting firm BDO vetted West Virginia’s expenses. The Governor’s Office didn’t contact the Treasury regarding the reimbursement of CARES Act money, Urling said, touting the BDO guidance instead.
Treasury spokeswoman Julia Krieger directed questions regarding coronavirus relief funding oversight and compliance to the Treasury Office of the Inspector General, which did not respond to a request for comment.
Hardy told the Senate Finance Committee last week that the Department of Revenue was “pretty involved” in CARES Act funding at the outset of the pandemic until fall 2020.
“[T]hen that was gradually moved over to the Governor’s Office,” Hardy said. “But we do offer calculations and advice in every way we can.”
Hardy said the Governor’s Office also has handled compliance with the American Rescue Plan Act. West Virginia still has $677 million left in funding from that law, passed by Congress in 2021.
The Governor’s Office, as of this writing, had not provided records responsive to a Freedom of Information Act request filed Nov. 7 by the Charleston Gazette-Mail for records showing the expenses and recipients of the $28.3 million set aside to spend by the Governor’s Office that the state says it later reimbursed with CARES Act funding.
