Legislative leadership is abdicating its appropriations powers by allowing Gov. Jim Justice to award more than $20 million to date in CARES Act Small Business Grants without legislative oversight, the minority chairman of the House Finance Committee said.
“It’s not a question of a lack of legislative oversight. It’s a question of complete absence of legislative oversight,” Delegate Mick Bates, D-Raleigh, said.
Since late July, Justice has handed out more than 4,000 grants, most for $5,000, but some $2,000 grants to sole proprietors, out of $1.25 billion in federal CARES Act pandemic relief funds the state received in April.
According to the state Auditor’s Office Tuesday, a total of $18.89 million of grants have been awarded, with another $2.46 million in grants held up for a variety of issues.
Some of those grants have drawn scrutiny, including $5,000 grants Justice awarded last week to VIP Gentlemen’s Club, doing business as the Lust Gentlemen’s Club, an upscale strip club in Martinsburg; and to legislative lobbyist Larry Puccio, who clientele includes Justice’s Greenbrier resort.
Besides lobbying for Justice, Puccio chaired his gubernatorial transition team in 2016 and gave a maximum $2,800 contribution to the Justice campaign last October, leading to his forced resignation from the state Democratic Executive Committee.
“I’m sure Larry’s business was impacted in some way, but surely not as much as other small businesses,” Bates said of the latter grant.
Senate Minority Leader Roman Prezioso, D-Marion, a former finance chairman and the de facto minority chairman of the Senate Finance Committee, also questioned the grants Tuesday.
“Why did Puccio get a grant? Here’s a guy working for the [Justice] campaign, and lobbying for The Greenbrier, and the governor gives him a grant?” Prezioso asked. “There’s no shame anymore. Why would a strip club need a grant?”
As for grants that some taxpayers might find questionable, Bates said he is concerned there are no published guidelines for how the grants are to be awarded.
“What’s the criteria? What’s the standards? If you send in the application, you’re good to go? Is that how it works?” he asked.
Also raising issues with the screening process is that a sizable percentage of grant awards have been returned to the Governor’s Office for a variety of problems, including, most commonly, the lack of state vendor numbers or incorrect vendor numbers.
According to the state Auditor’s Office, 724 of the 4,728 grants submitted by the Governor’s Office have been rejected through Tuesday — about a 15% rejection rate.
While the majority of grants were rejected for vendor number or WorkForce West Virginia issues, 74 were duplicate awards to the same vendor, and one application was rejected by the Governor’s Office review committee.
Prezioso said that, without legislative oversight, there are no checks and balances on Justice’s awarding of the grants.
“As legislators, we’re the ones with the constitutional responsibility for how the money’s being spent,” said Prezioso, who is not seeking reelection this year after serving 32 years in the Legislature. “I’ve said from the beginning we should be involved in this, but I guess, what’s the good of being a monopoly if you can’t abuse it?”
Bates, who received a Small Business Grant for his Praxis Corp., said it all boils down to the refusal of Senate leadership to demand a special session on the state pandemic response.
“Everyone knows what’s going on, but we’re powerless to stop it until the legislative leadership gets its act together,” he said.
“If Justice were still a Democrat, they’d be losing their liberty-loving, fiscally conservative minds,” Bates said of Justice’s spending of the $1.25 billion of CARES Act funds without legislative oversight.
According to the Auditor’s Office, through Tuesday, the Justice administration has appropriated $253.99 million of the CARES Act funds.
Senate President Mitch Carmichael, R-Jackson, has said previously that legislative leadership has been able to work with the Governor’s Office in an advisory capacity on the pandemic, precluding the need for a special session.
Bates argued that, at the very least, leadership should call a meeting of the interim legislative Joint Committee on Government and Finance to review the Small Business Grants.
Prezioso said of the lack of legislative oversight, “It’s not right, but there’s nothing we can do about it because Justice holds all the cards.”
Senate Finance Chairman Craig Blair, R-Berkeley, and House Finance Chairman Eric Householder, R-Berkeley, could not be reached for comment.
Justice previously set aside $150 million of CARES Act funds for the Small Business Grants. Wednesday is the deadline to submit grant applications.