PHOENIX (AP) - All five Democratic members of Arizona’s U.S. House delegation want Republican Gov. Doug Ducey to explain how his use of nearly $400 million in federal coronavirus relief funds met Congress’ intent that the money be used only for pandemic relief.
Ducey used more than 20% of the $1.86 billion the state received in federal CARES Act relief to backfill agency budgets, allowing them to return cash to the general fund.
The strategy contributed to a major state budget surplus that the governor now wants to use to cut income taxes by $600 million a year. He also plans to use $134 million in remaining federal cash to boost the state unemployment insurance fund, allowing businesses to avoid a small increase in the rate they pay to the program.
A letter sent by Reps. Raul Grijalva, Ruben Gallego, Ann Kirkpatrick, Tom O’Halleran and Greg Stanton questions whether funding agency budgets met congressional intent to provide relief to businesses, schools, renters and others when it passed the massive CARES Act last spring.
The letter recognizes that Ducey gave some of the money to local governments and spent some to support COVID-19 testing, rental assistance, schools and other virus-related needs. But it says, “these programs clearly require additional support to meet Arizonans’ enormous need during this crisis,” and it questioned his use of the $397 million when those needs remain.
The letter notes that the governor’s office didn’t publicly disclose its use of the money, even as it has consistently touted expenditures that help the public.
Ducey spokesman C.J. Karamargin said Friday that the money was all used for COVID-related expenses as required by Congress.
Others have joined the House Democrats in questioning how the governor has been using the money.
Jared Walczak, vice president of state projects at the Tax Foundation’s Center for State Tax Policy, told the Arizona Capitol Times when it first reported Ducey’s diversions in November that Congress required states to uses CARES Act money to replace revenue lost due to the pandemic. Ducey was being particularly aggressive in how he interpreted the rules on its use, he said.
“Most states have avoided what might be interpreted as directly disregarding the guidance, but many have been flexible in the interpretation of that guidance in hopes that ultimately the Treasury will be similarly flexible in the accountability standards,” Walczak said. “Nonetheless, what’s being proposed in Arizona is a very aggressive interpretation.”
Wednesday’s letter from the members of Congress mentioned the possibility that the Treasury Department could force Ducey’s administration to repay misspent cash.
It asked whether Ducey’s office has talked with Treasury’s inspector general to ensure the governor was correctly using the money “and to prevent the severe harm that would come to the state if such money were to be recouped?”
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