WASHINGTON – The U.S. Senate on Wednesday rejected an effort to withdraw Treasury Department guidance on how funds approved by Congress should be spent by state and local governments during the Covid-19 pandemic.
46-49 vote The Congressional Review Act resolution ended an attempt by several GOP senators to block the Biden administration from changing the definition of “obligation” for state and local fiscal recovery funds and the schedule for spending some of that money. Both of Pennsylvania’s Democratic senators, Bob Casey and John Fetterman, voted against the resolution.
Missouri Republican Sen. Eric Schmitt said during floor debate that the Treasury Department’s change in guidance, which was released in November, was intended to “learn lessons quickly” from Congress.
“Treasury’s attempt to keep Covid spending under control is an insult to Congress and those who believe in our Constitution, and a complete misuse of taxpayer dollars,” Schmitt said.
The fund for state and local governments, Schmitt said, was intended to facilitate with “revenue shortfalls related to the Covid-19 pandemic,” and the law clearly stated that “all costs incurred from this fund must be incurred by December 31, 2024.”
An interim final rule that the Department of the Treasury released around Thanksgiving extended that deadline by two years for “administrative and legal costs, such as compliance costs and internal control requirements,” he said.
“This rule ensures that funding does not go to bridges or broadband, but to bureaucrats,” Schmitt said.
Projects affected in multiple states
Oregon Democratic Sen. Ron Wyden spoke out against the CRA resolution during floor debate, saying it could affect 17 projects in Georgia, 160 in Michigan, 342 in Ohio, 50 in Arizona, 404 in Montana and 73 in West Virginia.
“Thousands of projects could be closed across the country. “Dozens or even hundreds of jobs have been lost,” Wyden said. “It’s one of the most extraordinary voices I’ve seen recently, a real shocker.”
Wyden said he sees “no good reason for the United States Senate to roll back on solid, bipartisan progress and have the House operate in a way that will leave much of our country’s infrastructure in a state of ruin.”
During a news conference before the vote, Schmitt said the claim that the CRA’s resolution would impact projects already underway was a lie.
“In principle, commitments made before the end of 2024, in accordance with applicable law, will be honored,” Schmitt said. “That means it can’t be extended to years 25 and 26. That was never the intention of Congress.”
Kansas Republican Sen. Roger Marshall, also speaking at the GOP news conference, said the CRA resolution would recover about $13 billion and went so far as to call it “illegal spending.”
“Time will run out, but Joe Biden is once again trying to skirt the law,” Marshall said, adding that the Covid-19 pandemic is over and spending under this law must end.
Counties and cities opposed
Schmitt presented two-page CRA resolution in February with Marsha Blackburn of Tennessee, Mike Braun of Indiana, Tom Cotton of Arkansas, Joni Ernst of Iowa, Bill Hagerty of Tennessee, Ron Johnson of Wisconsin, Cynthia Lummis of Wyoming, Marshall and Rick Scott of Florida.
In a written statement released Wednesday before the vote, the National Association of Counties, the National League of Cities and the Association of Government Finance Officers urged lawmakers to vote against the CRA.
“The $350 billion SLFRF has provided $65.1 billion to every city and county in America, and starting in 2021, local communities are leveraging these critical resources to meet the unique needs of their residents and support long-term economic prosperity,” the statement said.
The three organizations wrote that the Treasury Department’s interim final rule “recognizes the importance of flexibility in facilitating the effective release of recovery funds, including our ability to use funds to cover certain staff costs and to recommit funds as needed.”
White House released on Wednesday issued a statement on administration policy saying President Joe Biden would veto the CRA if it reached his desk.
The CRA’s resolution, it said, “could result in mid-stage project cancellations, reduced project management and oversight, and higher costs as state and local governments are forced to contract out programs.”
“Almost all SLFRF funds have been allocated to projects, including infrastructure projects and disaster relief, that are eligible under bilateral legislation,” the SAP said. “SJ Reg. 57 would create unnecessary uncertainty for recipients implementing projects, jeopardize important work in progress, and inappropriately limit Treasury’s ability to address ongoing implementation issues.”
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