Virginia Federal COVID Bucks Still Flowing, With $2B More to Go

By Steve Haner

From SFAC presentation slide.

Virginia still has $1.7 billion in federal COVID “free money” to spend and two years in which to spend it, from just one of the multiple grant programs President Joe Biden and Congress authorized and paid for with federal debt.

That first and largest program is for general government expenditures (State and Local Fiscal Recovery Fund or SLFRF), and Virginia was allocated a total of $4.3 billion. There have been three rounds of this funding and fully $441 million still is not even obligated for some future purpose but needs to be soon.

More than $3 billion in additional grants were targeted only to elementary and secondary schools, with $270 million of that remaining to be spent. That program, mainly Elementary and Secondary School Emergency Relief Funds or ESSER, had quicker deadlines for use. About $70 million was directed to non-public schools, a pittance in comparison, but at least they were not ignored.

The update came in two presentations Tuesday (here and here) to the Senate Finance and Appropriations Committee. One member, Senator Barbara Favola, D-Arlington, considered the following advice to the Youngkin Administration so important she repeated it after both presentations: “It is incredibly important that we not leave any of these federal dollars on the table.”

The report indicated a bit under $300,000 from the first two rounds of school funding did not get used in time. But the legislators were assured every effort would be made to spend the remaining available funds on time and prevent additional clawbacks. 

COVID itself is on the wane again, and the state is once again changing its reporting process and migrating the data to another platform for public information. It will track other respiratory illness along with COVID. The old COVID dashboard with its years of trend data retires next week. But this spending, most from the American Rescue Plan Act, was more about Keynesian economic stimulation, not disease mitigation.

There were plenty of ways the money could be spent (pages 4-5 on the first slide deck), including directly on transportation, water, sewer or broadband expansions. Premium pay could be funded. The SLFRF money could also go to education, and $400 million or more did, with another $100 million to the State Council for Higher Education in Virginia (SCHEV.) The goal of the American Rescue Plan Act was to pump up the economy, fatten the money supply, and it worked so well the cost of groceries exploded.

The legislators were also told Virginia is further along in spending this money than most other states. We are one of 15 that has at least allocated 100% into agency budgets, and with 90% of the money tied to actual projects we are ahead of 32 other states. 

The SLFRF money has been split between 42 different state agencies, some of which have spent their full appropriation and some of which are in the process of paying for longer term projects. The Virginia Employment Commission got the largest pot, all fully spent. The Department of Environmental Quality got the second largest allotment, and those funds are still being trickled out on contracts.

Using less than $10 million each were 17 agencies, including the Office of the Governor, the Attorney General’s Office and the Department of Historical Resources (masks and plastic screens in historical buildings?) 

Was there any consideration given to saying, hey, these things we are paying for have nothing to do with public health, and the state is running surpluses so we actually could pay for much of it. Perhaps we should not impose all this debt on the next generation at 5-6% compounded?  Nope, federal largesse come with no state political consequences – keep it rolling out the door!