CARES Act rules need flexibility

The $150 billion in federal aid intended to help states with expenses related to COVID-19 should not be a case of water, water everywhere — but not a drop to drink. Unfortunately, some governors worry that may be the case.

One might have assumed that in the 880 or so pages of text comprising the federal CARES Act, specific guidance would have been given to states receiving shares of the $150 billion. But no, Washington can be quite vague in such matters.

Wording in the CARES Act stipulates that states may spend money they receive through it to cover “necessary expenditures incurred due to the COVID-19 pandemic.” Those expenses must have occurred between March and December of this year.

Officials in some states have interpreted the wording to ban use of CARES money to fill holes created in their budgets by the epidemic. Deficits are being created because revenue is lagging behind projections, due principally to the massive shutdown of large sectors of the economy. In addition, unforeseen expenses have arisen.

That last clearly falls under the CARES Act. But what about budget shortfalls stemming not from unexpected spending but rather, from revenue not flowing in as expected?

Reportedly, U.S. Department of the Treasury officials have signaled they intend to be flexible in interpreting the CARES Act. But how much so?

States able to trace revenue losses to COVID-19 clearly should be entitled to use CARES Act money to backfill their budgets. If that cannot be accomplished through flexible enforcement of the law, Congress may have to amend the CARES Act. Otherwise, the job of balancing state budgets may be left up to — you guessed it — hard-pressed taxpayers.


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