State auditor addresses economic impacts of COVID-19

EVANSTON — Wyoming lawmakers and statewide elected officials have begun the difficult process of determining how best to respond to the economic impacts of the COVID-19 pandemic and spend the $1.2 billion in federal funding allocated to the state through the CARES Act. Wyoming received more funding per capita than any other state but the money comes with numerous restrictions about how it can be spent.

According to State Auditor Kristi Racines, who spoke about her role with heading up the Governor’s COVID-19 Business and Financial Sector Task Force during a webinar on Tuesday, April 28, those restrictions include stipulations the money must all be used by the end of 2020, that it only be spent on expenses related to the pandemic, that it must be spent on items that were not included in the latest state budget and that it cannot be used to replace revenue lost due to the pandemic.

Racines said the result is that spending the money is complicated and there is little real guidance in the four-page guidance document issued with the funding. “The good news is it’s vague and the bad news is it’s vague,” she said. Racines said it’s disappointing the funds can’t be used to replace revenue loss that is clearly related to the pandemic and said she hopes there may be changes in the future that amend how the funds can be used.

In the meantime, however, Wyoming Gov. Mark Gordon has released details of a plan to utilize the funding, which he hopes the Wyoming Legislature will approve in a special session in the near future. Gordon’s proposal includes three phases of spending over the next several months.

Phase one would include an immediate $575 million toward emergency response and health preparedness, unemployment assistance, funding to support food banks and prevent tenant evictions, and additional business support for Wyoming small businesses to supplement assistance available through the federal Small Business Administration. Phase two would include $300 million for reimbursement for COVID related expenses for government agencies and an extension effective July 1 of support provided in phase one. Phase three would include $375 million for similar purposes as phases one and two but at dates later in the year.

Gordon’s proposal included a snapshot of Wyoming small businesses, which provide $3.3 billion in annual wages through approximately 280,000 jobs and generate an estimated $370 million in yearly sales tax revenues. As of mid-April, Wyoming businesses had received more than $850 million in SBA assistance. The SBA funding was depleted until Congress recently reauthorized additional spending, which, during a press briefing last week, Gordon said was still available.

Gordon’s proposal to the Legislature includes utilizing $350 million of the $1.2 billion federal allocation to create a Wyoming-led grant program to assist small businesses, which is reportedly an allowed use of the funding. His proposal calls for that funding to become available in two segments, with $225 million available in June and July and an additional $125 million available from August through the end of the year. The first segment would be allocated to assist businesses that did not receive SBA money and the second to help keep Wyoming small businesses viable throughout the duration of the pandemic.

The Wyoming Legislature has begun the process of drafting legislation for consideration during an upcoming special session. Three different bill drafts are posted on the Wyoming Legislature website, including one that would allocate $380 million to a COVID-19 relief account for expenses incurred to respond to the public health emergency. The most recent draft includes up to $100 million for the state government; up to $70 million for cities, towns and counties; up to $15 million for operational or capital construction expenses at the Wyoming Life Resource Center and Wyoming State Hospital to improve ability to respond to the pandemic; up to $2 million for the judicial branch of the state government; and up to $200 million in grants to Wyoming public and non-profit hospitals and healthcare facilities to respond to the public health emergency or improve the state’s healthcare infrastructure.

An additional piece of legislation would address other issues, including expanded unemployment insurance options, the inclusion of COVID-19 infection as a covered Worker’s Compensation injury, and financial support for landlords who do not serve eviction notices to those unable to pay rent due to unemployment related to the pandemic, provided the tenants earn less than 200% of the federal poverty level. Up to $10 million would be allocated to address those needs.

Other draft legislation would include giving Gordon additional limited authority to respond to the pandemic, establish emergency rules and programs, as well as some flexibility with how CARES Act funding is spent, without necessitating the recall of the Legislature, albeit with additional reporting requirements and the expiration of such authority at the end of 2020, unless expressly continued by the legislature. The legislature has also included requirements that all bills and programs must be reviewed by the office of the Wyoming Attorney General to ensure compliance with the CARES Act, which Gordon has also said is important so as to avoid potential penalties or repayment requirements that could occur if compliance was not ensured.

As for the small business grant program proposed by Gordon, that would also need to be carefully reviewed by the AG’s office to ensure compliance and that such spending falls within CARES Act requirements.

Racines said at this time she anticipates a very brief special session of the Wyoming Legislature to occur in early May, with a second longer session possibly taking place this summer to continue dealing with the consequences of the pandemic, including the state’s budgetary outlook that is being significantly negatively impacted by revenue loss. Racines said the January budget estimates provided by the Consensus Revenue Estimating Group (CREG) are now “worthless” and said she expects substantial revenue loss necessitating “substantial” spending cuts.

Despite the dire economic forecasts, Gordon said he believes Wyoming is better poised to weather the storm and emerge in better shape than other states after the pandemic because of both the relatively low number of cases as of yet and because the state was in “better fiscal shape than a number of other states” prior to the pandemic.