Treasury Secretary Steven Mnuchin says states have no excuse to hold back money allocated to them from the past aid packages aimed at covering frontline workers and responders to the COVID-19 pandemic.
Mnuchin on Monday referenced a Treasury report that showed how the distribution of payments allocated to states and local governments through June 30 shows they have spent just 25%.
“The states have money left from last time,” Mnuchin told CNBC’s Squawk Box. “I have already given them flexibility, and they can use that money for firefighters, policemen, first responders, healthcare workers. So, there is no reason they need to lay off those people.”
The Trump administration (along with Republicans on Capitol Hill) is cautioning that the $3.7 trillion legislative package pushed by Democrats could too easily be used to bail out states’ budget gaps and unfunded pensions. Democratic critics contend mass layoffs will ensue if their economic relief package, passed by the House in May, is not enacted.
According to the report, New York state spent 53.4% of its allotment, while New Jersey spent 4.7%. Florida spent 11.6% of its allocation, and California spent 74.6%. Michigan spent 8%, while Texas spent 12.2%.
The Treasury report was criticized last week by the National Governors Association, along with six other organizations representing state and local governments, saying the data did not include numbers related to unemployment or the gross domestic product.
“While the Treasury report focused on state and local spending to date, it fails to account for allocated funds and forecasted losses which are due to the historic drop in GDP and record-high unemployment,” the seven organizations said in a statement.
Heritage Foundation senior policy analyst Adam Michel warned states could use federal money to clean up chronic fiscal messes they’ve spent years creating.
“A lot of states are sort of in a holding pattern hoping — that Congress allows them to back-fill declining revenue or use the money to bail out failing pensions or whatever their priorities are,” Michel told the Washington Examiner.
