May 15, 2023 at 4:24 p.m.
County to consider resolution opposing clawback of unobligated Covid funds
To help resolve the nation's debt ceiling crisis, the U.S. House has passed the Limit, Save, Grow Act, which raises the debt limit for a year in exchange for deficit-relief measures. One of those measures would return about $35 billion out of about $70 billion remaining in unobligated pandemic relief aid.
With Democrats controlling the Senate and the presidency, the bill has no chance of becoming law, but it does send a symbolic message.
According to Joel Zinberg, a senior fellow at the Competitive Enterprise Institute, out of $4.6 trillion appropriated for Covid-19 relief, $444 billion remains unspent, and more than $114 billion hasn't even been "obligated," or committed to pay for goods and services ordered or received.
However, an analysis by House Democrats on the House Committee on Appropriations - backed up by other independent analyses - showed that as of the end of March, agency financial systems were reporting less than $80 billion of unobligated balances remaining, and clawback wasn't an option for more than half of those funds.
"Of those amounts, fewer still can actually be rescinded, as many are already encumbered by statutory formula or are 'such sums' for which programs would need to be explicitly terminated to garner savings from the Congressional Budget Office (something that the provision does not do)," the analysis stated.
Zinberg and many conservatives want as much money as possible returned, and they contend many local governments have and will continue to use the dollars as slush funds. Democrats and local government officials - including the Oneida County administration committee and the Oneida County finance director - say many of the dollars are earmarked for valuable projects and are planned for or already in the pipeline, but that doesn't satisfy critics like Zinberg.
"Undoubtedly, some of these projects are worthwhile, but [they] raise a big question: Why, more than two years after the money was appropriated, hasn't it been spent on these presumably valuable projects?" he wrote in the Wall Street Journal after Rep. Rosa DeLauro (D-Connecticut), the ranking member of the House Appropriations Committee, released an eight-page catalog of what she said were worthy projects that would go unfunded with a clawback.
"Bureaucratic agencies never return unused funds," Zinberg wrote. "They always spend them regardless of the merits. If these unobligated funds, which agencies haven't found worthwhile uses for in more than two years, stay with the agencies, they will be obligated and spent."
Zinberg says the unused money should be returned to the Treasury.
"That would reduce the deficit and restore decision-making authority to Congress," he wrote. "If future projects are truly valuable, lawmakers should fund them."
A view for the other side
Earlier this month, Oneida County finance director Tina Smigielski offered up a different perspective to the administration committee as she offered a resolution put together by the Government Finance Officers Association (GFOA).
"There is some conversation at the federal level that unobligated funds, which pretty much means unspent, a little bit different of a definition, that this could be a way for the federal government to address the looming debt crisis," Smigielski told the committee. "So this would be a resolution, it's nonbinding obviously, but a resolution that the county could pass and then forward on to our federal representatives just to let them know that we do intend to use this funding and to please not take it away, which they already gave to us."
Smigielski explained that even though the county has the money budgeted and planned, it's not considered obligated at the federal level. And she says, if the money is taken away, it would punish the wrong people - those who took the time to think through plans for spending the money carefully.
"And I as a finance professional find this action to be punitive because we took a conservative and thoughtful approach to our ARPA (American Rescue Plan Act) funding and didn't spend it all right away," she said. "I don't think that's fair that other local governments that spent the money right away would get to keep all of their funding. And then governments like ours that took a thoughtful approach would be essentially penalized for being more thoughtful about it."
Smigielski advised that the thinking in Washington about clawing back the funds was merely conversational at this point, but she cautioned that "sometimes these conversations quickly turn into legislation."
While the GFOA is trying to mobilize local government opposition to any clawback sentiment, the National Conference of State Legislatures (NCSL) is opposing the concept at the state level.
"NCSL supports smart, efficient use of funds provided for pandemic relief, such as the Coronavirus State and Local Fiscal Recovery Fund (SLFRF)," the group said in a statement. "Congress has only recently allowed increased flexibility for SLFRF as part of the Consolidated Appropriations Act, 2023."
The NCSL said many of the spending rules haven't even been set in stone yet.
"The Department of the Treasury is still working on providing interim rules governing how these funds may be spent under the increased flexibility," the group stated. "Accordingly, states have not yet acted and are reluctant to apply for funding until there is clarity."
NCSL said the Consolidated Appropriations Act, 2023, also provided a much-needed extension, moving the deadline of when to expend SLFRF funds from Dec. 31, 2024, to Sept. 30, 2026.
"The long-term challenges presented by the pandemic are complex and states need sufficient time to develop long-term solutions," the NCSL stated. "NCSL urges against the transfer of unobligated funds before states can use this increased flexibility and put forward smartly developed proposals, especially during this time of economic uncertainty."
It's not clear that, if the government were to rescind funds, Oneida County would lose any of its dollars.
According to the House Democrats memo, as well as other professional estimates, only about $35 billion in unobligated pandemic funding could be clawed back out of the $70 billion, much of it in health and human services, transportation funding, and local government housing subsidies. The Democratic memo said federal health agencies could lose money for research in global disease detection, genome sequencing, and data systems modernization.
If the county board passes the resolution, county clerk Tracy Hartman will send it to other counties, as well as to the county's towns and the City of Rhinelander, in hopes of getting those local government entities to follow suit.
The meeting is scheduled to begin at 9:30 a.m. in the county board room at the Oneida County Courthouse.
Richard Moore is the author of "Dark State" and may be reached at richardd3d.substack.com.
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