April 28, 2020

Cortez Masto, Rosen Call on Trump Administration to Cut Red Tape in Distributing CARES Act Funds to States

 Letter calls on Treasury to follow Congressional intent and allow states to use funding to make up for lost tax revenue so they can continue providing essential services.

Las Vegas, Nev. – U.S. Senators Catherine Cortez Masto (D-Nev.) and Jacky Rosen (D-Nev.) joined Senator Jack Reed (D-R.I.), Senate Minority Leader Chuck Schumer (D-N.Y.), and 42 colleagues in responding to the Trump Administration’s needless bureaucratic restrictions on how governors can distribute Coronavirus Relief Funds to their states. The Senators sent a letter to Treasury Secretary Steven Mnuchin calling on him to revise initial guidelines so that they can provide essential public services amidst the COVID-19 global pandemic, as the law intends.

“In the midst of an economic collapse, the intent of the entire CARES Act is to provide flexible help to a wide range of Americans,” wrote the Senators. “To prevent the flexible use of these relief funds is a choice that is neither required nor intended by law.”

“To avoid distracting states, Tribes, and localities from meeting the crisis at hand, the Treasury Department should publicly confirm that states, Tribes and localities may use these funds to maintain their essential services as the CARES Act clearly permits,” the Senators’ letter concluded. 

BACKGROUND:

Senators Cortez Masto and Rosen voted for the Coronavirus Aid, Relief, and Economic Security (CARES) Act, including a $150 billion Coronavirus Relief Fund for states, to help provide a measure of certainty and economic stability to Nevada. In its interpretation of the law, the US Department of the Treasury determined that states and local governments may not use these funds to cover funding shortfalls and costs resulting from lost revenues. These overly restrictive regulations are not reflective of Congressional intent behind the bipartisan CARES Act, and will severely impact each state’s ability to respond and recover.

Full text of the letter can be found here and below.

Dear Secretary Mnuchin:

We write regarding the Treasury Department’s Coronavirus Relief Fund Guidance to urge you to promptly revise your interpretation so states, Tribal, and local governments can use these funds to prevent further economic damage.

While the term “lost revenue” does not appear specifically in Title V of the Coronavirus Aid, Relief and Economic Security (CARES) Act, a plain text reading of the law leads to the logical conclusion that lost or delayed revenues are a direct cost created by the coronavirus that were never accounted for in any budget. Therefore, we believe it is fully within your authority and the intent of the CARES Act that these funds may be used to replace lost or delayed tax revenues and maintain public services. In the midst of an economic collapse, the intent of the entire CARES Act is to provide flexible help to a wide range of Americans. To prevent the flexible use of these relief funds is a choice that is neither required nor intended by law. 

We are not alone in this view. Governors and senators from both sides of the aisle have set aside ideology and urged you to follow the law as written instead of creating more bureaucratic red tape in the middle of a public health emergency and ensuing economic crisis. Of all the regulations that this Administration seeks to cut, it should start with this one.

We all have a common interest in preserving as much of our economy as possible so that we are well positioned for a robust recovery. A critical component of our economy is our state, Tribal, and local governments as they not only serve as customers for our local businesses, but also provide the essential services, such as effective law enforcement, public infrastructure, a strong education system, and other necessary conditions that provide the business certainty that make our country attractive to businesses and investors throughout the world. We should preserve and maintain this critical comparative advantage. 

To avoid distracting states, Tribes, and localities from meeting the crisis at hand, the Treasury Department should publicly confirm that states, Tribes and localities may use these funds to maintain their essential services as the CARES Act clearly permits. 

We thank you for your consideration and urge you to act promptly.

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