Letter to the Hon. Steven Mnuchin, Secretary of the Department of the Treasury - Sherrill and King Lead Effort Calling on Treasury Secretary to Revise Guidelines that Penalize States Responding to COVID-19

Letter

Dear Secretary Mnuchin:

We write to express our deep concerns regarding the guidance issued by the United States
Department of the Treasury on April 22, 2020, as it relates to the types of approved usage of
stabilization funds authorized by the CARES Act.

Congress made its intentions clear when it passed legislation to provide $150 billion to State,
Territorial, Local, and Tribal Governments that these funds were to be made available to meet
the individual needs of those governments. As you know, the CARES Act stipulates that
expenditures by subnational governments are authorized if they:

* Are necessary expenditures incurred due to the COVID-19 pandemic;
* Were not accounted for in the budget most recently approved as of enactment of the
CARES Act (March 27, 2020); and
* Are incurred between March and December of 2020.

The intent of this program is to provide states with the flexibility to address the crisis as it best
suits their needs. However, the recent guidance from your department establishes strict and
unnecessary limits on what states can and cannot do. Of greatest concern, the guidance
establishes a prohibition on expenditures to address budget shortfalls associated with COVID-19.
States need to be able to replenish the accounts that were borrowed from when they adjusted
existing budgets to fund COVID-19 response efforts. Without revisions, this guidance will
almost certainly lead to many states being unable to spend the money they were provided, and
instead compelled to return it to federal coffers. This is both unacceptable and preventable; you
have the authority to let states use these funds as intended, instead of forcing them to make
drastic, damaging, and unnecessary budget cuts.

States that have acted quickly to protect their residents from the spread of COVID-19 by
immediately implementing programs funded by the CARES Act should be held up as an
example, not penalized for their foresight. In the strongest possible terms, we urge you to amend
this overly prescriptive guidance and allow states to use funds authorized by Congress as
originally intended; to address key needs while maintaining essential services.