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Did Ricketts shortchange Nebraska's local governments on COVID aid?

Did Ricketts shortchange Nebraska's local governments on COVID aid?

LINCOLN — When Hall County Board member Pamela Lancaster looks around her central Nebraska county, she sees a lot of COVID-19 related costs piling up.

Expenses include the private security guards hired to enforce social-distancing standards at the county courthouse, remodeling an old federal building for temporary use for county court trials, erecting clear-plastic barriers at service counters to protect employees and patrons, and the purchase of hand sanitizer and masks.

So far, she guessed that Hall County had spent upward of $175,000 on materials and manpower to keep the coronavirus at bay in her hard-hit county.

How her county will cover the virus-related costs is a concern, Lancaster said.

The federal government, through its $150 billion CARES Act relief fund, sent Nebraska $1.25 billion in aid to help cover such expenses. But Gov. Pete Ricketts allocated only about one-fourth of the amount suggested by the federal Treasury Department for reimbursing Nebraska counties, cities and public utility districts.

Ricketts set aside $100 million for those local governments; a federal guidance document suggested $425 million.

Lancaster said she wasn’t aware of the wide discrepancy.

“That makes me even more concerned,” she said. “I have great respect for our governor, but I am very concerned if there will be enough money for cities and counties.”

The situation is even more dire for the City of Omaha, which estimates that it may have $90 million to $100 million in virus-related costs by the end of the year. The bulk of that is to finance the entire budgets for the Police and Fire Departments, which the city maintains — though others disagree — are expenses eligible for CARES Act aid.

Taylor Gage, a spokesman for Ricketts, said the federal guidance on how to allocate the money was just that: guidance.

“The federal government has given states the flexibility to each develop a plan for CARES Act resources that works best for them,” Gage said in an email.

Ricketts laid out his allocations on May 28. The biggest were for stabilizing the state’s unemployment insurance fund ($427 million), grants to struggling small businesses and livestock producers ($392 million) and reimbursing state and local governments for their COVID-19 expenses ($180 million). He later generated controversy when he told counties that they won’t get any CARES Act money if they mandated that members of the public wear face masks in county buildings.

A total of $100 million of the $180 million was set aside for county and city governments, and public utilities, based on estimates of their expenses, Gage said.

Nebraska wasn’t the only state that didn’t follow the federal guidance.

The neighboring states of Iowa, South Dakota, Wyoming and Kansas — which also got $1.25 billion in CARES Act money to dole out — all provided less than the $425 million recommended for their local governments. Kansas came the closest, allocating $400 million. Iowa provided $125 million for distribution to local governments.

States were “all over the place” in their allocations, said Lynn Rex of the League of Nebraska Municipalities. Some states, she said, didn’t set aside any money for cities and counties.

She and other city and county officials said that there are still a lot of unanswered questions about local expenses for battling COVID-19, including whether there will be a “second wave” of infections that will require more spending.

Larry Dix of the Nebraska Association of County Officials said costs varied widely among the 93 counties across the state. Some hard-hit counties, with courthouses with narrow hallways or costs for setting up meetings over the Internet, had more health-related expenses than some rural counties that had few COVID-19 cases and had few expenses.

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“Based on information we’re hearing, the amount that’s allocated to counties is probably sufficient to cover our costs,” Dix said.

Omaha, however, is pleading for more money. The state’s largest city is in a unique situation in that it is eligible not only for CARES Act money handed out by the governor, but also part of the $166 million granted to Douglas County to distribute.

So far, Douglas County has said it will allocate $25 million to the City of Omaha, and it appears that Ricketts will match that amount.

That $50 million would still leave Omaha confronting some difficult questions about whether to keep libraries closed and expand layoffs, which have already cost 800 part-timers their jobs, according to Stephen Curtiss, the city finance director.

“If we’re not going to get any federal money, we’re going to have to take some fairly drastic, draconian moves,” Curtiss said.

Curtiss said the “plain English” of federal guidance on the use of CARES Act money in late April stated that cities can “presume” that all costs of police and fire are COVID-19 related and will be covered. So the city plans to submit two requests for CARES Act money, he said, one that reflects the broader, federal guidance, and one that follows the narrower qualifications laid out by the state.

Douglas County has already said it is not going to grant CARES Act money to cover the city’s entire police and fire costs, and the Ricketts administration has adopted the same stance. Later federal guidance says that only expenses that were “substantially dedicated” to mitigating or responding to the coronavirus are eligible.

Rex, of the League of Municipalities, said that it would have been helpful to get the federal guidance earlier about the $425 million, before Ricketts made CARES Act decisions, but that overall, the Governor’s Office has been helpful.

A bigger question for cities and counties, though, is how they will deal with the loss of tax revenue caused by people staying home and not generating sales tax revenue, a major source of money for cities. Lincoln recently reported that sales tax revenue was down 13% in April, and Curtiss said Omaha projects a revenue loss of $98 million this year.

U.S. Rep. Don Bacon, R-Neb., has co-sponsored a bill to allow the use of the existing CARES Act money to help the state and local governments offset their revenue losses. There’s also been talk nationally of additional federal aid being sent, though Ricketts is opposed to that.

Rex said that she hopes that the $100 million in CARES Act money set aside for direct expenses for counties and cities in Nebraska will cover those expenses but said it won’t come close to covering the expected loss of tax revenue.

“It’s a work in progress,” she said of covering the costs of local government. “There are more unknowns than knowns.”

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Reporter - Regional/state issues

Paul covers state government and affiliated issues. He specializes in tax and transportation issues, following the governor and the state prison system. Follow him on Twitter @PaulHammelOWH. Phone: 402-473-9584.

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