Legislative budget writers start reviewing cuts, hearing from public

Oregon State Capitol.

An informal coalition of local governments, civic and business groups across Oregon say they are being short-changed by state political leaders in charge of allocating about $1.6 billion in federal coronavirus relief funds.

"This is disturbing to me," said Pendleton city councilor Paul Chalmers, who backs the coalition. "If the state was following the guidelines of the U.S. Treasury, this money would be coming to us. Where is it going and why? There has to be better accountability."

The 17-member group includes Oregon Business Alliance, Bend Chamber of Commerce, League of Oregon Cities, and the Association of Oregon Counties.

At issue is how Gov. Kate Brown and Oregon legislative leaders are spending Oregon's $1.6 billion share of the $2 trillion federal CARES Act approved by Congress to aid local governments hit by COVID-19 costs. A federal directive says the money sent to the states is to be passed along to local governments.

"Local governments are allowed to use these funds both to cover increased costs related to COVID-19 and make grants to community partners," said Eric Kancler, a lobbyist for the City of Bend, who is working with the coalition. "There are many resources local governments and partners are ready to provide to their communities. But they lack the funds to do it."

But Gov. Kate Brown and legislative leaders in Oregon have used about $200 million of the money for targeted funding to aid Black Oregonians, small businesses, arts groups, and workers who are unemployed. The allocation was made July 14.

“The Legislature took significant additional steps to assist vulnerable Oregonians whose lives have been turned upside down over the last few months,” said House Speaker Tina Kotek, D-Portland.

Under the federal funding formula, local governments with populations above 500,000 received the money directly. In Oregon, only three local governments qualified: Portland received $114 million, Washington County received $105 million and Multnomah County received $28 million.

Under federal guidelines, 45 percent of the nearly $1.4 billion remaining money — $624 million — should go directly to local governments on a per capita basis.

"It is more administratively feasible to rely on states, rather than the federal government, to manage the transfer of funds to smaller local governments," said the guidance from the Treasury Department. "The remaining money should be allocated on a per capita basis. This approach will ensure equitable treatment among local governments of all sizes."

So far, the local governments have been able to start accessing $200 million in funds. Gov. Kate Brown and legislative leaders have said another $200 million is to come. What happens with the other $224 million has become a point of contention.

In a July 2 letter to Brown and legislative leaders, the group of local governments and civic groups raised an alarm over the delay.

"Local governments statewide face both unprecedented revenue losses from COVID-19 combined with significant additional costs," the letter said. "Most can’t afford to take the risk of granting money out to community partners without assurances that it will be reimbursed. Direct allocations are essential in enabling local governments to confidently pursue the partnerships we so desperately need to provide comprehensive solutions to our communities."

Brown's office has indicated that the $400 million is all the money that is coming to local governments, unless the Congress and President Donald Trump approve additional direct funding to state and local governments. The additional funding is supported by the Democratic-controlled House, but is unlikely to pass in the Republican-controlled Senate and is opposed by Trump.

"The Governor is committed to providing portions of coronavirus relief funds (CRF) to local governments, which have been hit hard by COVID-19," said Elizabeth Merah, Brown's press secretary. "We understand the concerns raised in the July 2 letter. Our office has committed $400 million of CRF, through direct and indirect allocations, to local governments across Oregon. We are also giving local governments the maximum amount of flexibility allowed under the U.S. Treasury Department guidelines, and providing direct and equitable allocations statewide."

Concerns grew when the legislative leaders on July 14 opted to allocate $200 million of the relief money to targeted initiatives.

The funding decision was made by the Emergency Board, a joint Legislative committee made up of the leaders of both parties. It has the power to make emergency allocations of money during periods when the Legislature is not in session.

The allocations went to:

• $62 million to aid Black businesses and individuals through an Oregon Cares Fund for Black Relief and Resiliency. Lawmakers pointed to statistics showing the Black community is being hit disproportionately hard by the pandemic. Some lawmakers questioned whether targeting funds based on race would stand up to a court challenge.

• $50 million to backfill the budgets of struggling cultural and arts groups and venues that have had to cancel events and shut their doors during the crisis.

• $35 million to send $500 emergency relief checks to residents who are still waiting in the backlog of unemployment claims that overwhelmed the Employment Department. Details on how to get the money to those in need are still to come. The lawmakers said the program could be administered by the Department of Administrative Services.

• $30 million for a COVID-19 Leave Fund that would assist workers who are infected with the coronavirus or have been exposed to the virus and must quarantine, but do not have paid sick leave.

• $25.6 million for small businesses struggling to survive. The money is limited to businesses with 25 employees or fewer and have not received money from the federal aid such as the Paycheck Protection Program (PPP).

Some members of the Emergency Board expressed concerns with the speed with which allocations were being made without the full details of how the expenditures would be allocated or used.

“So many of the mechanical details, the operational details, are either obscured or not developed,” said state Sen. Betsy Johnson, D-Scappoose. “Some of these E-Board actions are getting increasingly uncomfortable for many of us.”

Local officials involved in the coalition say that uncertainty makes it difficult to know whether they can move forward with plans to combat COVID-19 and the disruption to businesses and employment.

"Our biggest concern is delay," said Eugene Mayor Lucy Vinis. "There is a timeframe on how quickly we must spend those funds. We have to be finished by the end of the year.

"We have a wish list of immediate and urgent needs. Each day we delay is going to make it more difficult for us."

Vinis said the city would use its allocation for increasing and diversifying homeless shelters. The city of 171,000 residents has estimated there are 3,000 homeless — a number that has risen since the COVID-19 crisis led to layoffs in area businesses. Vinis worried that with the possible end of federal subsidies to state unemployment benefits, the numbers will just get worse.

"People are just barely hanging on," Vinis said. "We have a resilient community, but we depend on small businesses that already are operating on very narrow profit margins. Without some targeted investment, I am afraid a lot of them are not going to make it."

Dealing with people experiencing homelessness has been a major issue around Oregon. The traditional solutions to homelessness no longer work with COVID-19. Dormitory-style shelters are no longer feasible because of the lack of social distancing. Many homeless people found shelter at local churches and other places of worship, which are either closed or can't have crowded common areas as before.

Many of the volunteers around the state who help the homeless are older, putting them in the at-risk group for serious illness or death if exposed to COVID-19.

For cities with college campuses, how classes are held is another wild card. Thousands of students from outside of the cities could spike infection rates. The list includes Oregon State University in Corvallis, the University of Oregon in Eugene, Portland State University, OSU-Cascades in Bend, and the other state universities in cities that include La Grande, Ashland, Monmouth, Klamath Falls and Portland.

Members of the coalition are still waiting for a direct response to the letter and direct appeals to Brown and legislative leaders.

Vinis said she had reached out to Kotek, inviting her to lunch to talk about the issue.

"I haven't heard back," Vinis said.

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