Louisiana’s local governments likely to exhaust $525 million in coronavirus aid soon, official says

Local governments that have seen revenues dry up amid the coronavirus pandemic will likely exhaust a more than half-billion-dollar pot of federal aid by the fall, according to the governor’s top budget official, unless Congress appropriates more in the next relief package.

Data released by Commissioner of Administration Jay Dardenne’s office shows local governments have requested more than $366 million in the first two rounds of payments for the $525 million program.

That’s less than the $393.6 million available for the first two rounds of payments. But Dardenne said local governments will be able to tap into the funds retroactively, and he expects there will not be any left over.

“I think it’s all going to be spent,” Dardenne said on a conference call with reporters. “At the end of the day once parishes realize what’s eligible … I think we’re going to find out we’re going to use all this money.”

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The governmental entities seeking the largest reimbursements include the City of New Orleans, which has requested a combined more than $80 million through the first two rounds–far exceeding their allocation of $52.4 million. That doesn’t include a host of other Orleans Parish entities that requested millions more.

However, many other parishes are not expected to hit their cap, and Dardenne said there will likely be reshuffling to allow cities to tap into more if they need it.

Much of the funding is destined for police, sheriff’s offices and other public safety agencies.

That’s because while the funding is not available to offset lost revenue for cities, which is perhaps the biggest need, the U.S. Treasury Department has given localities flexibility in how to define a coronavirus-related expense that is eligible for reimbursement. The agency told states that any public safety payroll expense – salaries for police, fire, prison services, EMS and more – can be assumed to be related to the coronavirus, if it has not already been budgeted.

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That means sheriff’s offices have been approved for about $30 million, or 18% of the total amount approved in round one. That’s only through a handful of sheriff’s offices; Louisiana Sheriffs Association Executive Director Mike Ranatza said he expects more sheriffs to apply for reimbursement in future rounds.

In Baton Rouge, the entire first round of reimbursement was limited to public safety expenses, according to a breakdown provided by the city. Of the $12.2 million paid out to the city in the first round, $5.9 million went to police, airport police and constable; $4.3 million went to fire departments; $1.4 million went to Emergency Services and the rest was split between juvenile services, the office of homeland security and emergency preparedness and prison services.

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Baton Rouge Mayor Sharon Weston Broome, a Democrat running for reelection this fall, said during a virtual town hall last week that the city will be able to balance the 2020 budget without furloughing or laying off city-parish personnel. Without the federal aid, she said layoffs would be needed.

Broome noted that public safety salaries are eligible for reimbursement, which allowed the city to tap into millions for those expenses.

“This was not included as part of our original budget when we adopted our budget. That makes public safety eligible for reimbursement,” Broome said. “Local budgets weren’t designed for pandemics.”

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Louisiana received $1.8 billion in federal aid from the Coronavirus Aid, Relief and Economic Security (CARES) Act earlier this year. The state used north of $900 million to plug holes in the state budget–in large part by filling the coffers of public safety agencies like the prisons department. Another $525 million went to local governments. $275 million went to a small business grant program, and $50 million went to front-line workers.

Some Republican lawmakers had hoped leftover money from the local government pot could be redirected toward businesses. But Dardenne said that likely won’t be the case.

“I really don’t think there’s going to be any leftover money at the end of the day,” he said.

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