The Washington-Biden administration has receded the threat of withholding pandemic aid from Arizona after accusing the state of misusing funds to weaken school mask obligations earlier this year.
A spokesman for Republican Arizona Governor Doug Ducey confirmed that the state received a second payment of about $ 2.1 billion last month.
With a new focus on the $ 1.9 trillion bailout package passed by the Democrats last year, the withdrawal was accused of promoting rapid inflation, raising concerns about whether some of the money was misused.
Arizona will make up for the income lost during the pandemic, support health initiatives, and as part of the $ 350 billion share planned for states and cities to invest in water and sewerage and broadband infrastructure projects42. Awarded $ 100 million. Arizona received its first $ 2.1 billion installment in 2021, but fears that the state is using funds to undermine public health efforts, the Treasury has told Arizona authorities. Warned that it could recover the previously awarded $ 173 million or withhold a second tranche of funding.
Treasury spokeswoman Dayanara Ramirez refused to explain why the money was released after threatening to withhold the money.
“The Treasury has not commented on issues with the compliance process,” Ramirez said.
The Treasury said the funds were paid through a standard process established by the Bureau of Recovery Programs to make payments for the second tranche.
The funding debate began after a Republican-controlled parliament in Arizona banned school masking obligations in 2021, but some school districts imposed them anyway. Last August, Ducey announced that he would develop two educational programs aimed at alleviating such requirements.
One of the federal-funded programs that received $ 163 million provided additional funding of up to $ 1,800 per public and charter school student with “all state law” compliant and face-to-face instruction. did. Schools that require a mask are not eligible.
Another $ 10 million program-funded voucher worth up to $ 7,000 to help poor families leave areas that require face coverings or impose other Covid-related “constraints.”
The Treasury first warned Arizona about the use of funds last October, saying it was undermining law and public health guidance. In January, the Treasury threatened to begin the process of recovering funds if the program was not redesigned within 60 days. The Treasury also believed that Arizona had abused some of the first installments of what is known as the State and Local Financial Recovery Fund (SLFRF), so it may not release a second payment. I warned you.
“The Treasury may withhold funds from the second tranche installment payment of SLFRF funds in Arizona until the Treasury receives information confirming that the above issues have been properly addressed,” the Treasury said. Catherine B. Victorino, an employee of the Recovery Program Department of the United States, writes.
However, Arizona went ahead with the program, and Mr. Ducey sued the Biden administration to thwart any efforts to regain the pandemic bailout.
“The Biden administration is trying to take the money allocated to Congress hostage and bully Arizona to follow the move to seize this power,” Ducey said at the time.
The Biden administration is calling for the case to be dismissed. In a May lawsuit, a lawyer from the Justice Department claimed that Mr. Ducey had no right to sue because the Treasury did not actually try to get the money back.
“There is no imminent injury as the Treasury has not begun enforcement proceedings to reclaim the misused funds from Arizona,” they wrote, the Treasury letter is not the final agency action. Added.
The Arizona lawyer did not respond to a request for comment on the next steps in the proceedings.
Understand inflation and its impact on you
The Arizona proceedings are one of several obstacles the Treasury faced in paying and supervising recovery funds.
A $ 4 billion debt relief program for blacks and other “socially disadvantaged” farmers that was part of the relief law will determine whether the government can provide race-based debt relief. It was frozen following a lawsuit from a group of white farmers who questioned it.
The Treasury’s rule that states cannot use pandemic bailouts to subsidize tax cuts remains in the legal system after some states have filed proceedings alleging infringement of sovereignty. .. Four states have been given injunctions to prevent the Treasury from enforcing regulations.
Approximately three dozen tax cuts have been implemented this year, thanks in part to many other states finding workarounds and the surplus swelled by bailouts.
The Biden administration has been deploying funding from the US Rescue Program for over a year after the law was signed. On Thursday, the Treasury announced that it would award more than $ 350 million to Kansas, Maine, Maryland, and Minnesota from the Capital Project Fund to expand access to broadband.
Mr. Biden’s proposal for social safety nets and spending on global warming remains deadlocked in Congress, and the Biden administration has encouraged states and cities to use pandemic bailouts to invest in housing and labor development initiatives. rice field.
However, despite the large incentives overseen by the Treasury, the department itself lacks the funds to manage some programs. We are seeking permission to redirect administrative funds from other programs to secure more resources to oversee state and local funds.
“State and local funding has enormous long-term potential to improve equity, but the Treasury Secretary faces a lack of funding to manage this program, so this issue is addressed. We urged Congress to take action to address and support these continued successes, said Treasury Deputy Secretary of State Wally Adeyemo at this week’s Urban Institute-sponsored event.