Time Almost Out For Hawaii To Spend Federal Pandemic Relief Funds

Dec 15, 2020

Hawaii likely has just a few remaining days to make use of emergency pandemic relief funds awarded to Hawaii by the federal government in March when Congress passed the $2 trillion CARES Act.

When Congress approved the massive pandemic relief measure in March, the funds came with a catch: all the money had to be spent before January 1st, 2021.Unspent funds would be returned to the U.S. Treasury.

The Hawaii Data Collaborative has been tracking the local disbursement of CARES funds locally. The project is being headed by former State Senator Jill Tokuda.

“The bottom line is unless the federal government changes something, the good or service must be received by the 31st,” explains Tokuda.

Tokuda and the Hawaii Data Collaborative estimate that with the New Year nearly upon us, the State of Hawaii has only spent $478 million, just over half of the $1.25 billion it received to help residents and businesses with pandemic costs.

Another $250 million, roughly one-third of the total allocation, is tied up in a purgatory category the Data Collaborative calls “encumbered.” This refers to a state of being somewhere between expended and unspent.

The classification can be a temporary designation while service reimbursements are processed for specific funds or an existing contract which has not yet been paid. 

That delay would normally not be a major cause for concern, but with just two weeks before the expiration of the CARES Act, a delay means that those relief funds may never reach the community.

The end of year deadline means no more rent assistance payments or restaurant spending cards. For non-profit organizations, it also means the end of community services provided with CARES Act funds.

“There’s no money to pay people in January,” says Sandy Ward, Executive Director of Hui o Ho’ ohonua, an Oahu-based group that does environmental restoration around the Pearl Harbor watershed, known as HOH.

Before the pandemic, most of the work HOH did was completed by volunteers.  But for several months they’ve been using CARES funds to provide out of work residents so-called “green collar” jobs.

Ward has been able to hire workers at $15 an hour to continue Hui o Ho’ ohonua’s work. However, that is set to change on January 1st.

Those newly trained workers will be out of a job and Ward says she is worried about their wellbeing.

“When that money dies up, these kids are literally thinking “Ok in January, can I pay rent?’”

In addition to asking for a new round of assistance funding, states and cities around the country have been lobbying for Congress to extend the end of year deadline for the 2020 appropriation.

However in Hawaii’s case, that may not be the silver bullet. Jill Tokuda says if an extension is not granted in the next few days, it may be too late.

“If we do get those 11th hour decisions and changes, in some cases the ball might be pretty far down the hill already,” she cautioned.

That is because the State Legislature added a condition when it divvied up Hawaii’s CARES Funds. By state law, all the remaining money will be transferred to the state’s unemployment insurance trust fund on December 28th .

Tokuda says moving large sums of money to a new home will not happen instantly, so the state will likely begin that process sometime this week to make sure nothing has to be returned to Washington for lack of use.

Sending the money to a government bank account rather than people in need may seem like a bad outcome, but Tokuda says there is a silver lining.

The state spent its entire unemployment fund earlier this year and had to take out a $1.1 billion loan from the federal government to keep benefits flowing.

“It has to be paid back, it has to be replenished,” Tokuda said of the loan and unemployment insurance trust fund.

“Keep in mind, the ones that would have to be looked at to replenish these funds would be businesses, and the awful consideration of having to raise rates.”

State law automatically adjusts the tax rate local businesses pay to fund the unemployment system based on how financially solvent that system is.

The financial stress currently facing the state could result in a higher tax bill for businesses, at a time when most are in no position to absorb additional expenses.

Paying down a big chunk of the unemployment loan will save state taxpayers money on interest over time, thus freeing up funds for other on-going expenses related to the pandemic.

It also leaves financially troubled residents without a lifeline going into 2021. It’s a lifeline that only Congress has the power to restore.