CORONAVIRUS

Billions in federal COVID-19 aid spreads in Iowa

Full impact on state's economy still to be determined

A health worker performs a COVID-19 test Tuesday at a Test Iowa site at Waukee South Middle School in Waukee. Among the
A health worker performs a COVID-19 test Tuesday at a Test Iowa site at Waukee South Middle School in Waukee. Among the millions of dollars in federal aid being allocated in Iowa is $26 million for the public-private Test Iowa program. (Charlie Neibergall/Associated Press)

DES MOINES — Nearly $5.8 billion in federal money has been allocated to Iowa individuals and governments to help deal with the health and economic ravages of the COVID-19 pandemic.

Officials with the Legislative Services Agency reported Wednesday that state agencies had recorded federal awards totaling $2.896 billion as of last week to address a wide variety of expenses related to the outbreak — including $1.25 billion the state received in Coronavirus Aid, Relief, and Economic Security (CARES) Act on April 20.

Also, agency analysts reported that stimulus funding to individuals and families in Iowa totaled $2.66 billion in direct federal Economic Impact Payments, while another $189 million went to nonstate agency recipients at local levels and $40 million went to Federal Emergency Management Agency programs — including to the $26 million Test Iowa Initiative.

The update on coronavirus-related financial impacts and responses did not include federal small business assistance to Iowa businesses through the Paycheck Protection Program, which reportedly has topped another $5 billion.

A major piece of the $1.25 billion in federal CARES money that Gov. Kim Reynolds has to allocate will go toward paying unemployment benefits to tens of thousands of Iowa workers who have been idled due to the pandemic and related business closings.

Another $109.3 million is earmarked for public health epidemiology and laboratory capacity, $98.1 million for school lunch programs, $71.6 million for emergency relief funding for schools, $33.3 million in federal transit formula grants and $26.2 million for child care and development programs.

Iowa also has expended $70 million for small business disaster aid and $490 million for the state’s jobless insurance trust fund.

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To date, agency officials say there still is $584.5 million in CARES money to be allocated by the governor after she announced last week that $50 million if it would be directed to mental-health and substance abuse programs.

Under provisions of the CARES Act and guidance from the U.S. Department of the Treasury, state officials say the federal funds can be used to cover costs that are necessary expenditures incurred due to the COVID-19 emergency that were not accounted for before March 27 but were incurred during the period that began March 1 and ends on Dec. 30.

Any CARES Act funds that are unobligated by Dec. 30 revert to the federal government.

Before adjourning their coronavirus-interrupted 2020 session June 14, legislators appropriated a total of $7.779 billion from the state’s general fund for the fiscal year that began July 1. That was a reduction of $45.9 million, or 0.6 percent, compared with the previous fiscal year’s revised spending.

The fiscal 2021 appropriations — for the current state budget — are $244.4 million below the state’s expenditure limit.

Republicans who control the Statehouse said they wanted to take the cautious approach to funding due to uncertainty over the pandemic.

When Iowa budget estimators met in May, they reduced their estimate of expected state tax collections for fiscal 2021 by $360.1 million.

State general fund tax deposits and tax refunds issued from March 19 through July 2 declined by $468.8 million, a drop of 21 percent in year-over-year comparisons.

However, agency analysts attribute much of that decline to delays in tax due dates — and not as much to business closures, job losses and other COVID-19 impacts.

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But state officials say it will not be until the delayed tax payments have been deposited that the full economic impact of the pandemic can be reasonably calculated.

Earlier this year, the IRS extended the deadline for federal income taxes to be paid from April 15 to Wednesday, while Iowa extended the due date for state income tax returns to July 31.

On Wednesday, the legislative agency issued an update on state tax collections indicating that state tax deposits and tax refunds issued from March 19 through July 14 declined by $535.9 million, or 18.2 percent year-over-year. But the report also includes non-general fund sources such as fuel tax, vehicle registration and gambling revenue.

Currently, state government is projected to end fiscal 2021 year next June 30 with a $328.3 million surplus. Also, the combined balances in the state’s emergency and cash reserve funds are estimated to total $783.7 million — which is the statutory maximum of 10 percent of the state’s adjusted revenue estimate.

Reynolds issued a public health disaster emergency proclamation in March to slow the viral spread by closing schools and many businesses, halting in-person religious and mass gatherings and implementing social distancing, hand-washing and other steps aimed at protecting vulnerable Iowans from getting infected.

Those restrictions had a dramatic impact on Iowa’s work environment as many employees were sent home to work or lost jobs.

The governor has gradually lifted many of the restrictions, and the remaining provisions still in force are slated to expire July 25 unless she decides to extend or reinstate some restrictions.

During a news conference Tuesday in Webster City, Reynolds expressed concern of a resurgence of coronavirus cases.

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“We know where the positive cases are occurring and why and we’re carefully considering whether additional targeted mitigation efforts are necessary to slow the spread in some areas,” she said, stopping short of suggesting another broad closure order.

“You will not see me shut down the entire state,” she noted, but indicated she may reimpose some restrictions on bars due to the uptick.

Comments: (515) 243-7220; rod.boshart@thegazette.com

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