Virginia State and Local Agencies Must Spend Federal Coronavirus Relief Funds by December 31

by James C. Sherlock

State and local governments are awash in billions of dollars of federal funding with various federal expiration dates if not spent.

The General Assembly set its own deadline.

Recipients have to spend federal money allocated by the General Assembly by Dec. 31 or lose it back to the Governor for repurposing. That is not as easy as it sounds. It represents in many cases far more money that any of them have ever handled.

The budget bill from 2021 gave the outgoing Governor two weeks before the end of his term to shift unspent federal funds from the purpose for which they were allocated by the General Assembly to “other qualifying expenses.”

Thus, a Democratic majority General Assembly ensured that a Democratic governor could make the political decisions of re-allocation. Fair enough. Hard to blame them. They had already seen Terry McAuliffe. Risky bet.

We don’t know how much of the billions of dollars from multiple federal relief acts will be unspent by Jan. 1.

But we can be reasonably assured there is a scramble going on to get it spent before it has to be turned over for reclassification by the Governor.

I have known a lot of federal agencies to conduct end-of-the-authorized-obligation-period “cleanup” of unspent money.

I understand a similar scramble happened at the state and local government levels in Virginia with federal money from the $900 million that was appropriated and distributed for the great recession. $900 million? Nationwide. Peanuts now.

To give you an idea, the Virginia budget bill included $644,573,383 in allocations to localities.

Such headlong rushes to spend taxpayer money are never pretty to watch. Leaves cancelled until the money is spent — horrible, rushed acquisition decisions — that sort of thing. “We need to order 10,000 more laptops, stat.”

One can visualize bureaucracies all over the state lined up for a speech yesterday morning from the department head urging heroic action. Perhaps, channeling John Belusi in Animal House:

“What? Over? Did you say ‘over’? Nothing is over until we decide it is! Was it over when the Germans bombed Pearl Harbor? Hell no!”

Maybe the money is already all spent well and for authorized uses in this case. If so, congratulations. But I doubt it.

So did the General Assembly.

Here is the sausage making in this case.

2021 Special Session I
Budget Bill – HB1800 (Chapter 552)

H.1. If, after December 30, 2021, but prior to the required return of unspent federal Coronavirus Relief Funds, federal guidelines allow for unspent funds to be shifted to other qualifying expenses, the Governor shall have the authority to shift and reclassify such unspent amounts to eligible expenses in order to maximize the Commonwealth’s use of the funds. Such unspent funds shall include any funds that are returned to the Commonwealth by subrecipients.

2. If, after December 30, 2021, but prior to the required return of unspent federal Coronavirus Relief Funds to the federal government, the Governor determines that unspent funds remain after any reclassification pursuant to paragraph H.1. above, the Governor shall transfer those unspent funds to the Unemployment Compensation Fund established pursuant to § 60.2-300 pursuant to federal guidelines to reimburse any qualifying expenses.

Perhaps we will get a “greatest” hits video of the scramble.

Probably not.

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5 responses to “Virginia State and Local Agencies Must Spend Federal Coronavirus Relief Funds by December 31”

  1. Nancy Naive Avatar
    Nancy Naive


  2. Dick Hall-Sizemore Avatar
    Dick Hall-Sizemore

    Does the money have to be actually spent, that is, out the door, by Dec. 31 or just authorized? There is a big difference. And as far as deadlines are concerned, a legislative staff member remarked to me, in effect, after the first batch of COVID money, “No one is too concerned about the spending deadlines. There is no way the Feds are going to be able to audit all this money.”

    1. Spent, not authorized and it was not nearly as easy as some would think as the expenditures have to pass the auditors tests.

    2. Stephen Haner Avatar
      Stephen Haner

      Yeah, Dick, clawbacks are hard to imagine!

    3. James C. Sherlock Avatar
      James C. Sherlock

      “Mom” is correct. Thus my “10,000 laptops” comment. Those are the kind of things a bureaucracy can order and get receipts for even if they are not delivered until a year from Tuesday. I am told by someone very close to me that something similar happened in Virginia Beach schools with the great recession money.

      The GA took precautions to make sure Northam got one last shot at it.

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