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Biden Administration Retreats on Threat to Withhold Arizona Relief Funds

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The Washington-Biden administration withdrew threats to withhold pandemic aid from Arizona this year after accusing the state of misusing funds to undermine school mask obligations.

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 revenue lost during the pandemic, support health initiatives, and 4.2 billion as part of the $ 350 billion share planned for states and cities to invest in water and sewerage and broadband infrastructure projects. I was awarded a dollar. 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. In August, Ducey announced that he would develop two educational programs aimed at alleviating such requirements.

One of the programs I received $ 163 million With federal funding, we provided up to $ 1,800 per student in public and charter schools with “all state law” compliant and face-to-face instruction. Schools that require a mask are not eligible.

another $ 10 Million Program Up to $ 7,000 worth of funded vouchers to help poor families leave districts that require face coverings or impose other Covid-related “constraints.”

The Treasury first warned Arizona about the use of funds in October, saying the state is undermining law and public health guidance. In January, the department 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, a staff member of the Recovery Program Department, writes.

However, Arizona went ahead with the program, and Mr. Ducey sued the Biden administration to thwart any efforts to recover the pandemic bailout.

“The Biden administration is trying to keep the money allocated to Congress hostage and to 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, adding that the department’s letter was not the final agency action. rice field.

The Arizona lawyer did not respond to a request for comment on the next steps in the proceedings.

The Arizona proceedings are one of several obstacles the Treasury faced in paying and supervising recovery funds.

The $ 4 billion debt relief program for blacks and other “socially disadvantaged” farmers that was part of the bailout law shows whether the government can provide racially-based debt relief. Frozen after a lawsuit from a group of questioning white farmers.

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 that prevent the department 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.

President Biden’s proposal to spend on social safety nets and global warming is still stuck in parliament, and the Biden administration encourages states and cities to invest in housing and labor development initiatives with pandemic bailouts. I’ve done it.

However, despite the large incentives overseen by the Treasury, the agencies themselves lack 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.

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