Indiana still has $1.3 billion in coronavirus relief funds left to spend

The state of Indiana is still sitting on more than $1 billion in federal coronavirus aid with a little more than three months to spend the funds.

Indiana Office of Management and Budget Director Cris Johnston told the State Budget Committee on Tuesday that the administration has allocated or spent about $1.1 billion from the $2.4 billion the state received from the federal Coronavirus Relief Fund, which was established in the Coronavirus Aid Relief and Economic Security Act.

That leaves about $1.3 billion, and some lawmakers are anxious for the state to start spending it because the money must be spent on pandemic-related expenses incurred by the end of the year.

“I’m very concerned about these dollars getting out, period,” state Rep. Greg Porter, D-Indianapolis, said.

The funding cannot be used for revenue replacement or expenses already in the state budget.

Johnston said the state continues to wait for clearer guidance from the federal government on how the dollars can be spent. The U.S. Department of the Treasury has repeatedly updated its guidelines, and Johnston said that guidance recently conflicted with a report from the federal Inspector General’s Office, which has led to even more confusion.

Indiana officials also have been hoping that Congress would take action to extend the time period when the money can be spent and expand the ways it can be used.

“There was a lot of talk, but there hasn’t been any action on that,” Johnston said. “What happens next, we’ll just have to see.”

The state is also struggling to actually spend some of the money it has committed through various programs. Out of the $1 billion that is marked as committed or spent, only $225 million has been paid out, according to a presentation from Johnston.

For example, the $300 million the state set aside for local governments has barely been touched. Cities, counties and towns have to apply to be reimbursed for COVID-19-related expenses through the program, and so far, the state has paid out only $17 million, Johnston said.

“It’s a low number,” Johnston said. “And we’re looking to encourage local units of government to use that money.”

Johnston said he believes local governments are also waiting for better guidance from the federal government.

Other programs, such as the $30 million Small Business Restart Fund, also have struggled to issue grants. The small business program has issued 232 grants totaling less than $1 million so far.

“It has not moved very quickly,” Johnston said.

He said he has told the Indiana Economic Development Corp., which is overseeing the program, to consider whether the eligibility criteria need to be changed.

Meanwhile, the $40 million rental assistance program has proven to be in high demand. Johnston said the state has paid about $19 million so far, and 10,000 applications are still being processed, so he’s confident that fund will be exhausted.

When pressed by Democratic state lawmakers on the lack of spending, Johnston said the administration has “other programs that are being reviewed.”

For example, he said the state could use the funding to cover the cost of payroll for public health and safety employees for the rest of the year, which could be $300 million.

“There are certain buckets that could consume this money,” Johnston said.

State Rep. Carey Hamilton, D-Indianapolis, said she thinks the state should be trying to support Hoosiers who are struggling with food, housing or energy insecurity now, to help the economy bounce back faster.

“I just want to raise up these issues and express my strong desire to see a plan sooner rather than later,” Hamilton said.

Also during Tuesday’s meeting, committee chair Rep. Tim Brown, R-Crawfordsville, said the state will not be pursuing a new revenue forecast after previously planning to have one available this month.

He said that’s because there are still too many variables right now, so state lawmakers will wait until the regularly scheduled forecast in December to get a new look at the state’s future financial situation.