The U.S. Treasury has released guidance for the use of COVID-19 recovery funding in Puerto Rico from the new federal Coronavirus Relief Fund, which provides $150 billion for state, territorial, local, and tribal governments as part of the Coronavirus Aid, Relief, and Economic Security Act (CARES) Act.
Puerto Rico is expected to receive $2.2 billion from this fund. For Puerto Rico and for all other recipients, the funds can be applied only to costs incurred between March 1 and December 30, 2020.
The first major criterion is that the expenditures made from the coronavirus relief funds must be necessary. These necessary expenses include medical costs, such as costs for testing for the coronavirus or personal protective equipment (PPE) for first responders and essential workers. They also include other public health measures, such as distance learning while schools are closed because of the coronavirus, support for businesses affected by the quarantine, and distribution of food to people who need to have food delivered to them.
The funds cannot be used for payroll for people whose work is not directly related to coronavirus response, for bonuses, or for reimbursement for donations.
Caused by COVID-19
The guidance is very clear that the funds cannot be used as general revenue replacement. Puerto Rico, like the States, is seeing drops in revenue normally brought in by sales tax. The states and the territories will not be allowed to use the recovery funds to cover the shortfall.
Extra costs caused by the pandemic or the quarantine will be covered. For example, the cost of extra sanitation measures in prisons can be paid for with the recovery funds. Extra costs involved in making it possible for government workers to work remotely will be covered. The cost of additional efforts to keep the virus from spreading among homeless populations may also be paid for with the recovery funds.
Other types of expenses which may be covered at the discretion of local officials include:
- Communication and enforcement of COID-19 public health orders
- Disinfection of public spaces
- Technical support for responses to the pandemic
- Paid sick leave and family leave needed to meet public health requirements
However, the guidance very specifically says that the list of eligible expenses is not exhaustive. They also include “Any other COVID-19-related expenses reasonably necessary to the function of government that satisfy the Fund’s eligibility criteria.”
Not otherwise covered
The funds cannot be used for expenditures that would be covered in other ways. For example, the funds can’t be used to pay for expenses covered by insurance, or for any line items which were already in the approved budget before March 1. Unemployment compensation can be covered if it meets the other criteria, but not unemployment expenses which the federal government would cover under the CARES Act.
The new funding does not explicitly address items that may affect Puerto Rico differently from States, such as nutrition assistance and health care. Since Puerto Rico Medicaid, nutrition assistance and Medicare are funded by very different standards from the States, the U.S. territory will receive less funding than the states in these areas, and there will be a greater hardship for Puerto Rico.