States finding creative uses for CARES money to speed and sustain recovery

As the shock of the first wave of the coronavirus pandemic settled and the extent of the economic impact began to become clearer, states are developing creative and long-term plans and programs to breathe life back into their economies. States initially focused federal funds from the Coronavirus Aid, Relief and Economic Security (CARES) Act towards the urgent public health needs of responding to the unfolding crisis and to mitigating the impacts of mandatory business closures. Commerce has gradually resumed, yet unemployment remains high, job creation slow, and states face continued revenue shortfalls months after the outbreak. States are increasingly using novel and impactful ways to leverage CARES Act funding to speed the recovery, and to fortify their economies in a persistent environment of uncertainty over the virus.

Direct payments to companies to provide personal protection equipment (PPE), COVID testing, and enhanced hazard and protection pay for their employees, as well as for pivoting to PPE and healthcare production are hallmarks of states’ use of CARES Act funding. The Act states that relief funds may be used for expenses that 1) are necessary expenditures incurred due to the public health emergency with respect to the Coronavirus Disease 2019; 2) were not accounted for in the budget most recently approved as of March 27, 2020 for the state or government; and 3) were incurred during the period that begins on March 1, 2020, and ends on December 30, 2020. However, the flexible language of the bill and in the Treasury Department’s official CARES Act guidance provide avenues for potentially more creative uses for the money.

As SSTI has reported, states quickly pushed through workforce development programs in response to the pandemic. Two more recent examples come from Missouri where the state Department of Higher Education and Workforce Development has partnered with a nonprofit technology trade association to provide free IT training to individuals who have been laid off or furloughed due to the pandemic, and its usage of CARES Act money to support incubator facilities for entrepreneurs.

The following list provides a few examples of other alternative strategies that states have announced:

Broadband expansion

Delaware – Gov. John Carney announced that $20 million in CARES Act funding will be used to build out additional broadband infrastructure, conduct a statewide speed survey, and acquire equipment and services for families in financial need.

Additionally, 15 transmission towers in the current phase of the state’s Rural Wireless Broadband Initiative will be completed about four months ahead of schedule to reach unserved and under-served students in need of high-speed broadband for remote learning.

Tennessee – Gov. Bill Lee announced the state will invest $61 million in CARES Act funding on broadband expansion to support distance learning, telehealth and Tennesseans working from home.

Environmental

North Dakota – The state has devoted CARES Act money to speeding up its existing program for plugging and cleaning up its inventory of abandoned wells. The state is committing $66 million to plug 239 abandoned oil wells and reclaim 2,000 acres of damaged land. The slumping energy market in North Dakota and other oil-producing states has been a recent drag on local economies. Efforts to cap and clean abandoned oil wells are seen as an employment boon to the struggling industry despite criticism from some that private companies rather than the public ought to pay for these operations.

Innovation and Incubators

Georgia – Through the CARES Act and the U.S. Department of Commerce, Georgia Southern University’s Business Innovation Group (BIG) received $300,000 in grant funding to expand its programs, lectures, workshops, and other services to area business leaders, entrepreneurs, and government officials and to work with Georgia Southern faculty to strengthen patent and licensing activity.

Hawaii – Funded by a County Of Kaua‘i CARES Act grant of nearly $500,000 in collaboration with Kaua‘i Government Federal Credit Union, a new incubator program has been founded by Common Ground of Kilauea to boost the agricultural economy and food and beverage industry on Kaua‘i by developing capacity in companies making locally-sourced consumer packaged goods and developing an online retail platform for Kauai-made agriculture products.

North Carolina – The One NC Small Business Program has received $1.5 million from the state’s Coronavirus Relief Fund to renew its federal grant matching program to help fund North Carolina businesses in capital-intensive, high-risk industries in science, technology, engineering and math. Companies that win a Phase I federal Small Business Innovation Research or Small Business Technology Transfer grant (SBIR/STTR) will be eligible for matching state grants. The state grants may give priority to companies that are conducting coronavirus research, according to the N.C. Department of Commerce’s Office of Science, Technology & Innovation, which administers the One NC Small Business Program.