State makes plans for $650M in remaining CARES Act money as deadline nears

Indiana Gov. Eric Holcomb’s administration still has about $650 million remaining in federal coronavirus aid that must be allocated in the next two weeks, and a significant portion of the dollars are expected to be used to pay off a federal loan for unemployment benefits.

The state received $2.4 billion earlier this year from the federal Coronavirus Relief Fund, which was established in the Coronavirus Aid Relief and Economic Security Act. The funding must be used for pandemic-related expenses incurred before Dec. 30.

Holcomb’s administration has repeatedly called on Congress to extend that Dec. 30 deadline, but Congress has not taken any action yet. Lawmakers in Washington, D.C. continue to work on a relief package, but it remains uncertain whether that would include an extension or more funding for state and local governments and whether or not it could pass before the end of the year.

With only two weeks left until Dec. 30, questions have been raised over whether Indiana will allocate its remaining dollars in time.

During his weekly press briefing on Wednesday, Holcomb said he continues to advocate for extending the deadline, but if it does not change, the remaining $650 million will be allocated.

“We’re not going to be sending money back or leaving money on the table,” Holcomb said.

Indiana Office of Management and Budget Director Cris Johnston said the state plans to use at least $400 million to help the unemployment insurance trust fund, which is used to pay benefits to jobless Hoosiers and has completely drained its pre-pandemic balance of nearly $1 billion. The fund is supported by taxes paid by businesses.

The state had to start borrowing money from the federal government in September to pay for unemployment benefits. Johnston said the CARES Act money would be used to pay back what has already been borrowed plus what the state expects to continue borrowing through the spring.

Interest has been waived on the Federal loans, known as advances, through the end of the year. But after that, without further action from Congress, interest could start building on Indiana’s outstanding balance.

Johnston said he thinks that is the “prudent” use for some of the remaining CARES Act dollars.

The Indiana Chamber of Commerce sent out a statement Wednesday afternoon applauding the decision by Holcomb’s administration.

“Directing federal CARES Act money to the unemployment insurance trust fund makes good sense for the state,” Indiana Chamber of Commerce President and CEO Kevin Brinegar said in the statement. “This provides greater certainty for both those who receive unemployment and Hoosier employers who pay into the pool.”

The remaining $250 million could be used to help schools that have struggled to receive funding through a different federal program and add more funding to a grant program to help small businesses, but the dollar amounts for those allocations have not been set yet, Johnston said.

The state launched a $30 million Small Business Restart Fund in June to help companies with fewer than 50 employees cover the costs of pandemic-related expenses and changed the eligibility requirements in September to allow more businesses to qualify for it.

On Wednesday, Holcomb said he wants businesses to be in good positions to rehire employees that have been laid off during the pandemic.

“We want to get people back to work safely,” Holcomb said. “If these funds can go toward that end then it’s money well spent.”