Gov. Lee: TN should focus CARES funds on unemployment insurance, helping businesses

Gov. Bill Lee laid out his priorities on Tuesday for how Tennessee should spend $2.4 billion in federal CARES Act stimulus funds, advocating for investment in the state’s unemployment insurance program and aid to businesses that lost money because of his stay-at-home order in April.

Tennessee, like all states, has been navigating how to spend pandemic stimulus funds that at the same time come with strict strings attached from the federal government and a frustrating lack of guidance.

For instance, Lee and other governors are advocating that states should be able to “backfill” lost tax revenue from the pandemic, but that proposal has not received federal approval yet.

The focus of the state’s CARES Act money is direct expenditures from its response to COVID-19. In addition to the $2.4 billion lump sum from the federal government, the state has received $2.5 billion in federal funds earmarked for specific state programs.

Lee formed the Financial Stimulus Accountability Group, which held an online meeting Tuesday, to oversee the federal funds.

“One of the pieces of guidance that has not been made clear, and there’s still a lot of conversation around that, is governors like myself are pushing very hard for expanded leniency with how we use this money,” Lee said. “So we want to have as much flexibility as possible. But, it’s not clear yet whether we can use these funds for backfilling lost revenue.

“I propose that until that is clear, we ought to at least put aside a significant portion for the potential backfill of lost revenue. We can make changes to that obviously going forward. If we find that that is not going to be possible, then those monies can be spent in other ways.”

As Tennessee waits for guidance on whether it can spend CARES Act money to make up for lost revenue, Lee said he’d like the stimulus accountability group to concentrate its spending on making sure there is enough money in the state’s unemployment benefits fund and helping those businesses that were forced to shutter last month.

“We ought to push a significant amount of money to the businesses that were required to shut, and those that have lost significant revenue as a result of this pandemic,” Lee said. “The responsibility obviously of this group is to spend this money wisely to restart our economy and to pull levels that would help do that. Putting money in the hands of the unemployed, putting money in the hands of businesses that have been closed, putting money in the lost revenues in order to keep from having to consider tax raises in the future, those are ways I think that we stimulate the economy.”

Lee also referenced sending money directly to city and county governments “trying to get money back into the hands of those who have had real losses going forward.”

Only Metro Nashville and Memphis/Shelby County governments received direct appropriation from the CARES Act due to their population size. Memphis and Shelby County governments received a combined $164.7 million and Metro received $121.9 million.

There is urgency to provide help to Tennesseans quickly, Lee indicated. Unemployment surged last month to 15 percent, according to Lee’s Tennessee Pledge, which is his plan to reopen the state economy.

“These funds have to be used at this point by the end of the year,” Tennessee Finance and Administration Commissioner Butch Eley said. “And because of that everybody is anxious to go ahead and get moving as quickly as possible on expending these funds for their purpose. Certainly we want to do that. But we also need to do it in a way that is prudent and makes sense.”

Committee member state Rep. Harold Love, D-Nashville, pushed for the state to be mindful of small, minority-owned business and to be sure they are eligible for stimulus help.

“I want to make sure we are intentional when we talk about small businesses that we don’t go the direction the federal government did with the PPP program. And by that, I mean that some of our small businesses that applied for those loans were not able to get them, and then we didn’t see a wide range of African-American or minority-owned businesses that were able to get those PPP funds until the second round.”

The CARES Act also allowed payments to healthcare providers that saw a large number of COVID-19 patients. According to a presentation at the committee meeting, Vanderbilt University Medical Center and Sumner County Regional Medical Center qualified for those payments and 289 providers qualified for rural healthcare provider relief payments totaling $240 million.