US Treasury, Ducey administration fight over the use of COVID funds

PHOENIX (3TV/CBS 5) — Arizona may not lose the entire $2 billion it received so far from the American Rescue Plan Act, according to an official with U.S. Treasury Department. But the Biden Administration is still at odds with the way Gov. Doug Ducey has spent $173 million of the funds.

The dispute stems from Ducey’s plan to reward school districts that did not require students to wear masks during the height of the pandemic, and his effort to provide money for families that removed children from schools that did require masks. In January, the U.S. Treasury Department sent a letter to Ducey, warning that the department may require Arizona to repay its share of American Rescue Act funds and giving the state 60 days to comply. That window closed last week. “By using American Rescue Plan funds to discourage families and school districts from following appropriate public health guidance, the conditions in Arizona’s programs undermine efforts to stop the spread of COVID-19,” wrote a Treasury official in response to questions submitted by Arizona’s Family Investigates.

The official stated that recipients that use the funds in a way that violates Treasury’s guidelines are required to repay those funds, but not all of the funds the state received. Ducey filed suit against the Treasury Department in January, asking a federal judge to declare that the department was overstepping its authority. That case is pending.

The use of funds to reward what most in the medical community consider dangerous behavior is just one of several questionable expenses Arizona’s Family Investigates identified in the list of projects funded by the state’s share of American Rescue Plan Act funds.

Some of the money, $88 million to be exact, is earmarked for health care staffing in rural and underserved parts of the state. $40.7 million will go toward affordable housing, $10 million is headed to ASU for COVID-19 testing and $100 million will go to improve broadband in rural parts of the state. $758.8 million will go to the Arizona Department of Economic Security.

But there are other, seemingly-less COVID-related expenses. $95 million will go to state government employee pay raises, while $100 million will go to improve broadband along Interstate 19 and Interstate 17. $71.8 million will go to the state Office of Tourism, with $8 million of that going toward “improving water conservation at older golf courses.” “More than anything else, what goes through my mind is what a waste,” said Bryon Schlomach, who is an economist and conservative state policy expert.

“The ethic today is to draw down as much money from the federal government as possible and then just spend it,” added Schlomach, who argues that big business will likely be the biggest beneficiary of the money and that such a huge infusion of cash in such a short time will worsen inflation.

Other critics include David Lujan, who is the president and CEO of the Children’s Action Alliance. “You know we could be using those dollars to bring in more school nurses, school counselors to deal with the mental issues that students are facing,” said Lujan.

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