Gov. Kelly strikes COVID-19 deal with GOP legislators: Here’s what you need to know

Move redirects $38.5M to urgent needs, allows leftovers to inflate jobless fund

Gov. Laura Kelly and legislators on the State Finance Council agreed to reallocate $38 million in federal CARES Act money to urgent needs amid the COVID-19 surge and to earmark money unspent on Dec. 31 to the state's shrinking unemployment insurance fund. (Sherman Smith/Kansas Reflector)
Gov. Laura Kelly and legislators on the State Finance Council agreed to reallocate $38 million in federal CARES Act money to urgent needs amid the COVID-19 surge and to earmark money unspent on Dec. 31 to the state's shrinking unemployment insurance fund. (Sherman Smith/Kansas Reflector)

TOPEKA — Gov. Laura Kelly and legislative leaders unanimously agreed Friday to reallocate $38.5 million in federal COVID-19 disaster aid and to deposit emergency funding not spent by Dec. 31 in the state’s shrinking unemployment compensation fund.

Kelly and the State Finance Council discussed, but took no action, on the governor’s new executive order requiring wearing of masks in public. The governor affirmed her directive left in place county mandates that require use of face coverings, allowed counties to adopt her version of the public health policy and didn’t circumvent state law enabling counties to opt out.

The meeting achieved the Democratic governor’s top priority of shuffling millions of dollars in unused crisis funding into direct economic aid to restaurants, bars, private colleges, movie theaters and other struggling businesses. Kelly and legislators also agreed to inject more cash into Kansas hospitals, health departments, clinics and nursing homes in wake of an unprecedented surge of coronavirus in Kansas.

In a concession to Republicans, Kelly agreed to earmark unspent CARES Act resources — an amount that won’t be known until the end of December — for deposit in the unemployment insurance trust fund. The deal doesn’t preclude use of every last coronavirus aid dollar to meet unanticipated challenges raised by the pandemic in November or December.

It’s possible the state as well as cities and counties won’t be able to expend the available money by the Dec. 31 deadline imposed by Congress and President Donald Trump.

“Any of the unspent money at the end of the process will be transferred into the employers’ unemployment fund,” said Senate Majority Leader Jim Denning, a Johnson County Republican. “Very straightforward. Not manipulating or interferring with anything that’s already been approved by the State Finance Council.”

“It’s kind of a default bucket,” said Sen. Carolyn McGinn, a Sedgwick Republican.

Kelly, who balked recently at pouring CARES Act dollars into the unemployment trust fund, said the strategy should be viewed as a “stroke of midnight” way to clean out the account so nothing had to be returned to Washington, D.C.

There is growing anxiety among statehouse politicians with the ability of Kansas employers to fulfill their multi-year obligation to rebuild the fund that had a pre-coronavirus balance of more than $900 million. The trust fund is expected to run dry by spring, Kelly said.

Under the revised COVID-19 spending plan now in place, $18.5 million previously earmarked to shield Kansans from eviction and to help with child care expenditures would be transferred to four key areas. Here is a breakdown: hospitals for surge capacity, $7.5 million; local health departments, $5 million; safety-net clinics, $4 million; and nursing homes, $2 million.

That move left $16 million available for eviction and child care support, but the $75 million origionally allocated for those purposes by the state appears to have been excessive.

Legislators and the governor also agreed to pour $20 million in unused CARES Act funding directly into the economy, with priority given to struggling industries.

Here’s where that money will go: $5 million to private colleges, $5 million to movie theaters, $4 million to restaurants and bars, $4 million to large event venues, and $2 million for personal protective equipment manufacturing.

“These investments help keep businesses open and bolster our public health response all across Kansas,” said Julie Lorenz, the governor’s executive director of the office of COVID-19 recovery and the secretary of the Kansas Department of Transportation.