Stimulus Funding Watch Panel Analyzes More Than $ 2.2 Billion Spent On Housing And Commerce Departments – Maryland Matters


A Maryland Office of the Comptroller task force meets regularly to document state and federal stimulus funds received and spent by state agencies. Photo by Danielle E. Gaines.

As part of an ongoing effort to keep track of state and federal stimulus funds flowing into state coffers, a comptroller’s task force on Wednesday examined spending from two state agencies that paid the most. large amount of aid in the event of a pandemic: the Departments of Commerce and Housing and Community Development.

“There is no doubt that this help was essential. And I still believe that in many cases even more relief was needed, ”said controller Peter VR Franchot (D). “I also think, however, that with so much taxpayer money disbursed, it is both morally and fiscally prudent that we continue to evaluate these transactions to guard against waste, fraud and pandemic profits.”

Franchot formed the task force after the General Assembly asked his office to provide a full account of stimulus spending, as well as a report on any fraud discovered during his review.

As of March 2020, the Commerce Department has released more than $ 435 million in targeted grants and loans to Maryland businesses and nonprofits, according to data presented Wednesday.

Approximately $ 220 million was distributed through the Maryland Small Business Emergency Relief Grant and Loan Funds established by Governor Lawrence J. Hogan Jr. (R) in March 2020.

Franchot expressed concern about the way the department was distributing these funds, especially because Prince George County appeared to receive less money than other counties, despite being the second most populous jurisdiction. of State.

Montgomery County businesses received 2,646 grants worth $ 26.2 million under the emergency grants program, compared to $ 12.5 million for 1,270 grants in Prince George County, Franchot said. .

He also questioned the distribution of subsidies to certain industries that have not suffered dramatic job losses. The professional, scientific and technical service industries received 13% of all Commerce funds, although the industries only accounted for about 3% of job losses in Maryland, Franchot said.

In contrast, the restaurant industry received 17 percent of the funds from Commerce, but suffered nearly 33 percent of the job losses.

Sarah Sheppard, director of education and manpower at the Ministry of Commerce, said the disparities were created in part because the first disbursements were rushed at the height of business closures , while the approval process has been refined over time.

During the first round of state emergency grants and loans, the ministry frantically reviewed tens of thousands of applications with a team of eight employees. Later in the grant process, more than 100 state employees from other departments volunteered to work for Commerce to review grant and loan applications.

The original programs were also almost immediately oversubscribed, Sheppard said, meaning some of the more savvy applicants were able to secure all of the funding. During subsequent stimulus programs, the department worked to increase the reach of different types of businesses, and the stimulus funds approved in the bipartisan RELIEF Act of 2021 included provisions to ensure geographic diversity.

Members of the task force asked Sheppard if she would have made a difference to make the process fairer from the start.

Sheppard responded that the initial efforts were to get emergency financing for struggling businesses as quickly as possible, and by that time all businesses were taking losses.

Sheppard added that such an intensive response is, hopefully, even once in a lifetime.

Bureau of Revenue Estimates director Andrew Schaufele, a member of the task force, agrees. But, Schaufele added, it was always helpful to identify what went well and what didn’t.

“I think this will change the way the government reacts forever to any type of recession,” Schaufele said. “… I think this is going to be the new normal in response. So I think there is a lot of value to dig into these.

Asked about the fraud, Sheppard said Commerce had identified three companies – one in 2020 and two in 2021 – that appeared to be submitting forged documents, but the agency was not aware of any fraudulent payments made. Processing errors led to 56 companies receiving duplicate checks and four receiving overpayments, Sheppard said.

Most of the faulty checks were returned, canceled, or companies agreed to refund them, she said.

Rent assistance funds are pouring in now

The Maryland Department of Housing and Community Development has received more than $ 1.78 billion in stimulus funds throughout the pandemic to help with rental and mortgage assistance, homelessness prevention programs and the expansion of broadband Internet.

More than 70% of that funding was allocated through the US federal bailout law, which became law in March.

About $ 500 million is spent on rent assistance; about half were approved by the federal government in January, and the state established an application process that began in May.

Franchot expressed concern that some of the money paid to the state for rent assistance was not spent quickly enough. Of the $ 258 million included in the 2021 Federal Consolidated Appropriations Act, only $ 286,000 has been spent to date, according to spreadsheets presented by Robyne Chaconas, chief of staff at the Ministry of Housing and Community Development. .

Chaconas said it was a factual figure, but misleading. Now that applications for rent assistance were opened on May 15, the ministry expects that spending to increase dramatically, she said.

Chaconas also warned the panel that some dedicated stimulus funds would be spent faster than others: for example, some federal programs have much more flexible or longer-term guidelines, so state and local governments will pull back. ‘First time-sensitive subsidies, she said. mentionned.

Agency officials told the task force they would follow up on additional data requested but not immediately available on Wednesday, including information on the number of businesses that have failed after receiving stimulus funds, results of subsidies meant to stimulate the manufacture of personal protective equipment and how much of the rent assistance funding went to large landlords versus smaller ones.

The task force is expected to meet again in about a month to discuss the state’s unemployment system.

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