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Municipal League opposes DCEO’s proposed restriction on federal money for local businesses

Thursday, Jul 9, 2020

* Press release…

The Illinois Municipal League (IML) and state business leaders today called on the Illinois Department of Commerce and Economic Opportunity (DCEO) to amend a proposal that would prevent local governments from directly receiving millions of dollars in federal funds to support economic development and help businesses stay afloat during the coronavirus pandemic.

The move by DCEO would limit economic recovery in communities across the state by diverting federal funds away from cities, villages and towns where local leaders are best equipped to make decisions for their communities. Downstate and suburban communities that did not qualify for direct federal aid are particularly at risk, as the state will be able to reallocate these funds elsewhere.

This decision goes against provisions in the Coronavirus Aid, Relief and Economic Security (CARES) Act that allows local governments to provide economic support to businesses during the pandemic, which passed Congress with overwhelming support and was backed by every member of the Illinois Congressional Delegation. It also defies the intent of state lawmakers who believed they were sending direct aid to local governments and employers when voting for this year’s budget package.

“Local officials know their communities best. It’s disappointing the state wants to take away their ability to decide how federal dollars are spent to support economic development, especially as they watch shops, restaurants and other businesses close around them at an alarming rate,” said Brad Cole, IML Executive Director. “This decision undermines federal efforts to keep local economies afloat during the pandemic and demonstrates how out of touch state officials are with the needs of communities across Illinois.”

Under the CARES Act, local governments can use federal relief funds to provide economic support to businesses that have struggled during the pandemic. However, DCEO recently filed rules with the Joint Commission on Administrative Rules that would prevent economic development expenditures from being eligible for reimbursement. These guidelines would be more restrictive than those put in place by the federal government and will prevent municipal leaders from providing support to local businesses at a time many are struggling to survive. This economic assistance program is especially important in downstate and suburban communities, as only larger governments including Chicago, Cook County and DuPage County received direct funding under the CARES Act. DCEO also wants to shorten the timeframe for which municipalities are eligible for reimbursement of funds used to respond to the pandemic by 60 days, creating additional burdens to receive help.

Joining the IML in opposition to these harmful and unnecessary restrictions are leaders of the state’s business community, including the Illinois Retail Merchants Association (IRMA) and the Illinois Manufacturers’ Association (IMA).

“Retailers large and small have been devastated by the pandemic, with many struggling to make ends meet. Without this help, many local stores, restaurants, taverns, and entertainment venues may close for good,” said Rob Karr, President and CEO of IRMA. “The retail sector employs one-fifth of workers in Illinois, is the largest sales tax revenue generator for local governments and the second largest revenue generator for the state. Failure to help revive the retail sector will harm our state and communities for many years to come.”

“The state has repeatedly noted throughout this pandemic that local officials are best positioned to make judgements about what their communities need, and this must be extended to decisions regarding local economic development,” said Mark Denzler, President and CEO of IMA. “We are calling on the administration to rescind these restrictions to ensure federal relief funds are properly invested in our communities, including manufacturers who have stepped up during the pandemic to produce personal protective equipment, medical devices and ensure our food supply remains strong.”

The proposed rules are here.

* From the Illinois Department of Commerce & Economic Opportunity…

The claim that the state is preventing local governments from receiving federal funds is simply false. The General Assembly created the Local Coronavirus Urgent Remediation Emergency (Local CURE) Support Program to deploy $250M in Federal Coronavirus Relief Fund dollars to reimburse local governments for the costs they’ve incurred to address the COVID-19 pandemic beginning this month. The State separately created the $636 million Business Interruption Grant program to directly support businesses with grants to cover losses due to the pandemic. In developing the Local CURE reimbursement program, the Department of Commerce and Economic Opportunity (DCEO) sought input by various local government groups including IML on how to fairly and equitably deliver the funds to cover ongoing costs for COVID response. At the same time, the State created the BIG program to directly support businesses for losses they’ve experienced.

* Background from DCEO…

• The Local CURE program was developed to help local governments by reimbursing emergency costs incurred since March and draws upon funding appropriated to the department for use as a local government support program. This program has always been intended to mitigate costs for local government operations; it is not a relief program for businesses, which the state is addressing separately.
• It is the administration’s intent to release Local CURE funds in a way that addresses the needs on the ground – which is why this program is formula based and looks to release funding equitably per capita as well as with a needs based approach determined in partnership with IDPH to grant relief to communities with higher concentration of COVID-19 cases.
• DCEO has begun working with local governments to prepare for reimbursement, including issuing an application for other units of local government to submit their request. Despite what IML is saying, DCEO intends to distribute all of these funds to local governments. Local CURE program contemplates a reallocation ONLY if a local unit of government does not present costs eligible for reimbursement. DCEO has determined costs eligible for reimbursement in accordance with US Treasury guidance, and those include: public safety related costs, public health, PPE materials, and more.
• The state statute established Local CURE as a reimbursement program for costs incurred. Adding economic development to this via rules would require local governments to stand up new grant programs with their own funds, an impractical outcome given the difficult fiscal circumstances local governments are in. This would also result in an extended review period for applications to Local CURE, ultimately resulting in a delay in local governments seeing their reimbursements.
• Local CURE contemplates reimbursement for eligible costs submitted by nearly 100 counties and thousands of other local units over governments and is aligned with US Treasury guidance for allocating CRF. The average County allotment for reimbursement is $532,183; and the average municipal allotment for reimbursement is $132,599.
• BIG allocates 2.5 times the CRF money for BIG and applies it exclusively for economic development. The historic $636 million BIG program just closed its first round of funding applications this week. The administration is working diligently to ensure these funds are expedited for purposes of economic recovery, and the program places priority on communities and businesses hit hardest.

* From Jordan Abudayyeh…

Supporting economic development and ensuring local governments have the resources they need to fight COVID-19 are top priorities for the governor. The General Assembly created programs to support local governments through the pandemic using federal dollars and the Governor continues to call on Congress to pass additional state and local funding to ensure continued support throughout the pandemic response.

Background..

The $250 million Local CURE program reimburses local governments for additional spending related to COVID-19 and DCEO is charged with administering the program within the confines of state statute.

Similarly, the General Assembly also created the $650 million BIG program to ensure businesses were supported during this unprecedented time.

- Posted by Rich Miller        

8 Comments
  1. - Benjamin - Thursday, Jul 9, 20 @ 3:20 pm:

    One thing I’ve taken away from reading this blog is how many people who are supposedly politically savvy about state government have no idea how things are supposed to work.


  2. - Just Curious - Thursday, Jul 9, 20 @ 3:43 pm:

    Agree with your comment.


  3. - 4 percent - Thursday, Jul 9, 20 @ 4:29 pm:

    The federal law provides money to local governments for 5 purposes including economic development.

    The Assembly codified the federal CARES Act creating the state program to fully implement the law.

    Then the DCEO rules were released that only allow money to be spent on 4 of the 5 items. No money for local economic development.

    Why? So the Administration can keep it and reallocate it. Keep in mind that Chicago, Cook County, and a few large counties got direct money. They are currently NOT eligible for these funds. But if the Governor/DCEO rules apply, they then get the extra money to spend and reallocate statewide.

    Ask Langfelder if he would have liked a program to help Feed Store or Augies?


  4. - ANON - Thursday, Jul 9, 20 @ 4:29 pm:

    this adminstration consistently demonstrates either a reluctance, inability or refusal to seek stakeholder input before making public policy. Another trip back to JCAR will help them learn this important lesson.


  5. - Oswego Willy - Thursday, Jul 9, 20 @ 4:31 pm:

    ===… reluctance, inability or refusal to seek stakeholder input before making public policy.===

    Elections have consequences.


  6. - 4 percent - Thursday, Jul 9, 20 @ 5:17 pm:

    OW - election results didn’t help them with the work rules (they lost in court and withdrew within a week) and the fines that got rejected at JCAR.

    This isn’t partisan. There are Dem Congressmen and mayors not too happy.


  7. - Oswego Willy - Thursday, Jul 9, 20 @ 5:20 pm:

    === This isn’t partisan. There are Dem Congressmen and mayors not too happy.===

    The administration is going to go about their business as they see fit.

    They lose, they win, they are going to do it in their terms.

    You can like it or not, they can lose or win, but the election had this consequence


  8. - Medvale School for the Gifted - Thursday, Jul 9, 20 @ 5:49 pm:

    Have Brad Cole and the IML become fair weather partners of the Governor? They shared the COVID stage so well early on. Perhaps the Right-leaning IL Sheriff’s Assn is rubbing off on them.


Sorry, comments for this post are now closed.


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