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Idaho county sues state over federal COVID-19 rescue money

photo of downtown sandpoint

Sandpoint is the county seat of Bonner County. Photo by Sharon Fisher

A lawsuit filed by an Idaho county against Republican Gov. Brad Little and other state officials could upend plans for distributing $1.25 billion in coronavirus rescue money.

Bonner County in the lawsuit filed July 14 in U.S. District Court contends that Treasury Department guidelines require the state to simply distribute the rescue money to cities and counties based on population.

State officials instead have tied allocations to payroll expenses for first responders as a way to reduce property taxes. In addition, to receive the rescue money, cities and counties cannot increase their property tax budgets by the allowed 3% next year or use any balance from previous years.

Local governments had a July 17 deadline to sign up to receive the money.

At least 16 of Idaho’s 44 counties have pushed back in a letter to Little requesting a legal opinion from the U.S. Treasury Department and state attorney general’s office concerning tying $200 million in rescue money to property tax relief.

At least 28 other counties and 54 cities had signed up for the funding under the governor’s terms by the deadline, the governor’s office said. The state’s largest city, Boise, has signed up, as have nearby Nampa and Meridian. Sandpoint, which is in Bonner County, has also signed on.

Specifically, Bonner County is asking the court for a declaratory judgment spelling out who should get what portion of the $1.25 billion and how it should be distributed. The county is also requesting the court expedite the case.

The county also contends that the state has only allocated $282 million to local governments. But the lawsuit said the state is actually required to distribute 45% of the $1.25 billion to local governments, which would require Idaho to distribute about $560 million to local governments based on population.

Congress and President Donald Trump in March approved the $2.2 trillion Coronavirus Aid, Relief, and Economic Security Act. Idaho received $1.25 billion, a significant sum for the state that in the fiscal year that just ended generated a little over $4 billion in revenue.

Bonner County in the lawsuit said the act doesn’t allow use of the rescue money except as needed to deal with the public health emergency caused by the coronavirus.

“Nor does the CARES Act impose any further restrictions on how the Funds may be used by their recipients,” the county said.

Little set up a financial advisory committee responsible for using the rescue money to support businesses, health care providers and struggling families during the pandemic.

Little’s budget chief, Alex Adams, heads the committee. The committee is named in the lawsuit as are Adams, Idaho Department of Commerce Director Tom Kealey, State Controller Brandon Woolf and Idaho State Treasurer Julie Ellsworth.Marissa Morrison, spokeswoman for Little, in an email to The Associated Press on July 16 said that the “Governor’s thorough plan to protect Idahoans and our economy from this terrible diseases is legal. The Treasury Department guidance gives the Governor the discretion to determine what expenditures are necessary due to the public health emergency.”

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