Trump Decides Which States Get Fully Reimbursed By FEMA For Coronavirus Expenditures: WSJ

President Donald Trump has the authority to issue full reimbursement for expenses incurred by states in their fight against the coronavirus pandemic, the Wall Street Journal reports. 

FEMA Funding Only Provides Partial Relief 

Thirty-nine states and territories have requested the full reimbursement of the money they spent on procuring equipment to counter the COVID-19 pandemic.

States are allowed reimbursement up to 75% of expenses in fighting the coronavirus pandemic under the law that applies to Federal Emergency Management Agency.

The states have asked FEMA to waive this rule and provide full reimbursement on the expenses incurred on medical supplies, testing, and other incidentals disclosed a FEMA spokesperson. 

Trump Holds All The Waiver Cards

The president has the authority to waive the FEMA rule, and the National Governors Associaton had asked him to waive costs for all states and territories. A stimulus bill that passed the Democrat-controlled House of Representatives also calls for 100% reimbursement, but this bill is unlikely to pass the Senate, which is held by the Republicans. The administration meanwhile has told states that they can use money from the Cares Act to make up for the gap left after FEMA funding is made available.

State Budgets Left Reeling After Coronavirus Payments

States had paid high prices for coronavirus related equipment after FEMA advised them to purchase it on their own. These expenses are having a detrimental effect on the budgets of the states. Shortfalls in the state budgets may lead to curtailing of services even as unemployment reaches new highs not seen since the Great Depression. California Governor Gavin Newsom disclosed that the state is facing a $54 billion shortfall, and this may lead to the furloughing of essential workers. Tribal nations are also seeking full reimbursements.

'A Perfect Storm' Is Forming

FEMA has set aside $6 billion for reimbursing states and has $80 billion in remaining funds that could be utilized.

In the case of the state of Washington, FEMA has set aside $64.3 million, while the state spent $500 million on protective equipment, a FEMA spokesperson has said that the amount could grow as Washington applies for more money.

States paid inflated prices for equipment resulting from price gouging, but FEMA expects that the costs to be reimbursed must be “reasonable” and should not “exceed that which would be incurred by a prudent person under the circumstances prevailing at the time the decision was made to incur the cost.”

A former FEMA official told the WSJ regarding the shortfalls that the states face, “This is devastating their budgets,” cautioning, “All of this is a perfect storm.”