CORONAVIRUS

McKee: Small businesses need some of R.I.’s $1.25 billion now

Jim Hummel
The Hummel Report
Lt. Gov Dan McKee, drops off donated plexiglass barriers at Rogue Island restaurant in downtown Providence.

Rhode Island has spent only a fraction of the $1.25 billion it has received from the federal government for COVID-19 relief, leaving a pile of money that Lt. Gov. Dan McKee says the Raimondo administration should be making available to small businesses right now and not holding back for potential future medical expenses or to plug a hole in the state budget.

During her daily briefing on Thursday, Raimondo’s director of administration, Brett Smiley, said the state had spent $150 million, or 12%, of the $1.25 billion it has received in federal stimulus money, with another $500 million committed to expenses in the near future.

The state expects to spend “$600 million to $900 million” for coronavirus testing, personal protective equipment and health responses over the next year.

McKee is concerned that many small businesses, with an average of less than a month of cash on hand, may not be around a year from now unless they receive an immediate infusion of money, something the state can make happen right away with the federal funds.

“You’ve got the ability to put money into small businesses that have been required to close because of this crisis,” McKee said. “How many tens of millions of dollars [is the Raimondo administration] going to put in to help the businesses? How many hundreds of millions?”

In a series of questions and answers with The Hummel Report, the governor acknowledged she was holding back some of the money in case the federal government decides to allow states, including Rhode Island, to use the funds to help close budget deficits. Right now that is prohibited.

Raimondo has held off on layoffs or furloughs of state workers and now faces a projected $900-million deficit (up from an estimated $800 million several weeks ago), including an estimated $234 million needed to close the gap between now and the end of the fiscal year June 30.

“The [federal] money is intended to be used … the exact words are: What the governor deems necessary to meet the immediate needs of the crisis,” Raimondo said. “We will spend hundreds of millions on testing. We will spend tens of millions of dollars on contact tracing, quarantining, isolation, food delivery, et cetera. So the vast bulk of it will be to meet these immediate needs, and I need to make sure we budget it over 12 months.

“We do have an $800 million deficit,” she continued. “As I stand here today I am hopeful that the federal government is going to do the right thing and send the states another stimulus. I cannot guarantee that. In light of this uncertainly, I’m going to continue to meet the needs of the emergency: rental assistance, we’re going to have to do something for businesses. We have to keep doing the testing. But if, at the end of June, Congress says, sorry, you’re on your own, but you can use some of your $1.25 billion to fill your budget hole, I think everyone’s going to be happy that I held some back.”

McKee said the state should begin issuing grants immediately. “There’s your economy — this is right in front of you. How much is it worth to keep your entrepreneurs and your business owners afloat so that when [the virus passes] we have some normalcy again?”

Gov Dan McKee drops off donated plexiglass barriers at Rogue Island restaurant in downtown Providence.