Business & Economy

How to spend $1.25 billion: Digging into Vermont’s Covid-19 spending spree

This is the first in a four-part series exploring how Vermont has spent its $1.25 billion share of the federal Coronavirus Relief Fund. In the coming days, VTDigger will dive deeper into where the money went and the impact on Vermonters and on the crucial small business, agriculture and housing sectors. 

Ski areas are receiving an infusion of cash to create outdoor dining so their guests can stay out of the lodge. Small restaurants are learning how to update their e-commerce platforms. And affordable housing advocates are puzzling over how to spend $25 million to expand housing options as winter approaches.

As Vermont’s $1.25 billion share of federal Coronavirus Relief Fund, or CRF, flows into the economy this fall, one rule looms over every program: Use it or lose it.

The federal relief money must be allocated by the end of the year. That deadline has had state agencies scrambling to create, coordinate and implement major emergency grants programs, some of which have only recently been reintroduced with changes. 

About one-fifth of the money is being used for grants to help businesses survive and, in some cases, enable them to begin long-needed initiatives. These grants are among the largest categories of CRF spending, along with health care and human services.  

Outside of the programs that provide grants to individual businesses, the CRF money is being used to pay for homeless assistance, housing improvements, child care and an array of other needs. 

Vermont Legal Aid is using a CRF grant to create a mediation program for landlords and tenants. The Agency of Agriculture has directed $34 million to help farms, farmers markets, and other agricultural businesses weather the pandemic. And a mortgage assistance program has helped thousands of Vermonters stay in their homes.

VTDigger examined the data and looked closely at three sectors — agriculture, housing and small business — to see where the money is going, how it’s being used, and why some business owners still haven’t signed on. 

Nearly $20 million will flow into broadband initiatives through the Department of Public Service, increasing connectivity for rural Vermonters who are working from home and children studying remotely. 

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The money from the first stimulus bill was intended to help Vermonters with basic needs and keep the state’s businesses operating as the governor shut down the economy in March to prevent the spread of the Covid-19 virus. In the summer lawmakers created funding programs that would help state and local governments, individuals, and private businesses.

The federal government also sent money directly to Vermonters, through $600-per-week unemployment supplements and through $1,200 and $500 checks to households. It also provided loans and grants to businesses and nonprofits through programs like the federal Paycheck Protection Program.

But the CRF money was allocated by state lawmakers, who finished their work Oct. 1. It alone amounts to more than one-sixth of the state’s annual budget. Now the state’s leaders hope to see the money support individuals, businesses and institutions through an expected tough winter — at least until another federal stimulus package is passed. 

Still in business

Ski areas are in a tough position this winter. While they provide outdoor recreation – one of the only safe social activities available during the pandemic – they’re also places where people congregate and socialize, often in crowded lodges. With that in mind, the Legislature set aside $2.5 million to help ski areas create outdoor microclimates using wind screens, tents and fire pits.

Jay Peak has created an app that will help resort guests order deliveries to their hotel rooms from local restaurants and will have food trucks available for skiers who choose to dine outside. It’s also using its share of the state money to integrate contact-free payment systems at its lodges, hotels, shops and restaurants.

“If it weren’t for this opportunity with the state, it might be difficult to pull it off this year,” said Steve Wright, Jay Peak’s general manager.

Stephanie Shiman, owner of Frabjous Fibers & Wonderland Yarns, says she is selling much more online.

Business “pretty much came to a grinding halt” in mid-March for Stephanie Shiman, yarn maven and proprietress at Frabjous Fibers & Wonderland Yarns, a yarn shop in Brattleboro. A large shipment of raw materials that had been due to arrive in March didn’t get to her until July.

“It is a horrible feeling to have orders to fill — because with everyone staying home, crafting is the perfect entertainment — and not have any raw materials to create products with,” said Shiman, who received $50,000 from the state’s business grants program. 

“Without raw materials, our business comes to a standstill. So, I decided we would never run out of yarn again. Using the grant money, I ordered a lot of yarn — more than double the usual order,” she added. 

Shiman said yarn stores, including hers, have been pivoting to more online sales and making changes that will serve them well when the pandemic is over.

“The pandemic has forced business owners to take a deeper look at how their businesses are operating and pivot to keep up with changing times,” she said. 

Mary Beth Hamilton and her husband Greg, who have been running an antiques store in Vergennes for 22 years, also received $50,000. They used it to pay Greg’s salary, rent, and other expenses for the shop. Initially, the business wasn’t eligible for the business grants, which excluded sole proprietors in their first round. Eligibility was changed in September.

Hamilton credits the federal PPP program and the state business grant program with helping her family business survive and with enabling Vergennes — which has three new businesses  opening this autumn — to keep its downtown storefronts full.

“It would have been very, very tough” without the grants, she said. 

Unusual circumstances

Vermont has received the second-largest share of the money from the $2 trillion CARES Act, with just over $2,000 per person. Only Wyoming, which has a slightly smaller population of 578,000, received more money per capita, at $2,160. For any state with a population of 7 million or above, the per capita payout was only about $388, said Tom Kavet, the economist for the Vermont Legislature.

Kavet said the end-of-the-year deadline added urgency to lawmakers’ already enormous task of allocating the money fairly and logically. 

“Hundreds of millions of dollars are being spent with a couple days of analysis,” he said. “It’s just scattered all over the place, and it’s impossible to even say right now, ‘Let’s do an inventory of all the places it’s been spent.’”

Tom Kavet
Legislative economist Tom Kavet says because of the haste needed in spending Coronavirus Relief Funds, it's hard to know at this point where all the money's gone. Photo by Glenn Russell/VTDigger

Lawmakers were called to allocate the money quickly, meeting online instead of in person, and many of the funding programs unveiled this summer have been adjusted as administrators learn more about the need. Many have extended their guidelines and deadlines as they've learned more about the needs of the applicants. 

The state auditor’s office is already gearing up to audit the programs, looking for cases where recipients breached the rules, for example by using federal and state money for the same demonstrated need.

“We are allocating significant in-house resources to this; it is big money after all and the programs were created on the fly without the kind of due diligence and analysis you would expect for such enormous expenditures,” said Vermont Auditor Doug Hoffer in an email. 

The Scott administration allowed Hoffer to circumvent the state hiring freeze and bring on two people to help with the task of auditing the huge expenditures. But still, he said, “it will take a while.”

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Anne Wallace Allen

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