Doug Ducey Budget

“Investments, like these, will strengthen the economy. For instance, keeping people in their homes protects the renter, the landlord, and prevents homelessness. Helping small businesses survive the downturn protects jobs, the landlords, and the unique character that attracts tourists.”

With a possible lawsuit looming, Gov. Doug Ducey has let go of some of the federal cash he got for local communities – including Scottsdale.

Scottsdale will receive $29.6 million from the pool, the second largest allocation behind Chandler’s $30 million. 

Ducey is allocating $441 million, a quarter of the more than $1.9 billion Arizona is getting in coronavirus relief dollars. Most of the rest, he said, will be set aside for future needs of the state, including the possibility of replenishing the state’s unemployment insurance trust fund if it runs dry.

That amount computes out to $114.80 per city or town resident. Counties get the same amount, but only for the population living in unincorporated areas.

The move by the governor comes two weeks after the Pinal County Board of Supervisors voted to file suit to force Ducey to let go of the cash.

Maricopa and Pima counties, as well as Phoenix, Tucson and Mesa, got their pandemic relief funds straight from the federal government because they each have populations of more than 500,000.

The $29.6 million distributed to Scottsdale is out well below rough estimates by City Treasurer Jeff Nichols.

At a May 19 budget meeting, Nichols told the Scottsdale City Council could receive $45 million if the money was allocated based on the same formula used to determine the direct allocations to larger municipalities like Phoenix and Tucson.

Ducey brushed aside questions about the Pinal County lawsuit, saying “There’s no lawsuit necessary. The funds are distributed.’’

Strictly speaking, the dollars that Ducey is giving out are supposed to be earmarked for public safety and health needs.

But the program is set up so that communities can replace the local dollars they were using for those programs with the new state aid. That, in turn, frees up those dollars for other programs.

Ducey said it gives maximum flexibility to each city, town or county to decide how best to allocate the dollars.

The money could be used to help Scottsdale businesses and the city itself, both of which took significant revenue hits due to the drop in tourism associated with the covid-19 pandemic.

Scottsdale’s tentative budget for next year includes a $23 million sales tax revenue decrease compared to pre-covid projections – with much of that hit coming from projected declines in restaurant and hotel sales tax revenues.

A discussion at the May 19 Scottsdale City Council meeting hinted how some members would like to use the cash.

“I know there’s many in the business community who are really looking to the city for financial assistance,” Councilwoman Linda Milhaven said while discussing the budget on May 19.

Councilwoman Solange Whitehead also called on the city to aid small businesses while also using funds for rental assistance.

“Investments, like these, will strengthen the economy,” Whitehead said. “For instance, keeping people in their homes protects the renter, the landlord, and prevents homelessness. Helping small businesses survive the downturn protects jobs, the landlords, and the unique character that attracts tourists.”

Phoenix and Mesa both have allocated tens of millions of dollars in grants for small businesses, though Mesa now believes it will need less than $10 million for its program.

Both cities also are developing grant programs to aid households with grants covering a month’s rent and three months of delinquent utility bills.

Another $150 million of the money going to Arizona is being allocated to what the governor calls the Express Pay Program.

This is designed to provide quick cash to entities seeking public assistance from the Federal Emergency Management Agency but need the money more immediately.

 Eligible recipients include not just local governments but also tribes, state agencies, nonprofit hospitals, school districts, fire districts and skilled nursing and assisted living providers.

Everything else, Ducey said, is going to be banked.

“This is a significant amount of money that we get to spend once,’’ the governor said, stressing that it can’t all be given out to local governments because he’s waiting to see what the state’s financial situation is.

“We are going to have needs at the state level,’’ he said. That includes the fact that more than 600,000 Arizonans have applied for unemployment insurance since the virus outbreak.

“Those are dollars that need to be replenished’’ he said, if the account goes to zero.

Under normal circumstances, the fund would borrow money from the federal government. That’s what happened a decade ago when the state needed to borrow $420 million.

In that case, it took a surcharge on employers -- the people who finance the fund in the first place -- to repay the cash. Ducey suggested that the state might instead decide to finance the deficit, letting employers off the hook.

Progress Managing Editor contributed to this report.