A last-minute dustup over a plan to claw back state and local government COVID aid prompted the House Wednesday to drop all $15.6 billion of COVID funding from the new FY22 budget bill.
A separate COVID relief bill to cover President Joe Biden's request will be introduced as soon as Wednesday, House Speaker Nancy Pelosi said in a press conference Wednesday afternoon.
Current government funding is set to expire on March 11. A $1.5 trillion omnibus bill, which had been in the works for months, was released early Wednesday morning with House leaders hoping for a Wednesday afternoon vote.
But Democratic lawmakers and several governors mounted a last-minute challenge when they realized that the $15.6 billion in new COVID relief funding — a priority of the White House — was funded in part by clawing back $8 billion in aid allocated in the 2021 American Rescue Plan Act.
More than 30 states would have been affected by the move, Minnesota Democratic Rep. Angie Craig told reporters Wednesday afternoon. The vulnerable states were those that received their aid in two separate tranches, the second of which is expected in May.
"This deal was cut behind closed doors. Members found out this morning. This is completely unacceptable," Craig said according to reports. “Thirty of the 50 states just had some of their COVID relief money that’s already been put in a plan put into a claw back position. So, either 50 of the states need to participate here, or we need to figure out another way to do this more fairly.”
Washington was set to lose $400 million, according to Gov. Jay Inslee's office. “It’s really not fair because some states got the money all at once some states didn’t," Rep. Pramila Jayapal, D-Wash., told reporters.
The claw back was a Republican demand, and Democrats were able to whittle it down to $8 billion, which would have covered roughly half of the FY22 funding, Pelosi said.
"The Republicans insisted every penny for COVID be offset and we fought to make sure they didn’t take any of that money out of the pocket from localities, but they did insist it come out of the states," Pelosi said.
To quell the dispute and advance the bill, Pelosi decided to drop all COVID funding and send the legislation back to the Rules Committee.
"We must proceed with the omnibus today, which includes emergency funding for Ukraine and urgent funding to meet the needs of America's families," she wrote in a letter to Democrats, adding that it was "heartbreaking" to drop the pandemic relief.
During her press conference, she said the COVID funding would be taken up in separate legislation as soon as Wednesday afternoon. "The Administration's request is essential to continuing the fight against the pandemic."
In a letter sent to Congressional leaders Tuesday, the National Governors Association, led by Arkansas Gov. Asa Hutchinson and New Jersey Gov. Phil Murphy, urged Congress to drop any claw back plans.
“We strongly oppose any recission of the [Coronavirus State and Local Fiscal Recovery Funds], which would jeopardize our shared goals of mitigating, responding to and fostering a transformational recovery from this unprecedented national pandemic,” the letter said. “We urge lawmakers to negotiate in good faith to advance FY 2022 spending legislation, while preserving the critical support provided through the CSLFRF.”
Separately, the chamber is set to vote on another short-term continuing resolution to keep funding alive past the current March 11 deadline. The latest CR would extend funding for another four days.
