MONTPELIER – A new report from Vermont’s state auditor suggests that many Vermont businesses may have been awarded too much money from last year’s COVID-19 Economic Recovery Grant Program. I
State Auditor Doug Hoffer says the state agency in charge of the program used a funding formula that didn’t take businesses’ full financial picture into account. As a result, he says, two-thirds of the 57 Vermont businesses audited were more profitable in 2020 than the previous year, partly due to the grant funding.
Hoffer said the Agency of Commerce and Community Development should have factored in money some companies saved early in the pandemic by cutting payroll and reducing overhead costs.
“Those 57 businesses reported $130 million of need,” Hoffer said. “When we did the adjusted net operating income method, it was $14 million. That’s all that’s involved here, whether these funds were really closely and carefully directed to those most in need.”
Hoffer said the companies played by the rules, but the rules may have meant companies with greater need were left out of the program.
“If a lot of money went to firms that didn’t need it, or didn’t have anywhere near the need of your company that was struggling just to survive and come out of this in one piece, then the money that went to those guys wasn’t available for you,” he said
Commerce Secretary Lindsay Kurrle disputes Hoffer’s findings. She said there was broad support for the funding process, and the grants weren’t greenlighted solely by her department.
“It was done with the Administration and the Legislature’s blessing, and it was within the guidance of the U.S. Treasury,” Secretary Kurrle said. “We had to deploy money. We had businesses that had not seen any income for five months that were unable to pay their own bills, and there’s such a trickle-down effect when that happens.”
Still, Hoffer is concerned taxpayers would be on the hook for the extra money given to businesses if the U.S. Treasury ever came back for it. He believes state officials and the Vermont Legislature need to know exactly how much money Vermont could owe the federal government if it decides to reclaim it.
Kurrle believes that’s an unlikely scenario.
“We have not heard anything from the federal government that would indicate that they do not support the way we deployed this money, so at this point in time I don’t have a concern that’s going to be the case,” Kurrle said.
The businesses themselves can’t be held liable because federal guidelines said as long as the rules of the program were followed, businesses would be held harmless for issues that emerged later on.
The COVID-19 Economic Recovery Grant Program was established to provide emergency assistance to businesses in need. In total, the Agency disbursed $117 million to 2,278 businesses through the program in 2020.