JEFFERSON CITY — Almost $13 million of CARES Act funds meant to help small businesses and family farms went unused by the Missouri Department of Economic Development.

The state was allocated $30 million, but no more than $17.1 million will be distributed, even if the rest of the pending applicants are approved.

Rep. Peter Merideth, D-St. Louis, was frustrated by the department’s handling of the program during a House budget committee hearing Tuesday.

“Shouldn’t the goal have been to get emergency dollars into the hands of people applying for it as fast as possible?” Merideth asked.

Rob Dixon, director of the Missouri Department of Economic Development, said some states gave the funds out without asking many questions and that “their goal was prioritizing speed.”

After Merideth quipped that Missouri’s goal seemed to be bureaucracy, Dixon said its aim was to balance protecting taxpayers’ dollars while still getting payments out. He gave one example of people trying to claim leather purses as perishable inventory to count them as an eligible expense.

“The state of Missouri is ultimately responsible for the proper administration of those funds, and if we emphasized haste and getting the dollars out over complying with the federal law, the federal government could very well come back and ask the state of Missouri to reimburse what we should not have paid out in the first place,” Dixon said.

About $22 million was initially set aside for small businesses from the CARES Act funds. If 50 remaining applicants are approved, the most that could be distributed would be $15.2 million.

Dixon said all of the $22.5 million was initially approved for businesses, but $7.3 million ultimately went unused when businesses decided not to utilize the program or they didn’t present eligible reimbursable expenses.

Merideth expressed frustration that approval did not necessarily equal distribution.

“...This is not the time to be sitting on dollars that are for emergency relief, and I don’t understand why this is not being addressed.”

Merideth said the department should have known all of the money would not be spent, and a plan should have been in place to use all of it.

Michael Lanahan, director of the Business and Community Solutions Division of the Department of Economic Development, said the state created a waitlist for up to $2 million to account for what it anticipated might be left from ineligible expenses.

“It was something that we tried to account for,” Lanahan said. “And it exceeded expectations, unfortunately.”

Merideth talked about small businesses in his district that have been waiting more than eight months to receive funds.

“Why in the world is it taking eight months?” Merideth asked. With only 600 applicants approved, he questioned why it was taking the department so long to review the applications.

Merideth said Dixon and the Office of Administration previously told him payments would be done by the end of January, but all payments are still not finalized.

“What would we have done if this money had to be out the door by the end of December?” Merideth asked, referencing the initial date the CARES Act funding was set to expire.

Dixon explained that approved applicants were allowed to keep their applications open through November to maximize eligible expenses, and federal rule changes slowed things down.

Family-owned farms were allotted $7.5 million of the $30 million from the grant. Only $1.9 million of the $7.5 million was distributed. Dixon said the Department of Economic Development only received $2.8 million in applications for the grant.

Scott Cupps, R-Shell Knob, focused on how only $1.9 million of the $7.5 million was distributed.

“By percentage, that’s horrific,” Cupps said.

Cupps said he thinks applications were low because most farmers were unaware of the program.

“I just find it hard to believe that, with all of the hardships that our agriculture community faced this last year, that was the case,” Cupps said. “It clearly was not because of a lack of need. It was because of a lack of having any sort of clue that it existed.”

For more COVID-19 related news, see our section dedicated to COVID-19 updates.
  • Mark Horvit is the state government editor. Call me at 817-726-1621 with story ideas, tips or complaints.

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