Idaho seeks to dismiss CARES Act suit

By Lyndsie Kiebert
Reader Staff

Bonner County commissioners reiterated their stance on the CARES Act in a press release Oct. 23, responding directly to the state’s motion for dismissal of a case in which the county seeks declaratory judgment on the legality of Idaho’s disbursement of the coronavirus relief funds.

Commissioners voted 2-1 — Dan McDonald and Steve Bradshaw for, Jeff Connolly against — in mid-July to pursue a lawsuit against Gov. Brad Little and other state officials, seeking a court’s opinion on “the rights, duties and obligations of the county and defendants in relation to the funds that are currently in defendants’ possession and control.” 

Bonner Co. Commissioners Dan McDonald, left, Jeff Connolly, center, and Steven Bradshaw, right, at a public hearing on proposed business property tax exemptions May 10. Photo by Lyndsie Kiebert.

The funds are part of the U.S. Coronavirus Aid, Relief and Economic Security Act, which are distributed from the federal level to the states and, in turn, given to municipalities within the state to help mitigate the negative effects of the ongoing novel coronavirus pandemic.

In the original complaint, commissioners alleged that the state was “generally prohibited” from attaching conditions to the funds, according to Treasury Department guidelines. Those conditions included how the money must be spent, and a requirement that the county waive the right to increase taxes or take foregone funds in the upcoming fiscal year.

Counsel for Bonner County argues that U.S. Treasury directives require Idaho to distribute 45% of its share of CARES Act funds — $1.25 billion — to municipalities. That $560 million should be distributed according to population, the county argues.

McDonald told the Sandpoint Reader in July that the county was also interested in receiving indemnification from the state in the event that Idaho’s interpretation of CARES Act guidelines was flawed.

“[W]ithout the indemnification, we would end up having to pay back all the money plus any interest and fees, and you would see the commissioners, clerk and treasurer charged with crimes,” McDonald said.

Counsel for the state filed documents in early October seeking dismissal of the case, calling Bonner County’s desire to see the funds provided based on population as “misguided and legally flawed,” since not all areas are equally affected by the virus, according to the Associated Press. Deputy Attorney General Leslie M. Hayes, representing the defendants, also argued that because Bonner County did not sign up for CARES Act funds before the state-mandated deadline, “claims are moot due to the county’s own decisions and inaction.”

Bonner County doubled down on its stance in a statement shared Oct. 23 with the Reader, responding to the motion to dismiss the case. In the statement, the county’s allegations are three-fold: the state government is “leaving small town America out in the cold” by interpreting the CARES Act to only provide direct funds to towns and counties with populations greater than 500,000; that the governor is “using federal funds for political propaganda” by requiring a line item on all Idahoans’ property tax bills which says, “Your bill includes Gov. Little’s one time reduction of [blank]”; and the governor’s interpretation of the funding guidelines is “pro-spending, not pro-saving” by using the money meant for localities to increase “the size and budget of his State programs.”

Bonner County contends that, based on Treasury guidelines, Congress intended for the county to have approximately $14.4 million in relief funds, without conditions.

U.S. Chief Magistrate Judge Ronald E. Bush will hear cross motions for summary judgment and the state’s motion to dismiss the case during a virtual hearing on Wednesday, Dec. 9 at 1:30 p.m.