Bonner County files complaint over state’s CARES Act interpretation

By Lyndsie Kiebert
Reader Staff

The Bonner County Board of Commissioners voted July 14 to file a complaint with Idaho District Court alleging discrepancies between the state’s interpretation of the U.S. Coronavirus Aid, Relief and Economic Security Act (CARES Act), and the functions of the legislation as laid out by the federal government. Commissioners Dan McDonald and Steve Bradshaw voted in favor of moving forward with litigation, while Commissioner Jeff Connolly voted against.

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 board’s concern rests on two points: first, Bonner County alleges that the state is attaching unlawful conditions to the federal relief funds; second, if the county follows the state’s guidance on the CARES Act, commissioners fear they could be susceptible to federal litigation. In an effort to ensure any blowback from the federal government will not fall on county taxpayers, the suit seeks indemnification from the state.

The complaint — filed by Bonner County against Gov. Brad Little, the COVID-19 Financial Advisory Committee and several other state officials — seeks a declaratory judgement to outline “the rights, duties and obligations of the county and defendants in relation to the funds that are currently in defendants’ possession and control.”

McDonald told the Sandpoint Reader in an email July 15 that “none of what the state is telling us is found in the outline from the Treasury Department as passed by Congress.”

Bonner County argues that, according to Treasury Department guidelines, “the State is generally prohibited from imposing conditions on the County’s receipt of Funds.” According to the complaint, some of those conditions include a stipulation that a majority of the CARES Act funds be spent on payroll, not on personal protective equipment and disinfectant reimbursal; a waiver of the county’s right to increase taxes by the annually allowed 3% for the upcoming fiscal year; and a waiver of the county’s right to use foregone taxes. The complaint also claims that the state is “pressuring local governments, including the County, to accept Funds without regard to federally mandated accounting and reporting requirements.”

As McDonald wrote, “The declaratory judgement should force the governor’s office to come to the table to either indemnify so we can move forward, [if] not … we will remove ourselves from the program.”

As it stands, McDonald said following the state’s advice could “put county taxpayers in jeopardy or have elected officials charged with a crime.” Those crimes, McDonald wrote, could be “misappropriation of public funds, violations of bidding laws, etc.,” and added that, “without 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.”

Connolly said his vote against the legal action stemmed not from the complaint — which he believes has standing — but from the way the board chose to go about raising its concerns. He said he and Bonner County Deputy Prosecutor Scott Bauer originally discussed informally bringing the discrepancies to the governor’s attention in order to work through those concerns, but the other commissioners pushed for filing a formal legal complaint.

“My objection is, here we are, suing another entity, again … I’m saying there’s a better way to do it,” Connolly told the Reader, adding that he’s concerned about the money being spent on outside legal counsel — in this case, Coeur d’Alene-based Murphey Law Office and Buchalter Law Firm, of Irvine, Calif.

Connolly said he also has concerns about the timing of the litigation.

“Why didn’t we get in on the front end of this and help make this a better product rather than wait until now?” he said. “Because we’ve all been in on the conference calls for the last two or three weeks on all of these different things that the governor’s been proposing, so it’s not like we were caught flat-footed.”

County counsel formally requested a “speedy hearing,” according to legal documents, “based on the urgency of such matters and on the current deadlines for applying for, allocating and using CARES Act funds.”

It is unclear when the case will see its next steps.