Noem Violates CARES Act, Spends Coronavirus Relief on National TV Ads for Tourism

Last updated on 2020-09-09

Governor Kristi Noem didn’t just use your tax dollars to advertise herself on national television as the opening shot of the 2024 Presidential race. She used coronavirus relief dollars to encourage people to crowd into South Dakota and flout coronavirus mitigation measures:

South Dakota Gov. Kristi Noem’s administration announced Tuesday that it is using federal coronavirus relief funds to pay for a $5 million tourism ad campaign aimed at drawing people to the state, even as it emerges as one of the nation’s top hot spots for COVID-19 infections.

The 30-second spot, which premiered on Fox News alongside Noem’s speech at the Republican National Convention last month, features the governor saying that “with our breathtaking landscapes and wide-open spaces, we’re a place to safely explore.” But the state currently ranks second in the country for new cases per capita over the last two weeks, with 439 new cases per 100,000 people.

…Noem spokesman Ian Fury defended using the federal coronavirus funds for the ads, saying that the state “should absolutely be promoting tourism” because it is vital to South Dakota’s economy. After agriculture, it is the state’s largest industry.

“That’s how people put food on the table,” he said [Stephen Groves, “Amid Virus Surge, Noem Pushes Tourism with CARES Act Funds,” AP, 2020.09.08].

Great Caesar’s croutons! It’s as if South Dakota got federal money to fight wildfires, and Kristi used it to sell fireworks. It’s as if we got money from the Violence Against Women Act (one of Joe Biden’s achievements), and Kristi used it to promote Air Sex and Fake Orgasm contests at the Buffalo Chip. It’s as if we got money to educate American Indian students, and Kristi gave it to some white guy to build a giant rec room for his white kids. (Hmmm… suddenly, this misappropriation isn’t sounding so far-fetched for South Dakota….)

But let’s not be jaded by South Dakota’s proclivity for corruption. Senator Reynold Nesiba (D-15/Sioux Falls) certainly isn’t:

But Sen. Reynold Nesiba, a Sioux Falls Democrat who sits on the Appropriations Committee, criticized the decision, saying it was more about Noem raising her political profile than helping the state. He claimed the governor’s office has stressed a cautious approach to using the federal funds, delaying their deployment to non-profits, universities and businesses.

“The way to get our economy going again is to address the pandemic,” Nesiba said [Groves, 2020.09.08].

Senator Nesiba’s point is supported by other economists, like those at the Center on Budget and Policy Priorities, who say the first, best use of coronavirus relief dollars is fighting coronavirus itself:

Fund recipients should use the money first and foremost to cover costs for medical treatment and equipment, temporary medical facilities, testing, contact tracing, quarantine costs, personal protective equipment, recovery planning, and other costs of responding to the pandemic. The economy’s performance in coming months — and hence the fiscal health of states, localities, tribal nations, and territories — depends fundamentally on this work. States and localities can also use the CRF to cover the cost of tracking the pandemic’s disparate impacts across race, ethnicity, and other identities — a critical step in devising policies to address the underlying causes of inequitable health outcomes [Michael Leachman, “How Should States, Localities Spend CARES Act’s Coronavirus Relief Fund?” Center on Budget and Policy Priorities: Off the Charts, 2020.05.28].

The National Conference of State Legislatures reports that states are finding lots of ways to use their coronavirus relief dollars. Most of the spending is direct assistance to people impacted, healthwise or economically, by the pandemic. NCSL doesn’t cite any instances of states using CARES Act money for advertising.

Noem’s spending coronavirus dollars to put her face and coronavirus denial on national TV isn’t just outrageous and ignorant of good economic and epidemiological advice. It’s a violation of both the intent and the letter of the CARES Act.

Yes, it’s illegal.

The CARES Act says states may spend their coronavirus relief funds only for costs that meet these conditions:

1. are necessary expenditures incurred due to the public health emergency with respect to the Coronavirus Disease 2019 (COVID-19);
2. were not accounted for in the budget most recently approved as of the date of enactment of this section for the State or government; and
3. were incurred during the period that begins on March 1, 2020, and ends on December 30, 2020 [CARES Act, 2020.03.27].

Let’s work in reverse order:

The last criterion, #3, is no problem; Governor Noem incurred the cost of her campaign ad in the prescribed time frame.

Criterion #2 requires that the expenditures not have been accounted for in the state’s approved budget. The FY2021 budget appropriates $17.04 million to the Department of Tourism, so the Legislature clearly accounted for spending more than $5 million on Tourism in this fiscal year. Tourism told the Legislature they planned to spend most (79.5%) of the money on “contractual services”, which would include big ad buys promoting the state. The Department told the Legislature that the primary objectives of their efforts would be to “Promote South Dakota as a vacation destination.”

Our budget doesn’t get down to the nitty-gritty of on what channels and in what markets the Department of Tourism will spend its money, but pre-pandemic, the Legislature clearly appropriated far more than $5 million to support the Department’s advertising efforts. Noem’s expenditure of $5 million in CARES Act funds on already budgeted Tourism advertising violates Criterion #2 of the CARES Act. (Her earlier spending of CARES Act dollars to pay already budgeted Highway Patrol salaries is likely illegal for the same reason.)

Criterion #1 requires that CARES Act money be spent on “necessary” expenditures incurred “due to the public health emergency” of covid-19. The latest guidance from the federal Treasury (updated September 2, after Noem’s campaign ad buy) gently addresses those key phrases. Let’s grapple with perhaps the softer of the two terms, “necessary”, first, and the “reasonable” with which Treasury brackets “necessary”:

The statute also specifies that expenditures using Fund payments must be “necessary.” The Department of the Treasury understands this term broadly to mean that the expenditure is reasonably necessary for its intended use in the reasonable judgment of the government officials responsible for spending Fund payments [“Coronavirus Relief Fund: Guidance for State, Territorial, Local, and Tribal Governments,” U.S. Department of the Treasury, updated 2020.09.02].

Was a TV ad campaign “necessary” to bring tourists to South Dakota? The Sturgis Motorcycle Rally appears to say, no way! The City of Sturgis cut back on advertising this year’s Rally, and Noem’s campaign ad didn’t hit national TV until well after the Rally, but the Rally still drew more than 90% of the crowd it did last year.Who needs advertising?

Neither statute nor the Treasury define “reasonable” (most people still working in the Trump Administration define unreasonable—ba-dum-ching!). Absent a textbook definition, we can perhaps turn to an empirical definition suggested by the NCSL article cited above: a lot of government officials responsible for spending Fund payments are exercising their mostly reasonable judgment in many ways… but few if any of them are concluding that the first, second, or third thing on which they need to spend CARES Act dollars is national TV ads with pretty spokesmodels inviting people to come vacation in their states.

Maybe check with your own reasonable local government officials: Hey, Mr. Mayor! Madame Commissioner! There’s a pandemic killing people and jobs. What do we need to do? Let me know how many would say we need more medical supplies and personnel, how many would say we need to send relief grants to workers and employers, and then how many say in a reasonable tone, “We need to put the mayor in a national TV ad.”

“Reasonable” is not a definite term, but as I spitball it here, I feel like I’d have a much harder time keeping a straight face in front of a judge or the Inspector General of the Department of the Treasury arguing that spending $5 million on a tourism campaign to fight coronavirus is “reasonable” than I would making the argument that I make here, that Noem’s CARES Act campaign buy is unreasonable.

Even if we could persuade a judge that “reasonable” officials might deem tourism ads “necessary,” we’d have to play another round of logical Twister (not Whipped Cream Twister—again, that’s Buffalo Chip) to establish that we bought TV ads “due to” the coronavirus pandemic. Again, Treasury guides:

The requirement that expenditures be incurred “due to” the public health emergency means that expenditures must be used for actions taken to respond to the public health emergency. These may include expenditures incurred to allow the State, territorial, local, or Tribal government to respond directly to the emergency, such as by addressing medical or public health needs, as well as expenditures incurred to respond to second-order effects of the emergency, such as by providing economic support to those suffering from employment or business interruptions due to COVID-19-related business closures.

Funds may not be used to fill shortfalls in government revenue to cover expenditures that would not otherwise qualify under the statute. Although a broad range of uses is allowed, revenue replacement is not a permissible use of Fund payments [Treasury, 2020.09.02].

Treasury’s language and examples indicate that an expense “due to” the public health emergency pays for a direct response to the pandemic, an effort to directly help people whom the pandemic has harmed. We buy masks because we know they will prevent the spread of the disease. We buy medical supplies because we know doctors and nurses can use them to help sick patients. We write checks to unemployed workers because we know they’ll buy groceries and feed their kids. Those actions immediately address the primary health harms of the pandemic and its close-secondary economic harms.

Kristi’s TV ad doesn’t provide any direct relief to sickness or poverty. A TV ad is, at best, indirect assistance, a bankshot off the brains of whoever’s watching the boob tube that bounces a few more visitors our way. The ad brings no relief now—really, how many TV watchers are going to see an ad, say, “South Dakota! Let’s go!” and come put money in our pockets tomorrow? Receptive viewers may not come until next summer, by which point many South Dakota tourism businesses may have quit or gone bankrupt.

Kristi’s ad doesn’t target people in immediate need. Visitors may come and stay in hotels and visit attractions that are already keeping their heads above water thanks to their own effective advertising, alternate revenue streams, or deeper corporate reserves.

Kristi’s national TV ad campaign is not “due to” the pandemic. It does not directly respond to the needs of South Dakotans harmed by the pandemic. Kristi’s ad is due to vanity, and it directly responds to her and Corey Lewandowski‘s craving for national attention.

In this push to promote herself instead of public health and welfare, Governor Kristi Noem has corrupted the CARES Act, using federal tax dollars for purposes not allowed by the text of the law. We can only hope that, on January 21, the Inspector General of the Department of the Treasury will feel empowered to do his job and demand that South Dakota pay back the funds Governor Noem has misappropriated.