State’s ‘problem’: How to spend $842 million | Steve Brawner

How would you spend $842 million? That’s the “problem” Arkansas has right now.

The state is sitting on that money after it received its second $786.6 million bulk payment from the federal government May 19 through the American Rescue Plan Act. It still has $55.4 million left to allocate from its first payment, which came in June 2021.

The act, signed by President Biden into law March 11, 2021, provides $195 billion in coronavirus funds to states, the District of Columbia and Puerto Rico. It also provides $130 billion for local governments.

The state of Arkansas’ share between the two payments is $1.573 billion. Actually, it’s $1,573,121,580.80.

Somebody’s going to get that last 80 cents.

Under the terms of the act, states have until the end of 2024 to obligate the money and until the end of 2026 to spend it.

The funds must be used for replacing lost public sector revenue; responding to the pandemic’s public health and economic impacts; providing extra pay for essential workers; and investing in water, sewer and broadband infrastructure.

So far in Arkansas, most of the money has gone to health care-related expenses (roughly $369 million) and broadband expansion (roughly $312 million), depending on how you categorize it.

Grants were approved to increase capacity at hospitals that included, among others, Unity Health ($18.4 million); St. Bernards Healthcare ($5.6 million); Conway Regional Medical Center ($7.65 million); Baptist Health – Conway ($3.5 million); Baptist Health –Fort Smith ($3 million); and Baptist Health – Van Buren ($1.4 million).

There’s a process for determining how the money will be spent. Proposals go through the Department of Finance and Administration and then are reviewed by a private consultant, CTEH. It’s been allocated $10 million in ARPA funds so far for its services. State departments present final proposals to a 15-member ARPA Steering Committee appointed by Gov. Asa Hutchinson. After that, funding must be approved by Hutchinson and the Legislature’s Performance Evaluation and Expenditure Review Subcommittee.

Hutchinson last week said his priorities include broadband, workforce education and water projects such as surface water for irrigation.

Regarding the latter, farmers in eastern Arkansas have been drawing down the aquifers to water their crops. It’s a big problem, but there is a solution: Divert some of the White and Arkansas rivers as they flow across the state. It’s expensive, but Arkansas has the water, and now, it has some money.

“It really comes down to how much can we allocate to each of those areas, and I have in my mind how they should be allocated out, but there’s a lot of other people who have a voice in that,” Hutchinson said. “But now that we have that money, I do want to accelerate the presentation of those plans to the Legislature, and hopefully we’ll be in a position to do that in the near future.”

The governor has only seven months remaining in office. I wondered if perhaps there might be some sentiment in the Legislature to wait until the next governor is in office. That’s a lot of long-term money to obligate. Senate President Pro Tempore Jimmy Hickey, R-Texarkana, told me he’s heard no members speaking of such.

Instead, Hickey said lawmakers are discussing how much of the state’s $1.473 billion budget surplus to hold onto in case the economy turns downward. Hutchinson said last week that he plans to call lawmakers into special session this summer to cut taxes.

It should be noted that the American Rescue Plan Act was entirely deficit-financed, or borrowed from the future while it increased the national debt. Also, if it weren’t for all the federal money coming into the state – from many directions, including the ARPA – there would be no surplus, or at least not one nearly this big.

Someday, someone is going to have to figure out how to pay back all this borrowed money, or deal with the consequences if it’s not.

That’s not Hutchinson’s problem to try to solve, unless he’s elected president.

His problem is how to spend $842 million in Arkansas, which is easier.

Steve Brawner is a freelance journalist and syndicated columnist. Email him at brawnersteve@mac.com or follow him on Twitter at @stevebrawner.

This article originally appeared on Fort Smith Times Record: State’s ‘problem’: How to spend $842 million | Steve Brawner