The American Rescue Plan (ARP) Act of 2021, a $1.9 trillion economic relief package, was signed by President Joe Biden on March 11. Much of the funding included will have impacts on states, both in their budgets and in the specific policies they enact. The Council of State Governments (CSG) is providing our members with ongoing analyses of the various components of the ARP in this special edition series of The Current State e-newsletter, out each Monday.
This week, CSG provides resources on how states can utilize American Rescue Plan funds for programs providing nutrition assistance and supporting mental health. This newsletter also includes news, updates and resources covering homeowner assistance, higher education relief efforts, rural area vaccination efforts and more.
NEW THIS WEEK
The American Rescue Plan includes $12.4 billion in funding for mental health efforts and substance use support, with an additional $130 billion eligible to be used to support mental health in schools as states prepare to reopen in-person classes.
During the pandemic, demand for federal food assistance programs like the Supplemental Nutrition Assistance Program (SNAP) and the Supplemental Nutrition Program for Women, Infants and Children (WIC) has increased dramatically. The ARP includes over $2 billion for these programs.
The U.S. Senate passed the “Drinking Water and Wastewater Infrastructure Act of 2021,” on April 29, which, if enacted, would invest $35 billion in water infrastructure. Additionally, on April 27, the Environmental Protection Agency (EPA) announced $6.5 billion in new funding for water infrastructure projects in Fiscal Year 2021.
NEWS, UPDATES AND RESOURCES
CSG Justice Center launches new ARP criminal justice-related resource for state leaders
ARP funding can be used by states for long-term, system-wide improvements to the criminal justice system — including strategies to reduce justice involvement, to connect people to community-based services and to put people on a pathway to success. The CSG Justice Center is providing resources to state leaders to help them understand the potential for criminal justice improvements. To learn more, CLICK HERE.
Homeowner Assistance Fund money released to states
The U.S. Department of the Treasury announced May 13 that it had distributed $742 million in American Rescue Plan funds to states and territories as part of the Homeowner Assistance Fund (HAF). According to the Treasury, HAF funds are designed to “prevent mortgage delinquencies and defaults, foreclosures, loss of utilities or home energy services, and displacement of homeowners experiencing financial hardship due to the COVID-19 public health crisis.”
Investments in public health workers
The Biden-Harris Administration announced May 13 that it will invest $7.4 billion from the ARP to recruit and hire public health workers to respond to the workforce needs highlighted by the COVID-19 pandemic. Of that money, $4.4 billion will go to states to assist their public health departments (by increasing staff, supporting contact tracing and case management) and to schools through the hiring of school nurses. The remaining $3 billion will be invested in a new grant program to facilitate federal assist state and local governments as they expand, train and modernize the public health workforce.
Higher Education Emergency Relief Fund III grants announced
The U.S. Department of Education announced May 11 the awarding of over $36 billion in grants for postsecondary education institutions. The funds were appropriated from the ARP to “provide emergency financial aid to millions of students and ensure learning continues during the COVID-19 national emergency.”
Vaccination in rural areas
The Department of Health and Human Services announced May 4 the availability of almost $1 billion to strengthen response and vaccination efforts in rural communities. This will increase the number of vaccines sent to rural communities, expand testing capacity and support vaccine outreach.
Internet subsidy for low-income families
The Federal Communications Commission’s subsidy program, the Emergency Broadband Benefit, has been accessed by 825 broadband providers to offer discounts to millions of low-income Americans. This comes in light of efforts aimed to provide relief to struggling families who had to quickly transition to home-based work, school and health care.
Pew State Budget Best Practices
The Pew Research Center has highlighted recommended fiscal strategies for states when crafting budgets in the era of COVID-19. Included in the guidance are suggestions on how states can manage uncertainly and adapt quickly to fiscal crises, leverage the use of multi-year budget plans, and support struggling localities. To read these recommendations and learn more, CLICK HERE.
ARP’s impact on state taxes
The Tax Policy Center issued a report analyzing the American Rescue Plan’s potential effect on state taxes as it temporarily increases the federal earned income tax credit (EITC) and child tax credit (CTC). The report includes tables on the characteristics of state earned income tax credits for childless workers and on increases in these credits under the ARP. The report can be found here.
Child care relief funding in American Rescue Plan: State-by-state estimates
An analysis by the Center for Law and Social Policy estimates the child care relief funding states will receive from the ARP. Funds are to support child care providers to safely reopen and recover from the financial hardship placed on them by the pandemic.
Tax offset challenges
As some states challenge a provision in the ARP that prohibits use of funds to offset tax cuts, the Treasury has published an interim final rule for states seeking clarification as to the enforcement of that provision. The latest update on the matter comes from the U.S. District Court of Southern Ohio which has ruled in favor of Ohio Attorney General Dave Yost, stating that the provision is likely unconstitutional.
STATE UTILIZATION OF FEDERAL FUNDS
As state policymakers weigh options on how to maximize the relief from the ARP, state officials have begun to appropriate the stimulus funds.
- Arkansas Gov. Asa Hutchinson issued an executive order to create a 15-member Arkansas ARP Steering Committee to study the funds appropriated to the state, identify and prioritize the needs of the state, identify the best methods to obtain and apply for funding, and recommend the best uses of the federal funds.
- In Idaho, Senate Bill 1204 was signed into law by Gov. Brad LittleonMay 12. The act establishes the legislative intent on the use of discretionary American Rescue Plan Act (ARPA) funding provided to the state including that:
o “The state should make long-range investments with 28 ARPA funds that will benefit our grandchildren.”
o “One-time funding should be used for onetime expenditures, 31 state agencies receiving ARPA funds shall plan for the reduction of these federal funds to avoid creating ongoing obligations that are shifted to the general fund after the federal funds are depleted.”
o “ARPA funds should be used to maintain a long-term, structurally balanced budget such that ongoing revenue should exceed ongoing expenses. ARPA funds should also be used to lower the state’s capital costs and deferred maintenance costs in the years ahead to the extent permissible.”
- Ohio Gov. Mike DeWine announced May 12 that Ohioans receiving the COVID-19 vaccine will be eligible to win $1 million in a state administered lottery, in an effort to boost vaccination rates. The funds for the lottery are appropriated from existing federal Coronavirus Relief Funds.
- Vermont passed Senate 114 which leverages ARP funds to improve literacy for students in the state through activities related to learning loss such as summer learning programs, extended day programs, afterschool programs and more that respond to students’ academic, social and emotional needs.
- Washington state enacted Senate Bill 5237, which will utilize ARP funding to expand accessible, affordable child care and early childhood development programs.