By Brian Skinner, Esq.
State governments, including West Virginia, are beginning to receive the first allocations from $193.5 billion in American Rescue Plan Act (ARPA) funds. The ARPA, signed into law by President Biden on March 11, 2021, establishes the Coronavirus State Fiscal Recovery Fund. The Fiscal Recovery Funds are intended to provide support to State, local, and Tribal governments in responding to the impact of COVID-19 and in their efforts to contain COVID-19 on their communities, residents, and businesses.
ARPA represents the single largest state government aid package since the pandemic began and is the latest in a series of laws providing unprecedented federal emergency support to states. In addition to the $193.5 billion in flexible aid, ARPA provides states with separate funding for targeted uses, such as COVID-19 vaccine distribution, safe operation of schools, and substance abuse programs.
Fiscal Recovery Funds will provide State, local, and Tribal governments with significant resources to respond to the COVID-19 public health emergency and its economic impacts through four categories of eligible uses –
- Support public health expenditures, by, for example, funding COVID-19 mitigation efforts, medical expenses, behavioral healthcare, and certain public health and safety staff.
- Address negative economic impacts caused by the public health emergency, including economic harms to workers, households, small businesses, impacted industries, and the public sector.
- Replace lost public sector revenue, using this funding to provide government services to the extent of the reduction in revenue experienced due to the pandemic.
- Provide premium pay for essential workers, offering additional support to those who have and will bear the greatest health risks because of their service in critical infrastructure sectors.
- Invest in water, sewer, and broadband infrastructure, making necessary investments to improve access to clean drinking water, support vital wastewater and stormwater infrastructure, and to expand access to broadband internet.
Within these categories, recipients have broad flexibility to decide how best to use this funding to meet the needs of their communities.
Overall, West Virginia will receive $1,355,489,988.00 in federal aid which equates to about 7.6% of what the state spent in fiscal year 2020. These funds could result in to make significant investments in broadband, water system, and sewer upgrades.
The amount of ARPA dollars the state will receive is based on the number of unemployed workers in late 2020. For West Virginia, funding based on average number of unemployed equals $855,489,988.00. In addition, the program allocates each state a separate $500 million, which will have a much more significant impact in a state with smaller population and less annual spending than many of its border states.
ARPA state and local funds are not just a $350 billion lifeline; they represent the largest positive fiscal jolt to their budgets in decades. Unlike states that entered the pandemic-driven economic downturn without robust reserves or experienced significant budget squeezes, West Virginia ended the most recent fiscal year with a $450 million surplus. Consequently, the ARPA provides the state with an unexpected one-time investment opportunity. The question now is what is the best way to deploy these funds.
States have until the end of 2024 to obligate the funds. Some have already allocated substantial shares or are debating proposals to do so. Others are establishing task forces or other mechanisms to guide spending decisions across multiple years. Decisions about the timing of specific allocations will determine the actual share of state spending that comes from these funds each year.
This week Gov. Justice indicated that another special session will be necessary to allocate the $677 million the state has received from the ARPA. Although, he did not give a specific schedule for a special session.
Future legislative action will not only fund direct government services, but will offer opportunities for investments in infrastructure and to launch programs that support workers and small businesses. Those investments can be spent directly by public entities or funneled through nonprofits.
State and local leaders have an opportunity to invest in the future growth and prosperity of the state in a way that will extend beyond near-term expenditure needs. Small businesses, neighborhood leaders, social service agencies, philanthropic leaders, and corporate heads, all must be prepared to identify and pursue relevant opportunities as state government begins to develop policies and legislation around infrastructure and innovation.
Now that funding is secure, it’s time to act.
At H2C we understand the complex and convoluted governmental budget process. With more than a century’s worth of combined experience in state government budget analysis and advocacy, our team of government relations professionals is prepared to help connect you with the government officials making these critically important decisions.
Our team includes Melanie Pagliaro, a former budget analyst for the Speaker and Majority Leader of the West Virginia House of Delegates. Melanie can help you educate and ultimately influence lawmakers or officials concerning specific appropriations.
We look forward to helping you achieve your goals by providing you with practical strategies that produce results.
Brian is the former counsel to the West Virginia House of Delegates Judiciary Committee and counsel to the West Virginia Senate Minority Caucus. He was also general counsel to the West Virginia State Health Officer and Commissioner for the Bureau for Public Health. He has almost two-decades of experience as a strategic advisor and chief legal counsel to both executive and legislative branch public officials.