(The Center Square) – Missouri has until December 2026 to spend $2.8 billion in federal COVID-19 stimulus money it will receive, so what’s the rush in planning how to use the non-recurring plug?
That, essentially, is what state Budget Director Dan Haug told the six-member House Federal Stimulus Spending Subcommittee.
Haug said the comment period just ended for rule-making associated with federal funds to be allocated under the $1.9 trillion American Rescue Plan Act (ARPA) approved in March, so delaying decisions regarding how much of the money will be spent until January makes sense.
“It is one of the reasons we decided not to try to rush through and appropriate this last session, because we didn’t know all the rules yet,” he said.
ARPA includes money to cover revenue losses to state and local governments, as well as funds dedicated to specific programs such as education, health care and transportation.
Specific allocations may require the state to distribute more quickly, Haug said, noting his office is studying which programs must get federal assistance sooner than later but the emphasis will be on “critical one-time capital improvement needs.”
ARPA funds must be spent in three general areas, Haug said – health care needs directly related to the COVID-19 pandemic, to provide economic support for individuals and small businesses, and for heavily impacted industries.
He said ARPA money can be used to expand broadband, modernize technologies and upgrade water and sewer infrastructure, including replacing lead water pipes in older communities. According to the Natural Resources Defense Council, Missouri has the sixth-most lead water pipes in the nation.
Haug said he could envision Gov. Mike Parson calling a special session in the fall to write appropriation bills for federal funds that must be allocated, but the bulk of the $2.8 billion is likely to be available for the 2022 legislative session.
“I don’t anticipate this $2.8 billion being part of that,” he said. “I think that is something we will make recommendations for as part of our regular budget submission in January.”
The subcommittee, chaired by Rep. Doug Richey, R-Excelsior Springs, and created in April, has been staging hearings on how to spend the federal pandemic assistance.
While Tuesday’s meeting began with Haugh’s overview, the committee spent much of its time discussing using the federal assistance to upgrade technologies and enhance cyber-security.
Richey encouraged the panel to think big when discussing what type of state information technology system would best serve Missouri.
“I am starting from the standpoint that money is not the issue,” he said. “Whatever dollar we spend will have to be well spent, that is always part of the equation. But we can’t say now we don’t have the money to fix the system, because we do.”
Haug said there is uncertainty about the rules regarding ARPA allocations to cover revenue losses to state and local governments,
“This is probably the category that has frustrated me the most,” he said.
Revenue from Fiscal Year 2019 (FY19), which ended June 30, 2019, will be compared to revenue during calendar years of 2020, 2021, 2022 and 2023.
FY21 ended June 30. FY22 began July 1. Missouri ended FY21 with general revenue of $11.2 billion with $2.35 billion in the state’s general revenue fund, more surplus balance than the past five years combined.
But, Haug said, when all is said and done, it’s likely calendar year 2020 will show a revenue decline under federal calculations by the U.S. Census Bureau.
Until those calculations are ready, he said, revenue-loss allocations would be based on estimates and likely need to be revised.