Lt. Gov. Delbert Hosemann expressed concerns Thursday that Mississippi could lose $1.8 billion in federal American Rescue Plan Act funds or at least the ability to allocate the funds efficiently if the Legislature does not act this session to spend the money.
“We continue, unfortunately, to be concerned about the fact we are not passing out the American Rescue Plan funds,” Hosemann told media on Thursday in his Capitol office.
Hosemann spoke Thursday of the need to speed the process of spending the federal funds as House leaders, including Speaker Philip Gunn, R-Clinton, continue indicating that the expenditure of what are known as ARPA funds might be delayed until an agreement can be reached between the House and Senate on cutting taxes.
Gunn has been adamant that legislation be passed this year to eliminate the state’s personal income tax, which accounts for about one-third of state general fund revenue. The Senate has proposed a more modest tax cut that still would be one of the largest ever passed by the state.
House Ways and Means Chairman Trey Lamar said there is a likelihood of other legislation, such as ARPA spending, being frozen, “If the Senate doesn’t get right on this, and work with us.”
“If they don’t negotiate with us in good faith on the income tax, then that’s where it’s heading (other work being shut down),” Lamar said.
Gunn, the third-term speaker, said, “We want elimination, without further legislative action being required and we want it done as quickly as possible.” He also reiterated this week that he doesn’t want to wait until next year.
“This is the opportunity of a lifetime,” Gunn said. “… This is the opportunity to do something right now that we will never have again in our lifetimes.”
Gunn said the House GOP majority is “in solidarity” on his income tax elimination.
Whether that solidarity will last if federal funds that could help House members’ local communities is put at risk remains to be seen.
Mississippi is one of just four states, districts or territories not to have allocated substantial amounts of ARPA funding to date, along with Idaho, Nebraska, Oklahoma and Washington, D.C., according to data collected by the National Conference of State Legislatures.
The federal American Rescue Plan funds were made available to the state in part to deal with issues caused by the COVID-19 pandemic. Proposals are alive in the Mississippi Legislature to use the funds to help local governments deal with water and sewerage infrastructure, to continue to expand broadband and to deal with issues in state agencies, such as to help settle major lawsuits facing the state’s foster care and mental health systems.
While legislation is still alive, Hosemann is concerned about whether there will be good faith efforts in the final days to reach agreement between House and Senate leaders on how to spend the money.
Hosemann has taken umbrage at threats of other initiatives being halted over the tax standoff and said repeatedly, “They took the same oath of office I did,” referring to the oath Mississippi lawmakers take when being sworn into office. It includes the passage: “I will not vote for any measure or person because of a promise of any other member of this legislature to vote for any measure or person, or as a means of influencing him or them so to do.”
Under existing federal law, the states must commit the ARPA funds by the end of 2024 and actually spend them by the end of 2026. If the funds get caught up in the tax fight and are not committed this year, Hosemann expressed concern that it might be difficult for local governments to find contractors to actually do the water and sewer improvements.
“If we wait another year (to spend the funds), that means we are behind every other state…,” said Hosemann, who presides over the Senate. “If we get another year from now, we may not be able to get a contractor to do the work in the time period that is necessary.
“The fear and concern is that this is getting hung up in the last two weeks of the session. This is not good public policy.”
Hosemann said as inflation continues to rise, the funds will not have the same bang for the buck if they are spent next year instead of this year. Also, he said it can take a lot of time for a city or county to get permits, engineering and other prep work for a large infrastructure project.
Another concern, Hosemann said, is that Congress might change the law and not give states as long to spend the funds, or even take it back.
Last week, when contemplating a new emergency COVID-19 funding bill the Biden administration requested for Health and Human Services, U.S. House leaders were considering rescinding, or “clawing back” about $7 billion in unspent American Rescue Plan Act funds from states. The money would have come from the main ARPA program for state and local aid. But after outcry from states and lawmakers, the House leadership pulled that provision from the plan.
While multiple local governments have indicated that they will apply for the state’s ARPA money, Hosemann cited Jackson as a city where the funds could make a significant difference.
“You do not have to go any further than Jackson to see what the issues are,” the lieutenant governor said.
Jackson has issues with an aged water and sewer system and federal officials have indicated water safety issues with the system.
He said Jackson had indicated it needs about $85 million from the state’s ARPA funds to deal with its water and sewer issues, though he expressed concerns about whether that would be enough. In the past city officials have said $1 billion is needed to fix the system.here.