Arkansas budget coffers get $1.8 billion boost from American Rescue Plan

May 17-23, 2021

By Wesley Brown

The U.S. Treasury Department has begun releasing Arkansas’ portion of more than $350 billion in stimulus aid from President Joe Biden’s American Rescue Plan Act, White House officials announced on Monday (May 10). 

Under the $2.2 trillion stimulus package signed into law exactly two months ago, the American Rescue Plan will deliver several hundreds of billions of dollars to Arkansas and other states to respond to the COVID-19 emergency and bring back local jobs across the U.S.

According to the Treasury Department’s breakdown of the emergency aid, all 50 states and the District of Columbia will each get direct payments from a pool of $195.3 billion, while counties and the nation’s largest cities will receive another $110.7 million. Tribal governments and U.S. territories will get access to $24.5 billion, and non-direct government entities and recipients will split the remaining $19.5 billion.

In Arkansas, the state Department of Finance & Administration confirmed that nearly $1.6 billion in COVID-19 emergency aid began flowing into state budget early last week.  According DFA spokesman Scott Hardin, approximately half of the funding will be provided to the state immediately while the remaining half will not be issued for about a year. 

As with the earlier $1.25 billion coronavirus aid under the CARES Act, Gov Asa Hutchinson on Tuesday appointed DFA Secretary Larry Walther to chair a steering committee that will oversee distribution of American Rescue Plan funding. The first meeting of the committee will be held on May 19, Hardin said.

None of the state’s all-Republican congressional delegation offered statements in support of the new round federal funds from the Biden administration. During debate on the stimulus act earlier this year, Arkansas two senators or four House representatives, including Rep. French Hill, R-Little Rock, strongly opposed Biden’s rescue plan. In the final vote in the House and Senate, no Republicans voted for the plan.

In the days before Biden’s American Rescue Plan was voted into law on March 11, Hill called the $2.2 trillion stimulus package a “massive spending bill” that included several provisions that would not end the pandemic or bolster the U.S. economy.

“Since the start of the pandemic in March 2020, Congress has appropriated nearly $4 trillion in government spending to fight COVID-19, including roughly $900 billion just two months ago, and as of today there is $1 trillion that has not yet been deployed to help Arkansas and American families and small businesses,” said Hill on Feb. 27. “So, instead of focusing efforts on getting that funding out the door, today, predictably, House Democrats promoted yet another $1.9 trillion, which includes redundant, unrelated, and wildly non-targeted spending in the form of blue state bailouts and progressive pet projects.”

Under former President Donald Trump, Hill voted for the $2.2 billion Coronavirus Aid, Recovery and Economic Securities (CARES) Act that was signed into law on March 17, 2020. He also supported the smaller $900 billion Consolidated Appropriations Act of 2020 that was signed by President Trump on Dec. 27, 2020. However, no Republicans voted for Biden’s American Rescue Plan, signed into law on March 11.

Altogether, $1,573,121,580 from the American Rescue Plan is expected to flow into state budget coffers in the coming weeks. Arkansas’ portion is largely based on the average number of unemployed workers in the state, which now stands at 60,199, according to the state’s March unemployment report. 

In addition to the nearly $1.6 billion that the state of Arkansas will receive, all 75 counties will also split a large pool of funding of several hundred million. As Arkansas largest county, Pulaski County will receive $76.12 million in emergency aid, followed by Benton County and Washington County receiving a total of $54.12 million and $46.45 million, respectively. The $65.1 billion allocated to every county in the U.S. is based on the total population estimates from 2019 Census Bureau data, Treasury officials said.

Also, 14 Arkansas largest metropolitan service areas (MSAs) will also receive a share of nearly $45.6 billion in funding set aside through community development block grant (CDBG) program. According to the U.S. Treasury, 142 U.S. cities will receive such funding for coronavirus relief. As Arkansas largest city, Little Rock will receive the largest share of $37.71 million, followed by Springdale and Fort Smith at $21.35 million and $21.22 million, respectively. Jacksonville will receive the smallest share of $5.44 million. 

Called the Coronavirus State and Local Fiscal Recovery Funds, the Treasury Department said the emergency relief will “provide resources to meet these needs through the provision of care for those impacted by the virus and through services that address disparities in public health that have been exacerbated by the pandemic. 

Among many things, these funds can help support services and programs to mitigate the spread of the COVID-19 virus. Recipients may also use this funding to address a broad range of public health needs across COVID-19 mitigation, including medical expenses, behavioral healthcare, and public health resources.

 The U.S. Treasury also released details on the ways funds can be used to respond to acute pandemic-response needs, fill revenue shortfalls among state and local governments, and support the communities and populations hardest-hit by the COVID-19 crisis. Eligible state, territorial, metropolitan city, county, and Tribal governments will be able to access funding directly from the Treasury Department in the coming days to assist communities as they recover from the pandemic, said U.S. Treasury Secretary Janet Yellen.

“Today is a milestone in our country’s recovery from the pandemic and its adjacent economic crisis. With this funding, communities hit hard by COVID-19 will be able to return to a semblance of normalcy; they’ll be able to rehire teachers, firefighters and other essential workers – and to help small businesses reopen safely,” said Yellen.  “There are no benefits to enduring two historic economic crises in a 13-year span, except for one: We can improve our policymaking. During the Great Recession, when cities and states were facing similar revenue shortfalls, the federal government didn’t provide enough aid to close the gap. That was an error. Insufficient relief meant that cities had to slash spending, and that austerity undermined the broader recovery. With today’s announcement, we are charting a very different – and much faster – course back to prosperity.”

Yellen said that while the need for services provided by state, local, territorial, and Tribal governments has increased —including setting up emergency medical facilities, standing up vaccination sites, and supporting struggling small businesses—these governments have faced significant revenue shortfalls because of the economic fallout from the crisis.

“As a result, these governments have endured unprecedented strains, forcing many to make untenable choices between laying off educators, firefighters, and other frontline workers or failing to provide services that communities rely on. Since the beginning of this crisis, state and local governments have cut over 1 million jobs,” said Yellen, the former Federal Reserve chair.