The state of Mississippi has applied for more than $2 billion in American Rescue Plan funds — a key first step to the state receiving the federal stimulus money for local and state governments to spend.

While Gov. Tate Reeves, supported by House Speaker Philip Gunn, opted this week to discontinue participation in an American Rescue Plan program that provides the unemployed in the state an additional $300 weekly in federal benefits, Department of Finance and Administration spokeswoman Marcy Scoggins confirmed the state had requested the federal funds for state and local governments.

The U.S. Department of Treasury set up a mechanism this week to begin the disbursement of $350 billion to state, local, territorial and Tribal governments as part of the American Rescue Plan that was passed earlier this year to provide financial relief to governmental entities and individuals who might have been impacted by the COVID-19 pandemic.

Mississippi is slated to receive $1.8 billion to be spent by the Legislature. Half of that money, based on Treasury reports, will be disbursed to the state this month, with the remainder scheduled to provided in 2022. The money must be spent by 2024.

According to the guidelines from the Department of Treasury, the states and local governments have broad discretion in how the funds can be spent. It can go for COVID-19 relief, including to offset revenue lost because of shutdowns caused by the pandemic. On a state level, Mississippi never suffered a revenue loss because of COVID-19, and, in fact, tax collections for the current fiscal year have been growing.

The money also can be spent to enhance broadband and water and sewer improvements but not for roads and streets. Funds also could be used to provide extra pay to essential workers.

Similar rules apply for the funds going to the local governments.

The funds cannot be used to cut taxes, though some Republican-led states have filed lawsuits challenging that restriction.

The website for the Department of Treasury instructs: “The Coronavirus State and Local Fiscal Recovery Funds provide substantial flexibility for each government to meet local needs—including support for households, small businesses, impacted industries, essential workers, and the communities hardest hit by the crisis. These funds can also be used to make necessary investments in water, sewer, and broadband infrastructure.”

Mississippi is slate to receive:

• $1.8 billion to the state, to be spent by the Legislature.
• $97 million for the metro cities of Biloxi, Gulfport, Hattiesburg, Jackson, Moss Point and Pascagoula, with Jackson receiving the largest share at $47 million.
• $258 million for smaller cities.
• $577 million for the state’s 82 counties.
• $1.6 billion for K-12 education, with most directed to local school districts using existing formulas for federal money disbursement. For perspective, the state K-12 budget is a little more than $2 billion a year.
• $429 million for the state’s colleges and universities.
• $166 million for capital projects statewide, primarily for rural broadband access projects.

“Clearly this is something that is transformative to Mississippi,” Lt. Gov. Delbert Hosemann said earlier this year of the funds coming to the state. “… It is a good problem to have. Part of our process in my own mind is not only using this over the three years, but how to make this have an effect over the next five, 10 years or longer.”

Earlier this year the Legislature opted to establish a fund to be administered by the Department of Finance and Administration to deposit the funds with the legislators in the coming years deciding how to spend the money. The Legislature will have no say in spending the funds going to local governments and education entities.

READ MORE: Billions will flow to Mississippi from Rescue Act. Where will it go?

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