A special Senate subcommittee on Monday began studying how best to spend $1.8 billion in federal pandemic stimulus funds Mississippi is receiving as part of the American Rescue Plan Act.
“Never before in the history of Mississippi have we had an opportunity like this is going to provide,” Lt. Gov. Delbert Hosemann, who oversees the Senate, told the committee. City and county governments are receiving about $900 million in ARPA money, and Hosemann has proposed using much of the state’s share to match the local spending and fund larger projects.
A representative of the National Conference of State Legislatures on Monday told the new committee that at least six states have created ARPA matching funds for local governments for water, sewerage and other projects.
In a daylong hearing, the committee heard from officials from Louisiana and Tennessee — neighboring states that have already spent or earmarked much of the billions they received — and from state budget and audit officials on what the rules are for the spending the money.
“We spent about half of our $3 billion this year, and will spend half next year,” said Louisiana state Sen. Mack “Bodi” White. “We wanted to see how things go (before spending the rest).”
Louisiana has earmarked about $300 million for water and sewer infrastructure projects statewide, and has created a commission to work out details of the projects. It’s also spending millions on tourism, ports and health care, including extra pay to recruit and retain nurses. Although ARPA money can’t go directly to road and bridge projects, it can be used to replace lost revenue, and White said Louisiana is using $600 million to replace pandemic losses in its roadbuilding fund.
Tony Niknejad, policy director for Tennessee Gov. Bill Lee, joined the Mississippi subcommittee via videoconference on Monday. He said Lee, working with lawmakers, created a Financial Stimulus Accountability Group to help guide spending Tennessee’s $3.9 billion in ARPA money coming to the state and $2.28 billion to local governments.
Tennessee has earmarked more than $1.3 billion for water and sewer infrastructure projects, including $1 billion to match projects local governments are funding with ARPA. Tennessee is also spending about $500 million on broadband expansion and millions to help tourism and agriculture.
Mississippi State Auditor Shad White told the new Senate committee his office will provide any help it can in keeping state and local governments within the rules on spending.
“I’ve been telling (local officials) at the end of the day, we’re not the bad guys you need to worry about,” White said. “The bad guys will be from the (federal) Office of Inspector General.”
Sen. John Polk, R-Hattiesburg, is chairing the Senate Appropriations ARPA Subcommittee. He said he plans to have multiple meetings before the end of the year, and present its findings and recommendations to the Senate before the state’s legislative session begins in January.
After Gov. Tate Reeves spent portions of a Monday news conference criticizing federal policies that he said are holding back the state, he still announced his proposal to spend $1.2 billion in federal funds in the budget plan he hopes the Legislature will consider during the upcoming 2022 session.
Ahead of the 2022 legislative session, Reeves announced on Monday his proposal on how to spend state funds and his partial recommendation on spending $1.8 billion in federal funds the state is receiving to deal with COVID-19 and its aftermath.
The governor said he would announce additional plans later how to spend the rest of the federal funds, which must be appropriated by the end of 2024.
As far as the spending of state funds, the governor said because of the strong growth in state revenue he has retooled his plan to eliminate the state income tax to say it could be done in five years opposed to the longer time period he had recommended in the past.
In addition, Reeves included in his budget the commitment he made this summer at the Neshoba County Fair to provide a $1,300 pay raise for teachers during the upcoming fiscal year beginning July 1, followed by two years of $1,000 pay bumps.
“We seek to eliminate tax burdens and make a bold move: to attract high-paying jobs to the state of Mississippi,” Reeves said of his plan.
Reeves proposes spending $1.2 billion of the $1.8 billion in federal American Rescue Plan funds the state is receiving to deal with the COVID-19 pandemic on a litany of items, ranging from:
$130 million administered by the newly created Office of Workforce Development, commonly known as Accelerate Mississippi, to provide grants to community colleges and senior colleges for training “for the higher-income jobs and careers of the future.”
$200 million for the further expansion of high-speed internet. This would be in addition to recent broadband expansion efforts the state has made thanks, in part, to past federal COVID-19 relief legislation.
$300 million to improve 911 access in Mississippi, calling the state’s current system “an embarrassment.”
$200 million to restore some of the losses the health insurance plan for state workers and teachers absorbed because of COVID-19.
$5 million presumably for bonuses to recruit to Mississippi law enforcement personnel who Reeves said has been “mistreated” in “blue” or Democratic jurisdictions.
$200 million to further replenish the state’s unemployment trust fund. During 2020 when the state shutdown during the start of the pandemic, a record number of Mississippi workers were able to draw unemployment compensation, reducing the size of the trust fund. Under federal law, Reeves has said a tax will be imposed on Mississippi businesses to replenish the fund if other sources of revenue are not used for that effort.
$50 million for downtown Jackson revitalizing efforts.
$100 million for water and sewer grant projects in local municipalities. This would presumably be used to match local efforts to improve water and sewer with the separate American Rescue Plan funds they received.
When it was pointed out to the governor that officials for the city of Jackson have said repairs for their antiquated water and sewer system could cost as much as $2 billion, Reeves did not seem to rule out the possibility of using some of the additional American Rescue Plan funds for such an effort in Jackson and other cities. But he said the city of Jackson and the county of Hinds, which is where the capital city is located, have about $85 million in American Rescue Plan funds that also could be used for water and sewer issues.
The governor did not mention or commit any American Rescue Plan funds for salary supplements to help retain and recruit health care providers, particularly nurses, who have been retiring and leaving the state for better paying jobs in the midst of combatting the coronavirus. Both Lt. Gov. Delbert Hosemann, who presides over the Senate, and House Speaker Philip Gunn have endorsed such a proposal.
Rep. Robert Johnson, D-Natchez, who is the House minority leader, has said some of the American Rescue Plan funds should be used to provide salary supplements for “essential” workers, both those in the public and private sector, including for such jobs as grocery store employees.
“These are people on the front lines whose jobs are becoming increasingly more high pressure involved,” Johnson said.
Reeves called the economic growth and strong revenue collections as the best in state history. He said that growth came despite “to a certain extent some of the policies in Washington.” He later reluctantly acknowledged some of the massive federal spending might have helped spur the state economy as numerous economists have said.
Reeves’ traditional budget plan, excluding the American Rescue Plan, is $6.49 billion or 1.7% less than what the Legislature spent in the 2021 session for education, law enforcement, health care and other areas.
Part of that reduction would be to start the process of eliminating the personal income tax.
“Eliminating the individual income tax will further help us fuel Mississippi’s economic engine for the next 100 years,” Reeves wrote in his budget narrative.
The income tax accounts for about one-third of state general fund revenue.
The governor proposes using a large portion of the revenue growth the state has experienced to speed up the elimination of the state income tax. An analysis by Mississippi Today indicates state revenue growth that could be available during the 2022 session could be as much as $2 billion.
Reeves did not miss the chance to incorporate many of his conservative principles and Republican talking points into his budget. He proposes withholding state funding to school districts that teach critical race theory, which is an effort to explain the impact of racism on the country. He could not cite an example of any school in Mississippi teaching critical race theory.
He also proposed $3 million for the teaching of positive or patriotic American history.
And the governor endorsed a plan that died during the 2020 session to require removing from election voter rolls people who do not respond to a mail-out or have not voted once in the past four years.
The governor did propose more spending in some other areas, such as for math and computer science and for the Department of Corrections.
As elected officials at every level of Mississippi government decide how to spend more than $10 billion (and counting) in federal funds, Mississippi Today has launched “Follow the Money,” a newsroom-wide project that will closely track that spending and hold leaders accountable.
This historic influx of cash, most of it from coronavirus stimulus packages and the new infrastructure package, will provide Mississippi leaders a once-in-a-lifetime opportunity to address generational problems like:
The absence of employment opportunities across much of our state, which leaves so many Mississippians stuck in a cycle of poverty and lacking the resources to get out.
Public schools that have been starved for resources and dependent upon an inequitable funding formula that’s gone underfunded by billions of dollars since its inception.
No access to high-speed internet, keeping many Mississippians disconnected from the rest of the world and even the next town over.
Crumbling roads and water systems that pose critical health and safety risks to every single Mississippian.
A health care system that was never been built to care for every Mississippian regardless of their locality, race, or socioeconomic background.
The whole idea of this project is to ensure elected officials are publicly held accountable. Too often in Mississippi, a lack of transparency in government spending allows contractors, lobbyists and interest groups to reap the benefits of large pots of money intended to make our state better. Meanwhile, the Mississippians who need help most miss out. And all too often, the public isn’t even aware that it’s happening.
We cannot let that happen now. In the poorest state in the nation, where so many of our neighbors are struggling, the need is just too great and the moment too important. We’re devoting a newsroom of focus and energy to asking the tough questions of the decision-makers and tracking every dollar.
We hope our project page will serve as a hub for Mississippians, a place where basic information about the money is easily accessible and easy to understand. The page is a living, breathing thing, and we will add more resources, databases and coverage to it.
While our team of state government reporters is uniquely positioned to cover the state-level spending, so much of this money will be spent at the local level. That’s where you, the readers, come in.
City councils, boards of aldermen, boards of supervisors and school boards will have plenty of discretionary spending authority, and we need you to be our eyes and ears in those hundreds of halls. If you have questions, concerns or tips about how the federal money is being spent in your community, please reach out to us at adam@mississippitoday.org or kayleigh@mississippitoday.org. Check back soon for an interactive form that will allow us to more quickly respond to your comments regarding the federal spending.
As you follow this coverage, please don’t hesitate to reach out and tell us what we’re missing. We want you to help us provide this needed accountability.
Mississippi state, county and city governments are pondering how best to spend more than $2.7 billion in American Rescue Plan Act money.
Here’s what some state, local and national leaders and experts say about the ARPA funds.
Lt. Gov. Delbert Hosemann: “We are gearing up in the Senate, and we are looking at what other states are doing … This year and the next couple of years and how we expend these funds made available to us will be, I think the longest legacy that the Legislature has. Obviously the state flag (change) was monumental, but when you’re talking about being able to replace water and sewer systems and making our image much better with tourism, and addressing health and infrastructure … This is an opportunity for us that we will probably never have again … All politics is local, and individual municipalities and counties will make their decisions — they are closest to the ground on what they need. But what we are offering them is to perhaps double their money … Right now, we are more interested in long-term, generational matters.”
Northern District Public Service Commissioner Brandon Presley: “How we use this money isn’t about party or ideology. The federal government pretty much settled it by the way the law is written. You can’t buy popcorn with it. You can’t buy cotton candy. There may be many things politicians want to do with it to put a feather in their caps. But we can’t expect a community in our state to be successful if they don’t have access to safe water, sanitary sewer and broadband. It doesn’t take a Harvard scholar to figure that out. Don’t you know, when the national documentaries were made about Sugar Ditch in Tunica in the 1980s, this would have been wonderful to have this funding to fix it. Guess what — today we’ve got it, and we need to find the Sugar Ditches of 2021.”
Kathryn White, National Association of State Budget Officers: “While a number of states are further along, Mississippi is not alone in taking a slower approach. Some of this just comes down to a state’s budget process and legislative calendar. We’ve seen both — special sessions or special committees formed. Sometimes committees formed by the governor, sometimes formed by the legislature … It’s definitely a huge, heavy lift, deciding how to budget for these funds in a sustainable way, and this is not the only new source of federal funding, too. We are hearing that most states are adding additional staff to tackle this … (In a NASBO survey of state budge officers) 44% of respondents noted their state or territory has set up a separate office or unit to manage federal COVID-19 funds … 63% also indicated they have added staff to handle the increased federal funding … 49% indicated that they plan to use contractors to help ….”
Shari Veazey, director of Mississippi Municipal League: “A state matching grant program would be very helpful. Some of our cities, their water and sewer needs are so great that their ARPA funds wouldn’t cover them … Some of our cities have more needs with road repairs … We have encouraged our cities to take it slow and not in haste. Treasury is issuing rolling guidances. We are asking them to move cautiously. I think some of the larger cities that have more staff, engineers and other staff, feel confident in moving forward, but most are moving slow and waiting to see where things go with the state after conversations with the lieutenant governor … I think that needs to be part of the discussion, maybe the state’s money being used to hire the right accountants, consultants engineering studies and whatever else to help the local governments.”
Eryn Hurley, deputy director of government affairs, National Association of Counties: “We have been able to identify areas of investments counties are making (across the country) and a lot is going into the public health response … It’s going into their county health departments, maybe hiring additional staff to run county hospitals or other county-run health facilities … We’ve also seen counties investing in services or programs to respond to more of the social safety net areas — nutrition, housing and rental assistance, child care, early learning — across the board. Then we’re seeing investment in water and sewer and broadband, a lot of that from smaller counties in particular, and another big area is workforce development … We do plan to share publicly soon examples that other counties can look at and use to implement more programs … There are 3,069 counties in the United States.”
Derrick Surrette, director of Mississippi Association of Supervisors: “A lot of counties are kind of hesitant to move until there is a final rule (from Treasury) … We are in constant contact with the state auditor’s office and helping our counties. Some counties are interviewing and even hiring accountants and CPAs … Calculating lost revenue is a process they’re having to go through … I think most counties are looking at the lost revenue factor and saying that’s our opportunity to spend it on roads and bridges … Rural water and broadband are a huge issue, however, counties are not in the rural water and broadband business. That’s not what we do. We do roads and bridges and that’s what’s needed now as much as anything else.”
Mississippi House Minority Leader Robert Johnson III, D-Natchez: “I don’t know why we need to say matching money (from the state) for local governments. If a local government can establish and verify they have a need, then take the money that we have at the state level and give it to the local governments who have the most need. The state should just help. Some cities and counties can’t come up with enough of a match to cover their needs. They’re all part of the fabric and lifeblood of this state … I appreciate the fact that (the lieutenant governor) is at least thinking we need to help local governments.”
Josh Goodman, researcher with the Pew Charitable Trusts: “The challenge states face right now, as they did in the Great Recession, is that there’s a lot of money, but that money won’t last forever. The question is, what’s sustainable after the temporary federal aid is no longer available? With the Great Recession, just as states were making a comeback, the federal aid ran out and they had to cut budgets again in many cases. It was a lost decade for state governments … We are urging states to avoid that budget cliff — it doesn’t make sense for states to hire workers now only to have to lay them off in a few years … This is an historic opportunity for states, and they have a lot of important needs to address, but they also have to think about their long term budget position and make sure they’re not setting themselves up for challenges in a few years.”
Tippah County Supervisor Jimmy Gunn: “As we understand, we are going to have to wait until the Legislature meets and get a local and private bill passed before we could give money to a nonprofit water association … It’s a priority with us, to help anybody that’s not on community water. We have one project with 20-something homes on it, and another with 10 or 12 … I do think it would be a good idea for the state to provide some sort of match to the locals — I have spoken with the lieutenant governor about that … We are just waiting for the Legislature to convene. We had thought there might be a special session that could address this. We’re just waiting to see.”
Starkville Mayor Lynn Spruill: “We are spending this money wisely in a way that will impact the most people with transformative projects. While water and sewer and broadband are allowed, a municipality that is already taking care of that doesn’t really fit that profile. Police, tourism, parks and activities in parks in Qualified Census Tracts, which six of our seven parks are in, I think meet those goals.”
State Auditor Shad White: “There’s a tightrope to walk here. On the one hand, they’ve given us flexibility, more time to spend this money than under the CARES Act, and you want to use that time to make sure the money is not misspent or stolen, and that it has a real impact. Still at the same time, this is for recovery, and we do have a lot of pressing needs, this requires a lot of planning and we don’t want to wait too long. I think we’re still within the bounds of what’s reasonable.”
The $1.9 trillion American Rescue Plan Act signed into law in March directs about $6 billion to Mississippi — an amount roughly equal to the state’s annual general fund budget.
The bulk of the money is going to individuals, including $1,400 stimulus checks and child tax credits, or directly to education, other agencies and programs. Mississippi state government is receiving $1.8 billion and city and county governments $900 million. State and local governments have through December 2024 to allocate the money and December 2026 to have it all spent.
The U.S. Department of Treasury sets the rules on the spending, an ongoing process with final rules expected by the end of the year. In May, Treasury issued its “Interim Final Rule” on the spending, including lists of eligible and prohibited expenditures.
How governments can spend the money:
To respond to the COVID-19 pandemic or its economic impact
To help workers providing essential services during the pandemic by providing premium pay or grants to their employers.
For providing government services subject to a reduction in revenue due to the pandemic, relative to revenue collected in the fiscal year prior to the emergency.
To make necessary improvements in water, sewer or broadband infrastructure.
More specifically, spending is allowed for:
Public health: This includes programs to mitigate the spread of COVID-19, services to address behavioral health needs and payroll and benefits expenses for public health, healthcare, human services, public safety and others who work on the pandemic response
Negative economic impact: This can include assistance for workers and families, including aid to those unemployed and job training, and survivor benefits for families of COVID-19 victims. This also can include support for small businesses including grants and loans, and help speeding the recovery of tourism, travel and hospitality sectors. Also this can include rebuilding public sector capacity and rehiring public sector staff.
Services to communities disproportionately impacted by the pandemic: If an area is a Qualified Census Tract, meeting certain low-income or poverty levels, the money can be used to fund a broad array of services, including help for homelessness, funding community health workers, housing vouchers, affordable housing development childcare, education and other support.
Premium pay: Premium pay for essential workers can be given directly to the workers or with grants to employers, and Treasury said it should be prioritized for lower income workers. Any pay above 150% of the area’s average annual wage requires specific justification. Pay can be retroactive, and a broad range of workers are covered, including those at nursing homes, hospitals, farms, food facilities, grocery stores, restaurants, janitors, sanitation workers, educators and human service workers.
Infrastructure: Treasury specifies water, sewer and broadband infrastructure, not general infrastructure (see details below). This includes projects that address the impact of climate change, flood resilience and green infrastructure. Investments in broadband should be made in areas unserved or underserved, with a priority on projects that achieve “last mile” connections to homes and businesses.
Revenue replacement: State and local governments can compare actual revenue to what could have been expected without the pandemic. The governments can recalculate lost revenue in periods up to Dec. 31, 2023. The calculations begin with the last full fiscal year prior to the pandemic and can be calculated by the average annual revenue growth in three previous fiscal years prior to the pandemic, or using 4.1% — the national average growth from 2015-2018 — whichever is highest.
Administrative costs: The money can be used to pay consultants or for payroll for staff to assist with ARPA projects, including legal work.
How the funds cannot be spent:
To fund pension programs
To offset, directly or indirectly, a tax cut made since March 3, 2021. But more than a dozen states — including Mississippi — are challenging this rule in court, and at least two federal district courts have ruled in favor of the states. Texas recently earmarked $3 billion of its funds for property tax relief, in hopes the rule is eventually overturned. The prohibition on tax decreases applies only to state governments. The local government section of the bill has no such limitation.
For general infrastructure, such as highways, roads and bridges, other than water, sewerage and broadband. However, state and local governments can use the money for such projects if they can show the projects or infrastructure funds lost revenue due to the pandemic. Some state and local governments are using lost revenue calculations to restore money to general or infrastructure funds. Also, legislation pending in Congress would more broadly allow the ARPA funds to be used for general infrastructure projects. A separate $1.2 trillion federal infrastructure bill has just passed Congress.
To pay debt service.
To fill rainy day funds or other financial reserves.
To further restrictions from state governments. In other words, states cannot restrict city and county spending of the funds beyond the federal regulations.
Public Service Commissioner Brandon Presley meets with residents near the Faulkner community, who are asking for public water service to their homes. Nearly 13% of Mississippi’s population does not have public water service and Presley hopes federal stimulus money can change that. Credit: Amanda Barkley
Running water is a tentative thing for Amanda Barkley’s family and neighbors in more than two dozen homes near the Faulkner community on the Benton-Tippah county line.
They’re on wells, many dug decades ago and not deep enough now to tap into good, steady water. In some cases multiple houses are hooked up to one small well. Pressures are low — don’t try showering and washing clothes at the same time. Sometimes, they just go out. Is the water clean? They don’t know; nobody tests it regularly.
Digging new, deeper wells would cost homeowners tens of thousands of dollars each. Provided they could find a company willing to do it, they would spend months on a waiting list as contractors focus on new wells for new homes and businesses. In the meantime, the Barkleys and other families across the state frequently have to replace well pumps, at $1,500 or more a pop.
In March, after a bad storm, Barkley turned her kitchen tap and — no water. It remained out for a month, during which time her kids went through a stomach virus and the family had to bring in water in buckets and wash clothes at her mother’s house nearby.
“We would probably still be without water if we had to dig a new well,” Barkley said. Her husband managed to jury rig a way to get the well pumping again.
Mississippi has a water problem.
It’s been well documented that some urban areas in Mississippi, most notably the capital city of Jackson, have antiquated water and sewerage infrastructure that is collapsing. But families across rural Mississippi — a total of more than 382,000 people or nearly 13% of the state’s population, according to the Mississippi State University Extension Service — do not have public water service. In 18 counties, between 20% and 50% of the population is on private wells. Even in more urban Hinds County, that figure tops 10%.
It's a hindrance to the state's growth and economic development. And, it's a major health concern: Of Mississippi's private wells that have had their water screened, one in three have coliform bacteria, indicating a risk for water-borne disease. And those on wells also lack sewerage and have to use septic tanks, which pose health and environmental threats. Long, widespread outages and boil-water orders in urban areas such as Jackson also threaten health and economic development.
Mississippi is receiving billions of federal funds from the American Rescue Plan Act. There are rules and red tape, and more regulations are still being developed, but Congress clearly allowed the money going to state and local governments to be spent on water, sewerage and broadband internet.
"This is a no-brainer," said Northern District Public Service Commissioner Brandon Presley. "Water is a basic building block of any community. We have over 380,000 Mississippians not connected to community water. We have other water systems in dire need. For instance in Carthage, there's old asbestos pipes that need to be taken out and replaced. Then, of course, there's Jackson's problems. You can't expect any community in our state to compete if they don't have access to safe water.
"One thing we know for certain, today, clear as a bell in the rules is that these funds can be spent for water, sewer and broadband — basic building blocks of communities that we know are missing in far too many communities in Mississippi. This money is a once-in-a-lifetime opportunity, to use these funds in a way that not only has lasting impact on every county in the state, but also it's a heck of a way to boost the economy with jobs."
Presley has a fear: that local government leaders will try to "get extra cute" with spending ARPA money and "get crafty and contort it into a wish list of pet projects and ignore the basic building blocks." On the state level, he said, the longer planning and allocating the money takes, "every special interest lobbyist there is will have their hands out for their share of this money, and the average citizens get beat down because they can't afford a lobbyist."
"We are burning daylight," Presley said. "The time for planning is now, and we ought to be ashamed if we let these dollars sit there over the next year without a true plan."
Presley has met with Benton and Tippah county supervisors, and they plan to use ARPA funds to help expand rural water systems to cover the Barkleys' community and other areas. But Presley said that as he's been traveling the state urging local leaders to focus on such projects, too many are pondering more picayune projects and spending. Some small governments also appear ill equipped to navigate red tape, plan and administer the extra spending and projects. Presley is hoping the state or regional planning and development districts can help.
"I've heard some say they're waiting to see if they can use the money to tear down some old building," Presley said. "I've even heard chatter from some that maybe they'd just let the money draw interest, then try to just give it back and keep the interest. That appeared to be maybe just some idle chatter — I hope — but anybody that does that ought not be in public office."
On the state level, Lt. Gov. Delbert Hosemann has taken the lead in ARPA planning, and he has shared similar goals and concerns for the spending. He has traveled the state for months meeting with local leaders, urging them to think big and long-term on the spending, to make it "transformational."
Hosemann has also asked local leaders to hold off on spending if possible until the state can help coordinate — and supplement — the local government funds with the state's $1.8 billion in ARPA money. Numerous other states are creating such "matching" state grant funds to help local governments take on larger water, sewer, broadband and other projects.
Hosemann has created a special Senate subcommittee that plans to start meeting in mid-November on ARPA spending and provide recommendations to the Legislature in January. Hosemann said his office has already received numerous project proposals from local governments and rural water associations hoping a state match is in the offing.
"All politics is local, and individual municipalities and counties will make their decisions," Hosemann said. "They're closest to the ground on what they need. But what we're offering them is to perhaps double their money. If they have $1 million and do a water and sewer project, we'll match it. If they use their money for pay raises or something short term — well, that's a decision they'll have to make.
"This is an opportunity for us that we probably will never have again," Hosemann continued. "... How we expend these funds will be the longest legacy that the Legislature has ... We need to focus on things that will have an impact for generations."
But so far, neither House Speaker Philip Gunn nor Gov. Tate Reeves have endorsed Hosemann's proposal for matching funds for city and county projects. Gunn joined Hosemann in asking Reeves to call lawmakers into session to give some ARPA money to hospitals to alleviate a nursing shortage crisis, but has been noncommittal on Hosemann's pitch for the state using up to half its $1.8 billion to match local governments. Gunn said he has his top lieutenants studying how best to spend the money.
Reeves has so far declined to call a special session. While governors in other states have taken a lead in planning or spending ARPA funds — working with lawmakers, creating special task forces and seeking public input — Reeves for months said little about how lawmakers should spend the money. On Monday, as the new Senate committee met, he released an outline of his recommendations for spending ARPA money as par of his annual budget proposal to lawmakers. His proposal includes $100 million earmarked for local water and sewer projects. Lawmakers will have the final say on the spending.
Sen. John Polk, R-Hattiesburg, chair of the Senate's new ARPA subcommittee, praised Hosemann for moving forward on planning.
"There is plenty of time for the actual allocation of that money," Polk said. "But there are a lot of people out there thinking, hey, I could use some of that $1.8 billion. Until we set the parameters, they are in limbo. It is incumbent upon us to set the parameters, so these folks would know whether they would qualify, and if not they can move on and look for help elsewhere."
House Minority Leader Robert Johnson III, D-Natchez, has been critical of the legislative leadership not moving faster in planning and spending ARPA funds, such as premium pay for first responders and health workers. He said he's appreciative of Hosemann's efforts to get things moving, and of his proposal to help local governments with the state's share.
But he said a matching money program could mean local governments who are already receiving the most federal aid would also get the most from the state — a disparity for smaller localities with less resources. He said the state should allocate much of its money to local governments, no match required.
“If a local government can establish and verify they have a need, then take the money that we have at the state level and give it to the local governments who have the most need," Johnson said. "The state should just help ... They’re all part of the fabric and lifeblood of this state.”
Residents listen to Presley speak about the need for community water. (Submission: Amanda Barkley)
Mississippi lawmakers have a history of "Christmas Tree" spending — divvying up bond proceeds, federal disaster aid or other money via politics, lobbying and geography instead of looking for the biggest bang for the buck or the most pressing needs.
The state also has a history of its leaders fighting over how to spend federal stimulus, disaster aid and other money. After Hurricane Katrina, the BP oil disaster, and the Great Recession there were state and provincial squabbles over spending. With an earlier round of federal COVID-19 relief money, Reeves and lawmakers had a bitter political battle over control of the spending, with the Legislature winning out. Reeves warned "people will die" from lawmakers controlling the spending and claimed the Legislature "stole" the money.
The state also has a history — much of it recent — for misspending federal and other dollars through corruption, malfeasance or ineptitude, both on the state and local levels.
State Auditor Shad White said his office is working on the front end with Mississippi governments to make sure the latter doesn't happen, and that local governments aren't faced with repaying the federal windfall down the line.
White said his office is fielding numerous questions from local governments — they or residents can call 800-321-1275 with ARPA spending questions — and he's glad they're asking questions before spending the money. He said, "I practically yell that phone number into the microphone" when speaking with local governments and groups.
"We are getting everything from, hey, we want to beef up our water system in this way, all the way to ideas that are not contemplated in the law, or probably allowed," White said. "We get some like, what we really need in town is a brand new soccer field, can we do that? Our advice is usually no. Some are asking how to stretch the definition of what is lost revenue from the pandemic so they can spend it however they want.
"Yes, claiming lost revenue does provide a lot more flexibility, but not a lot of local governments in Mississippi had a lot of lost revenue — especially when you look at the (internet sales) use tax diversion to local governments kicking in during this time," White said. "Local governments I think are mostly trying to find the most effective use of the money that doesn't require a heavy lift on calculations or documentation. If you're staring at a water and sewer problem in your town, I think a lot of them are just figuring, let's spend it to fix that."
Some other states' governments are using the lost revenue provision to shift money to road and bridge projects, which are not otherwise clearly allowed with ARPA funds. Some Mississippi local government leaders have said their greatest needs are in road and bridge work, not water, sewerage and broadband. A bill pending in Congress would change the ARPA regs to easily allow road and bridge work.
White said he's already working with Hosemann's new Senate subcommittee as well as local governments to make sure the money is spent properly.
"The last thing we want is this money going out the door very quickly, then the Office of Inspector General coming back three years later and having to claw this money back out of local and state governments," White said. "That's a black eye for the state ... and it could be disastrous for a town or county to have to pay that money back, maybe when finances aren't so good later on."
State and local governments received half of their ARPA allotments over the summer and will receive the other half in the summer of 2022. They have until the end of 2024 to allocate the money and the end of 2026 to have it totally spent. This is a more generous deadline than previous federal pandemic relief, but planning and completing infrastructure projects and setting up administration of the money can take a long time.
On the state level, Mississippi appears to be behind most states in planning for and spending ARPA funds.
Hosemann and White said they were unsure how many local governments have already begun spending their money.
Recently, Hinds County supervisors approved spending $3 million of the $45 million the county is receiving to provide premium pay bonuses of $2,000 to $4,000 each to 900 county employees who worked during the pandemic. Lee County is trying to figure out if it would be allowed spend some of its $16 million on a new jail.
But Derrick Surrette, director of the Mississippi Association of Supervisors, said he believes many counties are waiting until the U.S. Treasury issues its final rules on the spending, expected any time now before the end of the year.
Shari Veazey, director of the Mississippi Municipal League, said, "We've encouraged our cities to take it slow and not in haste, with Treasury issuing rolling guidances ... Some of the larger cities that have more staff and lawyers and engineers feel confident in moving foward, but I think most are moving slow and waiting to see what happens with the state based on conversations with the lieutenant governor."
Both Surrette and Veazey said local governments would welcome any matching fund programs from the state or help with administration. Other states, such as Tennessee, are providing administrative or training assistance to local governments for ARPA spending.
The city of Starkville wasted no time, and allocated most of its $6.4 million in ARPA funds in late September. It spent the bulk of its money on city parks.
The Board of Aldermen voted to spend $3.5 million refurbishing its seven city parks, and $2 million to build two ballfields at its 12-field Cornerstone Sportsplex tournament facility expected to open next year. Aldermen also voted to spend $500,000 to hire two new police officers through 2024 (the city will have to cover the tab after that).
Aldermen only earmarked $200,000 for infrastructure — to upgrade a troubled water system serving a large neighborhood in Starkville. The tab for the repairs is estimated at $350,000, so the city would have to find other funds for it, perhaps state matching funds if the Legislature approves that.
According to the Commercial Dispatch newspaper, the spending raised criticism or questions from residents and at least one alderman who thought other projects — like the water project, helping struggling businesses and people who were evicted from their homes amid the pandemic and other needs — should take precedent over parks with the ARPA spending.
But Starkville Mayor Lynn Spruill said the city's ARPA spending decisions will "impact the most people and be transformative." She said the city will take care of the neighborhood's water problems regardless of ARPA money and Starkville's parks have needed refurbishing for decades.
She said the city attorney researched ARPA rules and, "We feel pretty confident that we are on firm footing ... did our due diligence." She said the city's parks are in well-defined socioeconomically deprived areas that suffered from the pandemic. She said ARPA rules allow spending for tourism, and the sportsplex ballfields qualify.
She said she understands the push for the focus on infrastructure projects, but that Starkville has "already checked those boxes" in its normal course of business.
"A municipality is a lot different than a county in needs of water, sewer and broadband," Spruill said. "I don't want the city of Starkville penalized because we have already stepped up and got our plans in place for water and sewer and already have broadband service ... These parks will be transformative — they've not been touched, or not redesigned or reconfigured, in the last 30 to 50 years."
Spruill said she still hopes for a state match for some of Starkville's spending and is "working on a white paper to support our use of those funds with all those facts at our command on how these are transformative and meet the goals."
"The state's got more money than it knows what to do with," Spruill said. "I think it's up to the municipalities and counties to help them with those decisions."
Meanwhile, Barkley and her neighbors, who have organized and met with county leaders, and nearby water associations, hope the ARPA windfall will soon provide them with water service. She said one neighbor is recovering from cancer, and they're terrified his well may go out soon.
Barkley notes, with some irony, that her area has broadband internet service thanks to the state's efforts — led largely by Presley — which included state spending from an earlier round of federal COVID-19 relief.
"It's great, and I commend them," Barkley said. "We love it, and we've had broadband for almost a year now. But it's kind of hard to enjoy that fast internet if you don't have any water. We need help."
Mississippi Today’s Adam Ganucheau and Bobby Harrison preview several factors that will make the 2022 legislative session one of the most contentious and important in recent history.
In this episode of Mississippi Stories, Mississippi Today Editor-At-Large Marshall Ramsey sits down with writer David Magee to discuss his powerful new memoir Dear William, written to his late son who died of an accidental drug overdose.
He helped inspire and create the William Magee Center for Wellness Education at the University of Mississippi, named for his late son and designed to improve lives with new solutions. Formerly a columnist for Newsweek, and a former daily newspaper and magazine publisher and a vice president of Alabama Media Group (al.com), David is the author of a dozen books including How Toyota Became #1 (Penguin), named a Top 10 Business Book of the Year from the American Library Association, and The Education of Mr. Mayfield, a best book of the South (2009), and he has been a regular guest on CNBC.
