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Infrastructure spending, money for medical providers dominate ARPA spending proposal

MONTGOMERY, Ala. – The Alabama Legislature will begin deliberating on Wednesday a spending plan for the last $1 billion in federal COVID-19 relief they’ll get to appropriate. 

Sewer and water infrastructure, broadband internet expansion and money for hospitals and other health care providers dominate a proposed spending plan, but legislative leaders say changes could be made in the next two weeks.

During her Tuesday night state of the state address, Gov. Kay Ivey called for a special session on the American Rescue Plan Act spending.

“I commit to the people of Alabama we will once  again take a smart approach and put it towards major and needed endeavors like expanding  broadband access, improving our water and sewer infrastructure and investing in our health care  – including telemedicine,” Ivey said.

Though lawmakers’ 2023 regular session just began Tuesday, a special session allows them to focus on just one issue without lawmakers also trying to bargain and barter for votes for other bills.

In a draft plan obtained by Alabama Daily News, the $1.06 billion spending plan includes many of the same spending priorities from the first round of ARPA funds.

Infrastructure, $660 million, including:

  • $400 million for water and sewer grants;
  • $225 million for broadband expansion;

Public health, $339.1 million, including:

  • $100 million to reimburse hospitals for COVID-19 related expenses;
  • $40 million each for the Public Education Employees’ Health Insurance Plan and State Employees’ Insurance Board;
  • $18 million for mental health provider payments;
  • $5 million to reimburse mental health providers for COVID-19 related expenses; 
  • $20 million for a voluntary clinical trial and research program;

Community services, $55 million, including support for food banks, senior services and support for long-term housing;

There is also $5 million for the Alabama Department of Labor for its expenses in responding to unemployment issues related to the pandemic. 

Legislative leaders and Ivey’s team have been working for months on this plan and conversations have been ongoing.

“In my opinion, there will need to be some changes, there are a few areas I would like to see modified,” Sen. Arthur Orr, R-Decatur, told Alabama Daily News. “We’re looking at additional categories that are approved for ARPA expenditures that other states have done.” 

As this is most likely the last of the federal COVID-19 relief funds, agencies and groups have lobbied hard for a slice of it. 

Senate President Pro Tem Greg Reed, R-Jasper, on Tuesday said the draft proposal is a good plan and starting point, but there is still room for discussion on the spending plan. 

“The budget chairs have done a very good job, but we’re still looking and listening for feedback from members of the Legislature,” Reed said.

Sen. Greg Albritton, R-Range, said the amounts spent on water and sewer infrastructure in the plan will result in even more funds going toward projects because of matching federal dollars to be pulled down. In last year’s ARPA funding, $225 million was allocated to water and sewer projects. That money was used to supplement other state and federal funds and grants, resulting in a total investment of $348 million around the state.

This year, $400 million do even more, Albritton, chair of the Senate General Fund committee, said.

“In this one, the plan is substantially more than that, and we expect to have the same result (of drawing down more money),” Albritton said.

Sen. Rodger Smitherman, D-Birmingham, said he’d like to see some of that water and sewer money allocated to stormwater drainage projects in metro areas. 

“I would hope for some flexibility to address stormwater issues,” Smitherman told Alabama Daily News. He said Birmingham, Huntsville, Montgomery, Mobile and other large cities have significant drainage issues.

Sen. Tim Melson, R-Florence, said he wants to see some of that $100 million for hospitals reach not just the large facilities, but the smaller ones in rural areas that lost revenue from elective procedures during the pandemic.

“We need to make sure the formula is fair,” Melson, a doctor, said. “We need to make sure that the ones that were hurt are helped.” 

The $40 million for the Public Education Employees’ Health Insurance Plan (PEEHIP),  the insurance provider for state educators, is less than the nearly $100 million in COVID-related expenses the agency told ADN its had since March of 2021.

“I’m concerned that the PEEHIP allocation may not be fully funded,” Orr, chairman of the Senate education budget committee, said. “If there was ever a direct COVID cost to the state, that is certainly one of them. And that is what this money is for, the cost of COVID to the state.” 

The mental health spending was expected as legislative leaders have in recent years focused on funding the agency gutted by budget cuts nearly a decade ago. The Alabama Department of Mental Health has plans for six crises centers around the state to provide acute care and stabilization to those with a mental health emergency. But staffing shortages are impacting the state’s mental health hospitals and the community providers.

Legislative leaders have said they’re sticking to the specific federal guidelines for ARPA spending.

Unlike the more than $1 billion lawmakers approved last year in what was the first batch of ARPA funding, this one does not contain the more flexible “lost revenue” portion that allowed states to use some of the funding to make up tax dollars they lost during the pandemic. It was with $400 million in that lost revenue that Ivey and the legislature are now building two new men’s prisons.

Lawmakers are expected to move the ARPA bill through the legislative process over the next two weeks. Their regular session will resume March 21. 

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