Of the more than $945 million in federal American Rescue Plan Act funds dedicated to water and sewer and broadband infrastructure projects in Alabama this year and last, less than $20 million has been spent.
Officials expect expenditures to soon move more quickly, but two state agencies charged with dispersing the funds were questioned Wednesday about the ability to meet federal 2026 spending deadlines and possible backup plans.
The Legislature and Gov. Kay Ivey allocated more than $600 million in ARPA funds for water and sewer, to be distributed by the Alabama Department of Environmental Management. And more than $300 million was sent to the Alabama Department of Economic and Community Affairs to be spent on broadband expansion efforts.
Like all the more than $2 billion in ARPA funding the state received, the funds must be allocated by the end of 2024 and expended by the end of 2026 or risk the U.S Treasury Department taking the money back.
“There is some talk that Congress might extend the deadlines,” state Finance Director Bill Poole told the legislative ARPA Oversight Committee on Wednesday. “We’re not going to rely on talk. We’re going to rely on the deadline as it exists in federal law.”
For the water and sewer spending, ADEM has pledged funds for hundreds of projects around the state, including many rural communities, through an application process. But the tight time frame, supply chain issues and competition for construction engineers and crews has raised deadline concerns.
“For whatever reason, we know some of these won’t get done,” oversight committee chairman Sen. Greg Albritton, R-Range, told Alabama Daily News. “We’re as prepared as we can be to deal with those issues.”
Kirk Fulford of the Legislative Services Agency updated lawmakers on what’s been spent and noted reimbursements to agencies, such as the combined $80 million for state employee and teacher insurance boards for COVID-19 related expenses and payments to the state unemployment compensation fund, were easy to spend. The infrastructure projects take more time.
While more memorandums of understanding on water and broadband projects are expected to be signed in the coming month obligating more funds, Fulford said the actual spending, especially for water and sewer projects, will depend on communities’ ability to get projects done.
“That is something this committee is going to have to keep an eye on because you have to leave yourself enough time to be able to reallocate money as necessary if it becomes available,” Fulford said.
Several lawmakers on the oversight panel told ADN they’d prefer not to redistribute ARPA funds.
“We’ve appropriated this money as needed, that was difficult enough,” Albritton said. “However there may be circumstances … that if there’s money that hasn’t been expended, we can recapture it and rededicate it.”
It’d be a similar process as seen in 2020 when a smaller group of state officials reallocated some CARES ACT money in 2020.
Sen. Chris Elliott, R-Josephine, asked ADEM and ADECA representatives Wednesday what monitoring deadlines they’ve put on projects and when they’d pivot to other projects if needed.
“At what point are we going to look at these milestones and at what point are we going to reallocate those resources?” he said.
Elliott has previously questioned ADEM’s ranking system for allocating money to projects. It received more than $3 billion in requests. He asked ADEM Director Lance LeFleur if a communities’ ability to get a project done quickly was used in the formula.
LeFleur said the agency had put deadlines in mid-2024 and mid-2026. If a project is underway but can’t be completed by the end of 2026, remaining funds will be moved to another project, he said.
“We don’t want to leave projects half-completed … our backup position is that we will make available to them state revolving fund loans in future years as needed to finish their projects.”
But those revolving loan funds are just that — loans, said Sen. Bobby Singleton, D-Greensboro. He said he’s heard from communities who want grants — not money they have to pay back.
“A loan would only put them in more debt … (I hope) we’re not forcing something on them that they cannot afford,” Singleton said.
LeFleur told the panel, and has previously told ADN, communities can be offered a package of funding that includes ARPA and revolving fund money.
Maureen Neighbors of ADECA told lawmakers that in all ARPA broadband spending, there are progress deadlines that must be met before providers are paid.
Singleton also asked Neighbors if ADECA was considering satellite internet as an alternative to broadband.
“…All of our money is being focused on in-ground fiber,” he said. “To get to some of these rural, rural areas, we’re not going to get there strictly by fiber. Are we considering wireless connectivity because it’s getting better and better everyday?”
“Absolutely, we are considering all technology that can provide the speeds that are required,” she said. We’re going to need all of the partners to get to all of the addresses.”