Alabama Legislature’s plan for COVID money: water and sewers, broadband, health care

The first day of the Alabama Legislature’s special session on COVID relief money lasted fewer than 10 minutes. But legislators plans for $1 billion in money from the American Rescue Plan Act (ARPA) became clearer.

The House’s General Fund budget chair filed a bill on Wednesday that would allocate the money to broadband, water and sewer projects and funds for hospitals and nursing homes. 

House Speaker Nathaniel Ledbetter, R-Rainsville, said he expects the bill to be on the House floor on Tuesday, and “maybe on the Senate floor by Thursday.”

HB 1, sponsored by Rep. Rex Reynolds, R-Huntsville, would allocate $1.06 billion dollars to a series of one-time investments. 

The bill follows an outline for spending the ARPA money laid out by Gov. Kay Ivey in her special session call on Wednesday. It also prioritizes the same three areas that legislators chose in spending Alabama’s initial $774 million in ARPA funds last year, though it allocates significantly more money to broadband and water and sewer infrastructure.

Under the legislation, up to $340 million would go to health care.  Of that, up to $100 million would go to state hospitals and up to $100 million would go to nursing homes. Ledbetter said that the money would pay off pandemic-related expenses. 

“Most of them had to stop with what they did as far as operations and things like that so they could handle a pandemic and they really have never gotten back over that curve,” Ledbetter said.

The remaining $140 million would be allocated to Veterans’ Affairs hospitals, mental health services, and the expansion of telemedicine.

Sen. Greg Albritton, R-Atmore, the chair of the Senate Finance and Taxation General Fund committee, said that health care expenses will be paid as reimbursements on “actual costs that have been incurred based on invoices” and that “this is simply a reimbursement of what those costs were.”

“I don’t anticipate that the amounts that have been looking at being appropriated meet all the reimbursements that’s going to be asked for,” he said.

HB 1 would also allocate up to $660 million eligible water, sewer, and broadband infrastructure investments. The state would spend up to $400 million on water and sewer projects, and $260 million on broadband. 

“I hate to say in the 21st century, we’ve got places in our state that don’t have fresh drinking water,” Ledbetter said.

Under the bill, the Alabama Department of Environmental Management would distribute $395 million in water and sewer funds. About half of that would be provided as grants to the Environmental Protection Agency’s Clean Water State Revolving Fund or the Drinking Water State Revolving Fund. The remaining $200 million could be used for matching grants to public water and sewer systems for water or sewer infrastructure projects.

Up to $55 million would be allocated toward various programs related to the negative impact of the pandemic, such as providing food assistance through food banks, child-welfare, senior services, mental health and long-term housing security. The bill does not specify how much would go to each program. 

The Legislature may also appropriate up to $5 million to address wastewater improvements through the engineered septic system program in the Alabama Black Belt areas.

Up to $5 million could be used to reimburse the Alabama Department of Labor for the expense related to the coronavirus unemployment benefits. Up to $1 million could also be used to reimburse costs for the administration, auditing, and reporting requirements of the state fiscal recovery funds.

In addition to ARPA spending, legislators will also consider a bill from Albritton to spend $60 million out of the current state budget to pay off a 10-year old debt. 

“That is state money we had. And that is the state obligation,” he said. “We’re paying the state’s obligations with state money. It’s not coming out of the feds at all.”

In 2012, the Alabama Legislature voted to borrow $437 million from the Alabama Trust Fund, a repository of money from oil and gas leases, to address a major shortfall in the General Fund budget. The following year, the Legislature approved a bill requiring that the amount be paid back by 2026. 

Ledbetter said the $60 million would completely satisfy that debt. 

“Not only are we on good financial footing, but we’ve paid off our debt and once we get that paid off, that’ll be something that we can rely on if we get in bad times again,” Ledbetter said.