The Appropriations Committee today will hear testimony on LB 1014 – the governor’s proposal to distribute $1.04 billion in American Rescue Plan Act (ARPA) dollars.

ARPA presents the states, such as Nebraska, with an unprecedented opportunity to make transformative investments that should help residents for decades to come. While the governor’s proposal contains some promising provisions like increased investments in public health and money for premium pay for essential workers, on the whole, it could do more to help individual Nebraskans. The measure also contains a provision – a provider rate increase – that would probably be better suited for the state’s general fund budget.

Only 30% of ARPA aid would help individual Nebraskans

ARPA funds are largely intended to support people struggling in the pandemic economy while beginning to address long standing inequities the pandemic exposed. LB 1014, however, only allocates 30% to directly or indirectly help individuals, with 12% of funds directly helping people through programs such as premium pay for essential workers and about 19% of its funds indirectly helping Nebraskans by way of programs to improve hospital capacity and increase workforce housing. While the federal government gave states broad latitude in deciding how to use ARPA funds, the remaining 70% of ARPA dollars go towards projects that are not being used for the intended use of addressing the health and economic disparities amplified by the pandemic.

Other funds could help support infrastructure projects

Under the bill, more than a quarter of ARPA funds would be allocated to water or sewer infrastructure, even though those projects could instead be funded by the $358 million for water projects the state is set to use under the Federal Infrastructure Bill. Additionally, there’s also $128.7 million in Capital Project Funds that haven’t been allocated. Using these funds to support infrastructure projects would allow ARPA dollars to help individual Nebraskans.

Controversial projects could complicate use of ARPA dollars

Some other projects called for under LB 1014 – including the Perkins County Canal Project and the STARWARS project – could be controversial and end up in litigation, which means Nebraska may not be able to use all the funds by the time they need to be spent. This would result in the federal government clawing the ARPA dollars back.

Provider rate increase likely belongs in the general fund budget

The bill additionally would use one-time funds to fund an increase in Medicaid provider rates. This expenditure likely will need to be ongoing and as such would be more appropriate for the state’s general fund budget. Including this provision with the ARPA budget makes the state’s general fund outlook rosier than it actually is and also could make it harder to sustain the rate increase when ARPA funds dry up.

An unprecedented opportunity

Lawmakers have a landmark opportunity to allocate APRA funds in ways that allow Nebraskans to come out of the COVID-19 pandemic stronger, healthier and more prepared to thrive. Addressing concerns raised by many provisions in LB 1014 will be essential to ensuring we capitalize on the unprecedented opportunity before us.

The hearing on LB 1014 starts at 1:30 p.m. and will be streamed live by Nebraska Public Media.