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Panel to study uses for $1.57B

Governor favors broadband, cybersecurity for some U.S. aid by Michael R. Wickline | May 12, 2021 at 7:04 a.m.
The Arkansas flag is shown in this file photo.

Gov. Asa Hutchinson on Tuesday created a 15-member steering committee to recommend the best uses for $1.57 billion in federal funds that state government will receive under the American Rescue Plan Act. He said the funding priorities should include expanding broadband access and cybersecurity protection.

The Republican governor signed an executive order to create the steering committee, which includes nine Cabinet officials or their designees and six state lawmakers, three each from the House of Representatives and the Senate.

The panel will be chaired by Department of Finance and Administration Secretary Larry Walther and will meet May 19 for the first time, Hutchinson said at his weekly news conference in the governor's conference room.

He said he read through the guidance issued by the U.S. Treasury on Monday regarding the use of these federal funds and "the purposes are very broad.

"There is a lot of flexibility," he said. "It is allowed to be used for capital investments, as well as investments in infrastructure with the Health Department ... to be prepared for a future pandemic.

"This is such a unique time that it is important that we proceed through this in a planned fashion," coordinating with cities, counties and education agencies that also are receiving funds," Hutchinson said. "We have to be methodical about this and not rush."

State government will receive the first half of the $1.57 billion in the near future and the other half later, Hutchinson said.

Walther said the federal funds will be available to the state over the next 3½ years and expire Dec. 31, 2024, "so we have time to study it and do it right."

The governor noted that his executive order calls for state agencies, including the departments of Commerce; Health; and Parks, Heritage and Tourism, to use advisory committees or working groups as needed in the private sector to assist in the development of investment plans for the American Rescue Plan funds.

"To me, the priorities should be capital investments like broadband, that need to be investments that we can make that does not incur long-term spending and indebtedness to the state," Hutchinson said. "Not necessarily programmatic investments as much as capital investments is what I can hope we can look for. Obviously, we are going to have some short-term humanitarian needs that will be part of it as well."

There is a broad consensus in the state to support additional broadband investment, and "that must be coordinated because there is other broadband money flowing," he said.

"With what we have seen with the Colonial Pipeline [shutdown after a ransomware attack], we have to continue to invest in our cybersecurity protection for the state, upgrade of our [information technology] system, upgrade of our cybersecurity efforts," Hutchinson said.

Besides Walther, the Arkansas American Rescue Plan Act of 2021 steering committee will include:

• Education Secretary Johnny Key

• Human Services Secretary Cindy Gillespie

• Commerce Secretary Mike Preston

• Agriculture Secretary Wes Ward

• Public Safety Secretary Jami Cook

• Parks, Heritage and Tourism Secretary Stacy Hurst

• Labor and Licensing Secretary Daryl Bassett

• Health Secretary Jose Romero

• state Sens. Ronald Caldwell, R-Wynne; Bill Sample, R-Hot Springs; and Keith Ingram, D-West Memphis.

• state Reps. Frances Cavenaugh, R-Walnut Ridge; Kenneth Ferguson, D-Pine Bluff; and Jeff Wardlaw, R-Hermitage.

The steering committee's duties include studying the money available to the state, its citizens and businesses under the new law; identifying and prioritizing the needs of the state, citizens, and businesses for the funding; identifying the most efficient practices and procedures to obtain the relief; and recommending the best use of the funds to the governor, according to the governor's executive order.

Arkansas will receive $5 billion in federal funds in various forms, including for public schools, colleges and universities; cities and counties; and the state Department of Human Services in the form of rental assistance or other humanitarian assistance, Hutchinson said.

State and local governments together will receive nearly $2.6 billion in covid-19 aid as a result of the American Rescue Plan, the Biden administration said Monday.

More than $1 billion will be designated for local government. The announcement came at a time when the state's covid-19 numbers are low and its economy is rebounding.

The covid-relief package was signed into law in March by President Joe Biden after narrowly passing in Congress. Democrats supported the measure. Republicans opposed it.

The Treasury Department on Monday said the money can be used to "support public health" or to "address negative economic impacts caused by the public health emergency."

Water, sewer and broadband internet projects qualify. The money can also cover shortfalls caused by covid-19-related revenue shortfalls.

The federal fund can't be used to cut taxes or to bail out public pension plans. Like the rest of the country, Arkansas' economy suffered after the imposition of a public health emergency last year.

Hutchinson said Tuesday that he will probably accompany Walther to visit with the Biden administration regarding its guidance on tax cuts.

He said he wants to visit again with economist Gene Sperling, the Biden administration's program director for the American Rescue Plan, "specifically about what our plan would be for tax cuts in Arkansas, demonstrating that they have nothing to do with the American Rescue Plan money, totally separate depending on our state revenues.

"I want to hopefully get an advance clearance so that we can proceed," Hutchinson said.

He has said he would call a special legislative session in the fall for state lawmakers to consider income tax cuts, including cutting the state's top individual income tax rate of 5.9%. He hasn't specified the size of the envisioned tax cuts.

On Tuesday, Hutchinson said he appointed Sen. Joyce Elliott, D-Little Rock, to fill the spot held by then-Sen. Will Bond, D-Little Rock, on the 15-member Arkansas Coronavirus Aid, Relief, and Economic Security Act steering committee. That panel includes eight Cabinet officials, a governor's aide and six state lawmakers.

The CARES Act panel was created last year to recommend the best uses of $1.25 billion in federal funds that the state received under the CARES Act signed by then-President Donald Trump in March 2020. About $2.5 million of that money remains available, said Scott Hardin, a spokesman for the finance department.

Information for this article was contributed by Frank E. Lockwood of the Arkansas Democrat-Gazette.

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