Alabama lawmakers allocated the state’s final $1 billion of ARPA funds. What comes next?

As the Alabama Legislature begins to craft the 2024 General Fund budget, decisions made during last month’s special session should provide lawmakers with more flexibility to meet ongoing needs for our state. With additional near-term funding already in place for key priorities, legislators should seize the opportunity to improve the quality of life for every Alabamian. Investments that would further this goal include providing funds for public infrastructure like Medicaid expansion and public transportation.

On March 16, Gov. Kay Ivey signed HB 1 to end the special session she called to distribute the remaining federal funds that Alabama received under the American Rescue Plan Act (ARPA). This act provided states with federal funding to help cover losses and expenses incurred because of the COVID-19 pandemic. Lawmakers previously distributed the majority of the funds, leaving $1.06 billion to be allocated in this year’s special session.

Arise priorities eligible for funding

The Department of Finance received $55 million in ARPA funding for direct services for people likely to face economic hardship. These categories include older Alabamians and victims of domestic violence. Service providers will receive this money through departmental grants.

Further available categories for this funding include food banks, long-term housing security and mental health care. Summer education programs for schoolchildren and services to families involved in child welfare also are eligible for this funding.

Arise has advocated for using a portion of Alabama’s ARPA aid for affordable housing. While the ideal path would have been a specific allocation to housing, this funding pool provides a path for that important investment. Direct food assistance is likewise a vital public good. And increased mental health funding could help improve the well-being of Alabamians of all demographics.

Health care receives significant funding

Lawmakers allocated $339 million for direct health care expenses and related services. The largest portion will be used for hospital and nursing home reimbursements at $100 million each. Increased expenses for state employees’ health insurance will account for $80 million of the remaining $139 million.

The remaining $59 million will go toward several programs to expand health care availability and efficacy for Alabamians. These funds include:

  • $9 million for telemedicine infrastructure expansion, particularly focused on specialist coverage for Alabamians in rural communities.
  • $20 million for research into increasing access to personalized health care.
  • $175,000 in cost reimbursement for COVID-19 vaccinations provided to college and university students.

Also notable is a $25 million line item for mental health care investment. This expenditure can help bring state programs up to the requisite standard of care. This amount is in addition to the permissible use of a portion of the Finance Department’s $55 million in funding.

Infrastructure improvements receive lion’s share of ARPA aid

Lawmakers allocated the largest share of this round of funds, $660 million, to infrastructure improvements in water and sewer systems. Of that amount, $260 million will go toward broadband internet access.

This decision is consistent with the state’s emphasis on increasing internet connectivity during recent legislative sessions. These funds are also available for use by state agencies to modernize and improve access to state computer infrastructure. This has been another recent priority for the Legislature.

The remaining $400 million in this category will go toward water and sewer infrastructure improvements. This includes $195 million for high-need water and sewer projects. A further $100 million will be available for water projects in growing communities. And an additional $100 million will be designated for grants that require 35% funding matches by local governments.

The Alabama Department of Public Health has designated $5 million to conduct wastewater system improvements in areas with high poverty rates, low populations and difficult soil conditions for septic systems. This expenditure aims to improve longstanding sewage disposal issues in the Black Belt.

In several Black Belt counties, recent major sewage problems due to inadequate investment in public sewage disposal have drawn international condemnation. This ARPA allocation will help mitigate the problems, though further investment will be necessary to fix them fully.

Final thoughts

Overall, state lawmakers used this final round of ARPA funds as generally intended: to improve Alabamians’ lives and mitigate shortfalls due to the COVID-19 pandemic. The relative flexibility of the appropriations bill still leaves open the possibility that some funds could be used in counterproductive ways. But the Legislature performed much better in allocating ARPA funds equitably this session than with the first round, when they devoted $400 million of relief funding to prison construction.

Thankfully, this special session created numerous pathways to help Alabamians by directly providing important public goods. The opportunity to make significant improvements in vital areas includes funding adequate housing and providing food for people who need it. It includes investments in mental health care and improvements in state agency reliability. And it includes mitigation of some harms resulting from decades of state disinvestment in Black Belt communities with mostly Black populations.

Make no mistake: Many urgent and vital needs remain unmet after the special session. But ARPA funding nonetheless will provide a generational opportunity to make substantial improvements to the lives of all Alabamians. Lawmakers should build on that momentum by expanding Medicaid, funding public transportation and making other investments in a brighter, more inclusive future for Alabama.