Oklahoma is about to go on a multi-billion dollar spending spree — but there’s a catch, actually several.
Oklahoma, like other states, has already dolled out hundreds of millions of federal dollars on COVID-19 response efforts through Coronavirus Aid, Relief, and Economic Security Act (CARES) funding that was approved by Congress last year.
State leaders, however, have another reservoir of money to spend thanks to a new relief package — the American Rescue Plan Act — that President Joe Biden signed into law in March.
The new law will send about $1.9 billion in direct funds to the state along with several hundred million more going out to cities, counties and smaller communities.
“This is an opportunity for the state of Oklahoma with an amount of money we have never seen before,” said Rep. Kevin Wallace, R-Wellston.
But as lawmakers begin to look to the public for guidance, there are tight restrictions on where the money can be spent, when it can be spent and who authorizes the spending. After the Legislature’s newly formed Joint Committee on Pandemic Relief Funding met for the first time Wednesday, here’s a look at the main questions surrounding the money.
How Much Does Oklahoma Have to Spend?
The American Rescue Plan will send $350 billion to states, local governments and tribes.
Based on a formula that largely takes into account states’ unemployment population, Oklahoma will receive $1.87 billion.
In addition, Oklahoma’s 77 counties will split $728 million, the 10 largest cities will receive a total of $315 million and smaller cities and towns (under 50,000 population) — classified by the federal government as “non-entitlement users” — will receive $238 million.
The state will decide how to spend the money for the smaller towns.
The federal government will also provide $20 billion to support tribal governments across the country. It hasn’t been decided how that money will be split up.
When Does the State Have to Spend It?
Policymakers will have some time to weigh their options.
Melissa Houston, a former Oklahoma labor commissioner and owner of 929 Strategies who is consulting on the work, said lawmakers and the governor must decide how to spend the money by the end of 2024 and spend it by the end of 2026.
With such a large pot of money and with the prospect of possibly pooling funds with local governments to fund larger projects, Houston said it’s critical that officials start the work now.
“It’s important to think long term because these funds are long-term funds,” she said. “This isn’t like CARES dollars that have to go out the door tomorrow.”
What Can They Spend it On?
Although federal guidelines are relatively broad, officials will be restricted on how to spend the money.
According to the U.S. Department of Treasury, allowed uses include:
- Supporting public health, such as funding COVID-19 mitigation efforts, medical expenses, behavioral healthcare and certain public health and safety staff.
- Addressing negative economic impacts caused by the public health emergency, including economic harms to workers, households, small businesses, impacted industries and the public sector.
- Replacing lost public sector revenue, using this funding to provide government services to the extent of the reduction in revenue experienced due to the pandemic.
- Providing premium pay for essential workers, offering additional support to those who have and will bear the greatest health risks because of their service in critical infrastructure sectors.
- Investing in water, sewer, and broadband infrastructure, making necessary investments to improve access to clean drinking water, support vital wastewater and stormwater infrastructure, and to expand access to broadband internet.
Houston said states can’t use the money to fund pension plans, build up reserve or rainy-day accounts, finance debt or use it to leverage more federal funds.
States are also banned in most cases from using the federal funds on tax cuts. A number of states, however, are challenging that restriction in court.
Houston said projects also need to be targeted and measurable so the results can be audited.
“We are going to have outcomes we are trying to achieve and outputs that we’re measuring,” she said. “So if you’re talking about broadband, it’s not enough to say, ‘the goal is broadband.’
There’s another catch too: Thanks to a bill passed this session, state agencies can’t use federal pandemic relief funds in ways that grow the need for future state dollars once federal funds are spent unless it is specifically approved by the Legislature.
This means any type of spending that commits the state to spend more in future years, such as paying for pay raises or funding a project that carries significant ongoing expenses, can’t be included, unless the Legislature passes a law allowing the state to do so.
Similar to how CARES funds were spent, Gov. Kevin Stitt will have the final say on how the funds are spent. But this time lawmakers made sure they would be at least part of the discussion on how to use the federal funds.
The Legislature formed the 24-member Joint Committee on Pandemic Relief Funding to develop a list of recommendations. That committee will then forward its recommendations to a group of six legislators and five executive branch officials who evaluate and rank for Stitt to consider.
The 24-member legislative committee is made up of 12 Senate members and 12 House members. Four Democrats are on the committee while Republicans, who hold supermajorites in both chambers, make up the rest.
The two chambers’ respective budget chairmen, Rep. Kevin Wallace, R-Wellston and Sen. Roger Thompson, R-Okemah, are heading the committee.
There are also four subcommittee’s that will review and compile the proposals:
- Economic Development and Workforce (Co-Chairs: Sen. Adam Pugh, R-Edmond, and Rep. Rhonda Baker, R-Yukon)
- Health and Human Services (Co-Chairs: Sen. John Haste, R-Broken Arrow, and Rep. Kyle Hilbert, R-Depew)
- Government Transformation and Collaboration (Co-Chairs: Sen. Chuck Hall, R-Perry, and Rep. Jeff Boatman, R-Tulsa)
- Transportation, Infrastructure, and Rural Development (Co-Chairs: Sen. James Leewright, R-Bristow, and Rep. Logan Phillips, R-Mounds)
Will the Public Get a Say?
Houston said the committee plans to work with various stakeholders across the government, private business, non-profit organizations and others to come up with proposals and then vet and rank those proposals.
She said an online form will be made available in August for public input.
What Kind of Projects Might Be Considered?
Lawmakers didn’t get into discussing specific projects or even broad priorities during the meeting Wednesday.
Stitt, however, sent the panel a letter earlier in the week outlining his philosophy on where the money should go.
“As states recover from the devastating impacts of COVID-19, Oklahoma is uniquely positioned to not only return to normal, but to forge boldly ahead,” Stitt wrote. “We have this opportunity, in part, due to thoughtful decisions made during the pandemic by our state leaders who focused on keeping businesses open and Oklahomans employed.”
The governor went on to say that he wants to “make strategic, one-time investments that will benefit future generations while improving services today.”
He specifically said his priorities include:
- Developing, retaining, and attracting top talent to close critical skill gaps and stimulate innovation.
- Leveraging private and local co-investment opportunities through strategic government funding.
- Enabling high-growth business clusters through infrastructure investments.
- Creating a “best in class” customer experience with a human-centered, mobile-first interface for government services;
- Bridging the digital divide to ensure all Oklahomans access support and opportunities.
- Elevating comprehensive social service programs with a focus on vulnerable populations.
“With this opportunity comes a great responsibility,” he ended his letter. “The projects and programs we fund today will impact future generations across the state.”