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Gov. Ivey signs spending plan for $1B in pandemic funds

Alabama Gov. Kay Ivey delivers her State of the State address, Tuesday, March 7, 2023, in Montgomery, Ala. (AP Photo/Julie Bennett)
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FR170675 AP
Alabama Gov. Kay Ivey delivers her State of the State address, Tuesday, March 7, 2023, in Montgomery, Ala. (AP Photo/Julie Bennett)

Alabama lawmakers have given final approval to a spending plan to use $1 billion in federal coronavirus funds largely on a mix of water and sewer infrastructure, broadband expansion and reimbursements to health care providers hit financially by the pandemic.

Alabama Gov. Kay Ivey, who had called lawmakers into special session to isolate the spending bill from other matters, signed the legislation shortly after it was approved last night.

“Alabama can now look to a future of greater promise thanks to the steps we have taken this week to invest these funds wisely," Ivey said in a statement.

The $1.06 billion comes from the American Rescue Plan — the sweeping relief plan approved by Congress and signed by President Joe Biden two years ago to help the country climb out of the coronavirus crisis. Alabama lawmakers, as they did with the first round of relief funds, and as some other states have done, opted to use a significant portion of the money for allowed infrastructure investments instead of expenses directly related to the pandemic.

“I think broadband in the state of Alabama now is what electricity was in the 1940s. It's hard to recruit and get businesses into Alabama without it, and we've got some deserts that we need to try to get broadband into," House Speaker Nathaniel Ledbetter said.

Republican Sen. Greg Albritton, who handled the bill in the Senate, said there were many requests on how to use the money but that lawmakers tried to focus the largest amounts on items “that would make the greatest difference.”

“We’re trying our best to invest in Alabama’s future, and I think we’ve done a fairly good job,” Albritton said after the vote.

Senators on Thursday voted 29-3 to approve the House-passed bill after adding language to allow local governments to use a portion of the money for storm water projects to combat urban flooding. The House agreed to the Senate changes

The approved spending plan will allocate:

— $339 million for health care costs, including $100 million to reimburse hospitals for pandemic-related expenses, $100 million to reimburse nursing homes and $25 million to support mental health programs and services.

— $400 million for water and sewer infrastructure projects, including $195 million for high-need projects, $200 million for matching funds for public water and sewer systems, and $5 million for septic systems in the Black Belt region.

— $260 million for improvement and expansion of broadband network access.

— $55 million for projects that address economic impacts of the pandemic. The legislation says the Department of Finance may distribute the money for a wide range of needs such as food banks, long-term housing and summer learning programs for children.

The spending plan provides one-third of the $300 million Alabama hospitals had sought to recover from the pandemic. Since 2011, 14 hospitals have closed in the state, including eight in rural communities, according to the Alabama Hospital Association.

While the legislation was approved with widespread support, minor disagreements erupted over how the water and sewer funds would be divided between rural and urban areas.

The Senate added language mandating that $100 million in water and sewer funds go to projects where local governments provide matching funds of 35%. “It stretches the money out farther. I think that is good for everybody,” Republican Sen. Chris Elliott, who proposed the requirement, said.

Ledbetter said some members wanted the matching fund requirement, “to make sure some of the money went to metropolitan areas.”

Democratic Rep. Thomas Jackson said poor rural communities have the greatest need but don’t have the resources to come up with matching funds.

Republican Rep. Rex Reynolds, the sponsor of the legislation, said that $195 million of the water and sewer funds are reserved for high-need projects and don't require matching funds.

Ivey also signed separate legislation to take $60 million from a budget surplus to finish repaying money borrowed a decade ago during a budget shortfall. Alabama voters in 2012 approved borrowing $437 million from the Trust Fund — a state savings account fueled by offshore drilling royalties — to avoid cuts to state services.

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