Governor plans to cut $89 million from federal rental assistance funds

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Gov. Asa Hutchinson said Friday, April 22, he would seek to cut about $89 million from federal housing assistance funds.

In other matters, he said the Department of Finance and Administration has officially determined that the state will have a $1 billion surplus by June 30. That’s up from the previous estimate of $600 million.

During one of his periodic “Pen and Pad” press conferences at the State Capitol, the Governor presented a letter he is sending to Treasury Secretary Janet Yellen stating that Arkansas will not accept the all of its $146 million in the second phase of Emergency Rental Assistance Funds (ERA2) contained in the American Rescue Plan Act of 2021.

Instead, Arkansas is asking for 39% of that amount, or about $57 million.

The letter sought confirmation that the state can use these funds to support programs that provide housing assistance combined with housing stability efforts, including job training and substance abuse remediation.

“It is my intent that Arkansas withdraw no more than 39% of available funding and direct it to these programs,” the letter states. “If you can’t confirm that we can only implement these programs without offering housing assistance separate and apart from Housing Stability Services, we will not take any funds.”

The letter says Arkansas has closed its portal for applying for emergency rental assistance and has no plans to reopen it. The governor said at the press conference that Arkansas already has $20 million in unspent housing stability funds. Funds from the direct rental assistance program have been spent and the $20 million cannot be rented without Treasury Department approval, Deputy Director of the Department of Human Services Keesa Smith said.

The letter says the state is running a pilot program using unspent ERA1 funds with nonprofit groups Our House and Restore Hope. He said both groups have a proven track record of helping families who are homeless or at risk of homelessness. Additional funds from ERA2 would continue this pilot program and expand it to other nonprofit organizations.

The governor said at the press conference that the money he is withholding would create a new ongoing program whose funds would be distributed only to tenants, not landlords.

“Our economy has come back, there are lots of jobs there and we have housing assistance programs in place that were pre-pandemic,” he said.

He said he would speak later today with Gene Sperling, the White House’s US bailout coordinator and senior adviser to the president, in hopes of securing greater flexibility in the use of funds. He said Nebraska is the only other state that doesn’t accept all the money it has.

“This money, I wish it could go back to the treasury, but in fact it will be recovered and sent elsewhere where there is greater need,” he said. “And to me, that’s responsible management of taxpayers’ money.

Arkansas Advocates for Children and Families executive director Rich Huddleston criticized Hutchinson’s actions in a statement released afterward.

“Tens of thousands of Arkansas households are either behind on rent or are not confident in their ability to make next month’s payment,” he said. “Thousands of people who asked for help were refused. Instead of refusing to put money in the pockets of Arkansan families in need, we should make it easier for families to stay in their homes and make ends meet.

Elsewhere in the press conference, Hutchinson said the $1 billion surplus could be used to expand broadband rollouts across the state, for schools facing inflation in school construction costs. or for tax relief.

He said no decision has been made and he will discuss the matter with lawmakers. At the earliest, an extraordinary session could take place in mid to late summer, but he would prefer there not to be. In addition to the surplus, calling a special session would depend on how the U.S. Supreme Court rules in a Mississippi abortion case that could alter or overturn the Roe vs. Wade court ruling that legalized abortion nationwide, he said.

Hutchinson also referenced a report released this week by the Broadband Development Group, a consultant, which showed the state would need up to $550 million to provide broadband internet service to reach 110. 000 homes currently not served by other federal programs.

Another 100,000 households do not have broadband service but are on track to be covered by other federal programs. Under federal rules, the cost of covering these households cannot be supplemented by a state program funded by federal dollars.

Hutchinson said he will be visiting various states over the next three to four months, including New Hampshire next week. He said each stop will have an economic benefit, but, because he will be engaged in other activities, the trips will be funded by his political action committee, America Strong and Free.

The governor has said in the past that he is considering running for president. New Hampshire is the first state to hold party primaries in every cycle.

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