On March 11, President Joe Biden signed the American Rescue Plan Act (ARPA), the third federal bill to include substantial grants, aids, direct payments, and other relief measures related to COVID-19. Totaling $1.9 trillion, the ARPA follows the CARES Act ($2.2 trillion, passed in March 2020) and the CRSSA ($900 billion, passed in December 2020). We covered some aspects of previous federal legislation here and here.
The ARPA provided direct aids to state and local governments, supplemented existing aid programs related to COVID-19 and economic recovery, and extended or altered federal policies related to unemployment insurance and other issues. Under the ARPA, Wisconsin was allocated about $3.2 billion for the state’s government, $2.5 billion for local units of government, $1.5 billion for public K-12 schools, $565 million for colleges and universities, and $189 million for infrastructure projects.
In March, the Wisconsin Legislative Fiscal Bureau (LFB) published a memo describing major provisions of the ARPA and the actual or estimated funding allocated to entities in Wisconsin. Another LFB memo estimated that 2.52 million Wisconsin resident taxpayers have now received stimulus payments totaling nearing $13.6 billion from the CARES Act, CRRSA, and ARPA.
An April report from the Wisconsin Policy Forum estimated that state and local governments in Wisconsin will have received at least, and likely more than, $19.9 billion in federal aid from federal spending bills related to COVID-19. That’s more than the state collects in general fund taxes in a typical year, and twice as much as the federal funds Wisconsin received following the Great Recession.
How the State of Wisconsin is Allocating Its ARPA Funds
As with previous federal spending bills related to COVID-19, Governor Tony Evers has broad discretion and sole authority to spend the $3.2 billion that the ARPA allocated directly to Wisconsin’s state government. On March 29, Gov. Evers announced that he planned to spend $2.5 billion of the state’s $3.2 general allocation on economic support programs for families, workers, business owners and communities, including $600 million on programs to support businesses and $50 million to support the tourism industry.
At that time, the governor also announced plans to allocate $200 million for infrastructure programs and $500 million to fund the state’s COVID-19 response efforts. He also vetoed Senate Bill 183 (read more here and here), which would have required the governor to submit his plans for federal aid related to COVID-19 to the Legislature’s Joint Committee on Finance for passive review. Subsequently, the governor has provided additional details on how he will spend some of the money in press releases here and here.
Wisconsin may receive additional ARPA funds through other federal programs. For example, Gov. Evers and the Department of Health Services (DHS) announced on April 20 that Wisconsin had secured $175 million from the federal government from a program for COVID-19 testing in schools.
Republicans Pass Bills to Spend ARPA Funds; Governor Vetoes
Following the passage of the ARPA, Republican leaders in the Legislature argued that Gov. Evers should primarily spend the state’s $3.2 billion share on one-time priorities, including items that the governor proposed in his 2021-23 budget, such as expanding broadband and paying for a new statewide public safety communications system. On April 13, the Assembly, voting along party lines, passed a package of 11 bills to allocate the ARPA funds for various purposes:
- $1.1 billion to issue 10 percent property tax rebates
- $500 million to expand broadband internet access
- $500 million to pay down state debt
- $308 million to rebuild highways and bridges
- $53 million to modernize the state’s emergency communication system
- Funding to maintain the Unemployment Trust Fund at a high enough level to avoid higher unemployment insurances taxes in 2022
The Senate passed the package of bills the following day, mostly along party lines. During the same floor sessions, the Assembly and Senate also passed resolutions asking the attorney general to join the state as a plaintiff in a federal lawsuit. The case, West Virginia v. US Department of the Treasury, is challenging a provision of the ARPA that prohibits states from using ARPA funds to directly or indirectly reduce taxes. According to a series of LFB memos, some of the Republican proposals for spending the ARPA funds may have run afoul of this provision.
On Thursday, April 22, Gov. Evers announced that he had vetoed all 11 bills, and also announced that he would spend $420 million from the state’s ARPA funds to create the Wisconsin Tomorrow Small Business Recovery Grant Program. The program will provide grants of $5,000 to businesses with gross revenues between $10,000 and $7 million.