Governor signals coming COVID-19 spending for health, colleges

Gov. Asa Hutchinson said the Arkansas Department of Health will need $71 million over the next 12 months to respond to the COVID-19 pandemic, while $15 million will be needed to establish testing sites for higher education institutions.

Hutchinson made those comments Wednesday (May 13) during a meeting of the 15-member CARES Act Steering Committee. The committee is tasked with helping determine how the state will spend $1.25 billion provided through the $2 trillion Coronavirus Aid, Relief, and Economic Security Act signed into law by President Trump March 27.

Hutchinson spoke from the Governor’s Conference Room at the Arkansas Capitol, while most members of the committee were participating remotely.

Hutchinson said the upcoming round of spending decisions, for consideration during the committee’s meeting next week, would fund the infrastructure needed for testing, contact tracing and a future vaccine so the state can be prepared for health care expenses and for a future resurgence of the virus.

“We hope that it dies out, or reduces, I should say, in terms of the summer, but everybody from nationally to here in Arkansas understands there’s a risk of it trying to come back and peak again next year, so we want to be prepared for that and build the infrastructure,” he said.

Providing what he called “ballpark numbers” that have not been fully vetted, he said the Health Department will need $30 million for administration of a future vaccine; $20 million for contact tracing expenses including personnel; $9 million for lab testing and supplies; $4 million for information technology; $2 million for personal protective equipment; $1 million for a quarantine facility as needed; and other amounts for other expenses.

The money must be spent by Dec. 30 on COVID-19-related expenses, before a vaccine likely will be developed, but Hutchinson said money can be spent to create the infrastructure and hire personnel needed to prepare for next year.

Another $15 million will be needed for five testing sites that will serve all of the state’s four-year and two-year higher education institutions. The sites would allow for rapid testing and contact tracing and would be operated in conjunction with the Department of Health and the University of Arkansas for Medical Sciences. He said University of Arkansas Chancellor Dr. Donald Bobbitt and other higher education representatives will be available to talk to the committee during its next weekly meeting May 20.

Hutchinson said the committee will be asked to consider those spending requests when it meets next week. It also will be asked to consider an unknown amount that will be needed to fund a partnership between the Department of Health and UAMS to conduct 3,000 antibody tests per day to determine which Arkansans have already had the disease.

Arkansas Secretary of Health Dr. Nate Smith said the state needs both of those testing programs. Higher education institutions need to respond rapidly to the disease in the fall. The antibody test will ensure the state is not dependent on outside resources for testing and to identify how the disease has spread throughout the state.

Hutchinson said two other spending requests will be presented to the committee at a later date.

One for $11.5 million would help Arkansas PBS expand its reach throughout all corners of the state. The public television and information provider has provided content for the state’s K-12 public schools during the school shutdown ordered by Hutchinson, but some parts of the state aren’t covered. He said that amount had not been vetted, and he had not yet agreed to support it.

The other request would compensate emergency medical service providers $9.1 million for work provided during the pandemic.

Hutchinson said a minimum of 25% of the remaining funds should be dedicated to economic assistance. The committee’s chairperson, Arkansas Medicaid Inspector General Elizabeth Smith, said 43%, or $537 million, of the $1.25 billion has been allocated, including that 25% along with other economic development funds being awarded through the state’s Ready for Business grant program. Hutchinson said money will also be needed for broadband expansion.

Secretary of Commerce Mike Preston told the committee that $147.7 million in Ready for Business grant requests were approved by the Arkansas Legislative Council to fund 12,233 applications from businesses employing 250,000 people, or roughly 25% of the Arkansas workforce. He said that 94% of the applications came from businesses with 50 or fewer employees.

However, the state will not be able to award all of the $147.7 million because the Council had stipulated that 75% would go to businesses of that size. Instead, $124.6 million will be awarded. All qualifying businesses with 50 or fewer employees will receive funding, while those with 50-100 employees will receive 70% of their requests and larger ones will receive half of what they requested.

The Council is a group of legislators who function as a legislative body between full legislative sessions.

About 20 Department of Commerce employees are reviewing applications in search of disqualifying factors such as tax delinquency, with the first awards expected as early as next week, Preston said.

Preston told the committee that 46% of the companies awarded, representing 35% of the funding, will go to woman-owned and minority-owned businesses. Two percent of the recipients are owned by disabled veterans and will receive $1.3 million.

Preston said recipients will receive half their grants upfront through a direct deposit, with the other half awarded after recipients provide receipts with their plans. The money can be taken back if businesses don’t meet certain requirements.

The meeting began with a presentation by U.S. Rep. French Hill, R-Little Rock, who said Congress has appropriated $3 trillion across four bills in eight weeks to respond to the pandemic, while the Federal Reserve has injected $4.5 trillion by leveraging $450 billion in appropriated funds to the U.S. Treasury. Hill also commented on the support businesses in Arkansas have received so far.

“As of May 8, over 38,000 small businesses here in our state have been approved for $3.3 billion in paycheck protection loans. Further, the SBA has directly injected more than $100 million in emergency loans and grants to Arkansas businesses,” he said.

Hill said Congress has supported health care providers and hospitals, including rural hospitals, and Arkansas is set to receive $586 million. He told committee members that cities and counties have faced significant expenses related to the pandemic.

“While the CARES Act specifically prohibits the states from using CARES Act funds to replace lost sales or income tax revenue, clearly there are many COVID-related gaps where one could think creatively with appropriate legal advice,” Hill said with a smile.

Editor’s note: KATV senior political reporter Marine Glisovic contributed to this report.