Gov. John Bel Edwards on Thursday made public his plan for spending nearly $1.6 billion in federal coronavirus aid in a proposal that pumps hundreds of millions of dollars into widening interstates, propping up the tourism industry, modernizing municipal sewer and water systems and shoring up the fund that pays out unemployment benefits.
It’s the opening bid in what will soon become a fierce debate between Edwards, a Democrat, and the GOP-dominated State Legislature on how to divvy up the first tranche of a $3.2 billion windfall made available by the American Rescue Plan passed by Congressional Democrats in March.
On the heels of a global recession that devastated Louisiana’s economy, the federal funds offer what state officials say is “once in a lifetime” opportunity to make lasting investments in the state’s future. Behind closed doors, the jockeying has already begun on where to direct the cash.
Top priority for both Edwards and legislative leaders is avoiding a tax increase on employers that’s automatically triggered by the depletion of the state’s Unemployment Insurance Trust Fund. Prior to the pandemic, the fund had more than $1 billion in reserves but it bottomed out by October as jobless claims soared.
Edwards wants to send $400 million to replenish the fund, and another $230 million to pay off federal loans the Workforce Commission began taking out once its resources dried up. That on its own won’t be enough to avoid the tax hikes, though lawmakers are expected to suspend the automatic triggers for another year to give the fund time to replenish.
“I don’t believe it’s ever a good thing to have a tax increase when you’re trying to grow your economy coming out of a pandemic,” Edwards said.
The influential chairman of the House Appropriations Committee, Rep. Jerome “Zee” Zeringue, R-Houma, said the broad strokes of Edwards’ spending proposal aligns with the priorities of state lawmakers, but was skeptical of the governor’s ask for $145 million for the tourism industry.
Edwards said Thursday he’d like to see $125 million set aside to make-up for lost revenues weathered by the state’s convention centers and tourism venues. He recommended another $20 million go to Lt. Gov. Billy Nungesser to aggressively market Louisiana as a tourist destination.
“This is incredibly important to jumpstarting our economy and getting more customers into our businesses,” Edwards said, noting that the state lost out on an estimated $5 billion in tourism spending during the pandemic.
Zeringue didn’t discount the importance of tourism to Louisiana’s recovery, but suggested local governments – who are set to receive $1.8 billion of federal dollars of their own – chip in on the effort. His counterpart in upper chamber, Sen. Bodi White, a Republican from Central who heads the Senate Finance Committee, said it’s unlikely they’ll greenlight that much tourism funding.
Edwards recommended $400 million go towards making a dent in the state’s $14 billion backlog of road and bridge projects. Investing in infrastructure is also a top priority for legislative leaders, but as is always the case with massive spending packages, “the devil is in the details,” Zeringue said.
Shawn Wilson, the Secretary of the Department of Transportation and Development, said his agency has worked up a wish list of projects for the $400 million, including $140 million to widen Interstate 10 in Ascension Parish, Interstate 12 in St. Tammany Parish, and Interstate 20 in northeast Louisiana.
Another $20 million would be used to take advantage of rail and transit opportunities offered by the Biden administration, including funding for a recently proposed Amtrak line between Baton Rouge and New Orleans.
The list also includes $100 million for various congestion and preservation projects and $75 million to finish upgrading La. Hwy. 3241 — a project in St. Tammany Parish nearly three decades in the making, first promised to voters in 1989 when they last agreed to up the gasoline tax.
The American Rescue Plan – or “ARP,” as Edwards calls it – puts a special emphasis on upgrading sewer and water systems, a focus both the governor and state lawmakers say they wholeheartedly agree with. More than half of the state’s drinking water systems are older than 50 years old, and 20% are under formal enforcement for water quality violations and maintenance issues, Edwards said.
Edwards wants $300 million to go into a grant program aimed at modernizing and consolidating those systems, with the requirement that local governments use a portion of their federal funding to match state investments.
“This is a once-in-a-hundred year opportunity to make significant advances in water and sewer, which is a tremendous problem all across the state in Louisiana,” Edwards said.
Edwards said there is no better return on investment the state makes than what is put into its ports, proposing that the final $50 million go toward replacing revenues lost by inland and deep-water ports during the pandemic. Zeringue said this funding was a top priority for the state’s Congressional delegation.
“Many of our ports lost revenue due to the loss of business, companies collapsing, and extraordinary costs to ensure the safety of the essential workers that never stopped moving our country’s supply chain,” said Jennifer Marusak, the executive director of the Port Association of Louisiana.
The Port of New Orleans lost out on roughly $28.7 million in revenues since the pandemic began, with more than $20 million of that shortfall attributed to the shuttering of the cruise industry, according to estimates provided by Marusak.
Edwards said, as always, there’s room to compromise on how to spend these dollars, but warned against splitting it up on pork barrel projects that won’t marshal the full magnitude of the funds.
“One of the things that I think we should all try to guard against is having everybody’s pet project, pet initiative, funded from these dollars because then you’re not going to have the transformative impact anywhere,” Edwards said.
There are already several stand-alone projects that rely on American Rescue Plan dollars working their way through the Legislature. Senator Brett Allain, a Republican from Franklin, is sponsoring a proposal that direct $30 million into the state’s Oilfield Site Restoration Fund. Another measure, from Senator Katrina Jackson, a Democrat from Monroe, asks for $200 million to support agricultural workers.
Edwards said that they’re holding out on putting the first batch of funds into broadband given that Congress is mulling an infrastructure package that’s likely to include significant support for efforts to expand high-speed internet.
The final rules on how the relief dollars can be spent aren’t expected until May 10, Edwards said. The remaining half of the $3.2 billion will be distributed over the next two years, and must be spent by the end of 2024.
“Even though $3.2 billion sounds like, and in fact, is a lot of money, if we want to have transformative, positive change in our state, you can’t do everything, and you can’t cut this pie into 100 pieces and think you’re going to make a significant improvement anywhere,” Edwards said.
Will Sentell of the Capitol news bureau contributed to this report.