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Water infrastructure, mental health services among $750 million in expenditures from dwindling federal aid

Sean Golonka
Sean Golonka
LegislatureState Government
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More than a year ago, Nevada received pandemic-era aid exceeding $2.7 billion from the federal American Rescue Plan (ARP), spurring massive, multi-million dollar investments into public health, education and affordable housing.

During Thursday’s meeting of the Interim Finance Committee, state lawmakers continued the trend, approving more than $750 million in ARP allocations that went toward boosting affordable housing, adding school-based mental health workers, opening a licensed forensic psychiatric hospital, modernizing government technology systems and creating a transplant institute, among other initiatives.

Now, state officials have allocated nearly all of Nevada’s ARP funds. 

Gov. Steve Sisolak heralded the allocations approved during Thursday’s meeting, including a $100 million initiative to fund water infrastructure and conservation projects.

"We promised Nevadans that we wouldn’t simply spend the federal dollars coming into the State – we would invest them to make lasting, generational change for our residents,” Sisolak said in a statement Thursday. 

In March 2021, President Joe Biden signed the $1.9 trillion ARP federal stimulus package into law, delivering nearly $7 billion to Nevada, including $2.7 billion in flexible aid for the state government. Of that flexible aid, just 3.5 percent ($97 million) remains unobligated.

During the 2021 legislative session, lawmakers obligated more than a quarter of those flexible funds. Among the allocations, $335 million went to repay loans from the federal government used to sustain unemployment benefits and $215 million was funneled toward education as part of a deal to create a new tax on the mining industry.

Since then, Sisolak’s administration has led efforts to disburse the remaining dollars. Throughout the summer of 2021, state officials met with residents statewide to gather ideas about how to spend the dollars. Increasing affordable housing availability and improving mental health services were at the top of the list.

In a rare, off-cycle State of the State address in February, Sisolak announced a suite of ARP spending priorities highlighted by a $500 million housing initiative, dubbed “Home Means Nevada.” The program will help fund affordable housing projects, including home upgrades and new developments.

That program received another financial boost during Thursday’s meeting. Lawmakers on the Interim Finance Committee — a select group of legislators that oversees the inner workings of the state budget outside of normal legislative sessions — approved $250 million for the program, funding the initiative in full.

Though roughly just one-third of lawmakers serve on the Interim Finance Committee, the group has served a key role in approving massive allocations of ARP funds outside of the normal odd-year legislative session.

On Thursday, those allocations also included more than $160 million for a litany of technology upgrades at government agencies, including $42.7 million to modernize the state’s Unified Tax System. The committee members also approved a $100 million allocation for the Department of Conservation and Natural Resources, which will help support local water conservation and infrastructure projects.

Assemblywoman Maggie Carlton (D-Las Vegas) described the ARP funds as an “unprecedented amount of money that's going to make huge structural change in the state,” and pointed to the urgency of allocating dollars ahead of the 2023 legislative session.

“We can't wait till next June to deal with some of these needs. They need to be done now,” she said. “It takes a while to get things done, and the last thing we want is children and families suffering because we want to wait and have a political debate during the legislative session.”

Affordable housing

After receiving more than 100 applications for affordable housing projects, Steve Aichroth, the administrator of the Nevada Housing Division, said Thursday that he expects the division to notify recipients of the first preliminary awards from the $500 million program in the final week of October.

Aichroth provided lawmakers with a rough breakdown of the initiative's four main components — $30 million for “homeownership and rehabilitation,” $40 million for “land acquisition,” $130 million for “preservation” of affordable housing and $300 million for “new development.”

But the requests for those four types of projects, totaling more than $1.25 billion, have far exceeded the available dollars, meaning many applicants will likely not be awarded funding.

Aichroth pointed to an extensive process of assessing and scoring those applications, and said funding for some projects may be buffeted or affected by additional affordable housing project funds from Clark County, which allocated $120 million for new development in the Las Vegas Valley.

Water infrastructure

Under a model similar to the Home Means Nevada initiative, the Department of Conservation and Natural Resources (DCNR) will be granting awards for water projects under the new Nevada Water Conservation and Infrastructure Initiative.

Nelson Araujo, who serves as infrastructure advisor in the governor’s office, said the $100 million in ARP funding for the initiative will be used to “support investments to reduce water demand by residential, commercial and agricultural sectors, while supporting investments to repair and replace aging, leaking infrastructure and simultaneously investing in our workforce.”

Using that $100 million, DCNR will award grants for infrastructure projects with a preference to those that aid in conservation or drought mitigation. Like the housing initiative, DCNR will solicit and evaluate applications from other agencies before awarding funds for those projects.

Jim Lawrence, acting director of DCNR, highlighted the department’s urgency in planning to distribute the funds, describing the initiative as a “historic opportunity” to improve the state’s water infrastructure. 

“Many of our basins are over-appropriated or being over-pumped,” he said. “Regardless of the … annual precipitation, water conservation is still going to be key and important to the state of Nevada moving forward.”

During public comment, Andy Belanger, director of public services for the Southern Nevada Water Authority, pointed to several potential uses for the funds to reduce consumptive water use, including helping businesses convert to evaporative cooling technology and addressing septic system conversions.

“We're facing, still, a 24-year drought and aridification on the Colorado River. We've done a lot of things in our community to help the community weather changing circumstances on the river, and we need this funding to do more,” Belanger said.

Lawmakers also approved a pair of smaller allocations similarly aimed at helping the management of water resources in Nevada. DCNR’s Division of Water Resources received $6.4 million for updating the state’s water budgets to determine how much water can be drawn from different sources without harming the sustainability of the water supply. The Governor’s Office of Economic Development received $1.5 million to create a “water-wise” economic development model, as Nevada grows its economy while grappling with a limited water supply.

Health services

The committee continued using ARP funds to expand the state’s mental and public health services by approving more than $110 million for a wide swath of health care programs on Thursday.

That included $55 million to convert a standalone building at the Las Vegas City Jail into a licensed forensic psychiatric hospital. The facility would be used to house and treat individuals with criminal charges, who are a danger to themselves or others, and who may be incompetent to stand trial or who are found incompetent to stand trial.

The state’s two forensic hospitals are at maximum capacity, leaving a need for the state to house individuals found incompetent for longer time periods.

“This is a problem that we should have solved a long time ago, and we've never had the financial ability to solve it,” Bailey Bortolin, the governor’s deputy chief of staff, said during the meeting. “We have worked really closely with our court systems because this impacts them every day and there's a real element in our conversation that this is something that the state has a legal obligation to provide.”

Assemblyman Steve Yeager (D-Las Vegas) said the new facility was needed to limit the state’s “legal exposure” for waiting periods for placements into the state’s forensic hospitals.

“The state has already been sanctioned by a judge for these wait lists and not being able to get people in,” he said.

During public comment, Nevada medical community members praised another item to help establish the Nevada Transplant Institute — a statewide transplantation center that will expand options in Nevada beyond the kidney transplant services provided solely by University Medical Center (UMC).

“The Nevada Transplant Institute has the potential to transform our entire care system,” UMC Chief Executive Mason Van Houweling said. “Not only will it benefit Nevadans who need organs, but it will also attract more specialized health care professionals, it will foster medical research and help grow Nevada's economic development efforts in health care.”

The approved item included $7 million to help build the institute, $1 million for a liver transplant center in Southern Nevada, $3 million to start a kidney transplant center in Northern Nevada and $4 million for 10-plus liver transplants.

Without such infrastructure in place to allow Nevadans to receive transplants, patients with critical needs have been forced to leave the state for their medical care.

“I have lived in Las Vegas my entire life until the day when I made the decision to move myself and my young children out of state, so that when the time came, I'd be near UCLA with a lifelong knowledge that a lung transplant was in my future,” said Lauren Molasky Fierst, a double lung transplant recipient and board member at the Nevada Donor Network. “The idea that such a life-changing medical need was not possible near my home and family had steep disadvantages and heartache.”

Assemblywoman Robin Titus (R-Wellington) expressed concerns about the allocation not being enough for the program, highlighting issues with many transplant patients leaving Nevada to receive organs they need.

“Why were you not awarded more for this program when we have $97 million left in this money?” Titus asked. “I want to see this program built … but my concern is the $15 million is not enough.” 

Marla McDade Williams, deputy director of programs for the Department of Health and Human Services, noted that the Nevada Donor Network has plans to secure additional private funding to establish the institute. 

Support for children

Earlier this month, the U.S. Department of Justice published a report detailing Nevada’s failure to provide adequate “community-based services” (such as therapy, crisis support, and behavioral support programs) for children with behavioral health problems. Instead, the state has over-relied on institutional settings, such as hospitals or residential treatment facilities, for treating such children.

On Thursday, lawmakers approved $2.6 million to address that shortfall. Those funds will go toward “community-based, youth-focused behavioral health care services” with a focus on prevention and early intervention services, such as group therapy sessions.

Members of the committee also approved several other allocations for improving youth health services, including $2.7 million for dental health programs for children and $4 million for school-based mental health providers.

Christy McGill, director of the Department of Education’s Office for a Safe & Respectful Learning Environment, addressed the need to combat recent issues with violent student behavior that have continued into this school year.

“We're seeing high levels of student-to-student violence, bullying and also suicide ideation. So these funds are still really important,” she said. “We do still have some schools without a school counselor or school social worker, and we know that's a big gap. So we're really working on that as well.”

Support for seniors

Lawmakers also moved to increase support for seniors, investing millions of dollars into programs meant to address workforce shortages and expand the state’s number of caregivers.

That included $5 million to develop a “Caregiver Training Institute program,” which aims to increase the personal care workforce who can assist older adults through in-home and community care. The program is expected to train 250 people.

“Nevada is currently suffering a critical shortage of direct workforce caregivers throughout our state, especially in rural Nevada,” Connie McMullen, representing the Personal Care Association of Nevada, said during public comment. “This is a vital service that allows people to live independently and avoid more costly premature institutionalization.”

Another $15 million will be used to fund payments for Nevada's assisted living and nursing facilities providers and workforce. Those payments will address rising costs of care in nursing and assisted living facilities, as Medicaid reimbursement rates have not increased at the same rate.

The state’s Aging and Disability Services Division also received several smaller awards for programs to assist older adults, including $2.9 million for meal delivery to elderly, homebound adults.

Modernizing government technology

A significant portion of the funds approved Thursday are set to help state agencies with significant technology modernization and system upgrades. That includes major allocations of:

  • $48.5 million for the Division of Welfare and Supportive Services to modernize its data systems
  • $42.7 million for the Department of Taxation to replace the Unified Tax System 
  • $20.9 million to continue funding the modernization of the Nevada Criminal Justice Information System
  • $18.4 million for the Division of Child and Family Services to replace UNITY, the state’s federally required electronic child welfare case management tool

Such projects have been a common recipient of ARP funds. During the 2021 legislative session, lawmakers allocated $54 million of the funds for modernizing the Department of Employment, Training and Rehabilitation’s outdated unemployment insurance system.

Committee Chair Sen. Mo Denis (D-Las Vegas) noted those programs were not a one-and-done expense.

“One thing that we know for sure about any of the IT systems is modernization is something that just happens constantly because by the time you get it done, you’re going to be already working on modernizing and going to the next level,” he said.

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