Battle heats up over remaining federal rental assistance
In her office at a nonprofit in central Nebraska, Karen Rathke routinely encounters residents still stung by the pandemic and hoping to get help with their rent.
Rathke, president of the Heartland United Way, was hoping to tap into $120 million in federal Emergency Rental Assistance to help them. But that money, part of what’s known as ERA2, is at risk after Republican Gov. Pete Ricketts said he doesn’t want it.
Many other states have in recent months returned tens of millions of dollars in unused rental assistance because they have so few renters — but only Nebraska has flat-out refused the aid.
“I’m very concerned about not having anything,” Rathke said of the federal money, which can be allocated over the next three years for rent, preventing eviction and affordable housing activities.
“All these nonprofits, when people come to them asking for help, the bucket will be empty,” she said. “It is hard to tell people no, to tell people that we don’t have the funds to help them.”
The debate is playing out across the country as the Treasury Department begins reallocating some of the $46.5 billion in rental assistance from places slow to spend to others that are running out of funds.
States and localities have until September to spend their share of the first $25 billion allocated, ERA1, and until 2025 to spend the second $21.55 billion, ERA2. So far, Treasury says, $30 billion has been spent or allocated through February.
The department announced earlier this month that more than $1 billion of ERA1 funds would be moved, for a total of $2.3 billion reallocated this year. Large states like California, New York, New Jersey and Texas are getting hundreds of millions of dollars in additional money. Native American tribes, including the Oglala Sioux Lakota in South Dakota and Chippewa Cree in Montana, are receiving tens of millions of dollars in additional help.
Those losing money are almost all small Republican states with large rural populations and few renters. Many were slow to spend their share as required by program rules, so they either voluntarily returned money or had it taken. Some states, like South Dakota, Wyoming and New Hampshire, unsuccessfully pitched to use the money for other things, like affordable housing.
Treasury officials, housing advocates and many Republican governors argue that there is still plenty of money to help renters in these states and that the reallocation gets the money to where it’s most needed. Montana, for example, returned $54.6 million but still has $224.5 million. West Virginia returned more than $42.4 million but still has $224.7 million, according to Treasury.
“We are trying to reallocate the best we can,” said Gene Sperling, who is charged with overseeing implementation of President Biden’s $1.9-trillion coronavirus rescue package. “This is a balancing act, but one that is rooted in commitment to getting the most funds to the most people in need as possible.”
North Dakota returned $150 million of its $352 million, saying it couldn’t effectively spend all the money by the deadline. The state believes the remaining funds are sufficient to meet the needs of those who are eligible.
Some Democratic lawmakers disagree.
“Outrageous and unacceptable: turning back rental assistance funds when applications are piling up and people are being evicted,” tweeted state Rep. Karla Rose Hanson of Fargo.
South Dakota was forced to return more than $81 million — though more than $9 million went to Native American tribes in the state. Gov. Kristi Noem suggested that the money was not necessary, adding: “Our renters enjoy something even better than government handouts: a job.”
But Democratic state Sen. Reynold Nesiba said there was a lack of awareness about the rental assistance and criticized the state for not doing more to promote it. He pointed to a $5-million tourism advertising campaign that was paid for with coronavirus relief funds and questioned why that level of promotion wasn’t applied to pandemic relief programs.
Organizations that are helping to administer what rental assistance is still available expect there to be a continued need. South Dakota has long faced a run on affordable housing, a situation that has been exacerbated during the pandemic.
“Housing costs are just too high,” said Sandy Miller, who coordinates the rental assistance program for the Community Action organization in the western half of South Dakota. “It’s harder for them to get in a home; it’s harder for them to stay in their home.”
Several states argued that the reallocation addresses a flaw in the program, which created a funding formula based on population, not on the number of renters in a state.
“Congress ... did not take into consideration Wyoming’s small population, income levels, actual renters’ needs and that the majority of Wyoming households — 70% — are owner-occupied,” said Rachel Girt, the state’s rental assistance communication coordinator, after the state returned $164 million out of $352 million. Another $2.8 million was shifted to the Northern Arapaho Tribal Housing Program and Eastern Shoshone Housing Authority.
Josh Hanford, commissioner of the Vermont Department of Housing and Community Development, noted that the $352 million the state received far surpassed the $25 million given to Memphis, Tenn., which has a similar population.
“As long as we’re able to serve all our eligible households, hopefully folks will see that there is greater need in other parts of the country that have received a lot less assistance per household,” Hanford said when asked about Vermont returning $31 million.
In Nebraska, the loss of funds is projected to hit rural areas hardest.
The state program reallocated $85 million of its $158 million in ERA1 to the biggest cities, Omaha and Lincoln, and their respective counties. It still has nearly $30 million. Without the additional $120 million in ERA2 money, tenants in Omaha and Lincoln will still have help after September, but those in other counties will not, according to an analysis by the University of Nebraska-Lincoln’s Center on Children, Families and the Law.
Ricketts, the Nebraska governor, defended the decision not to take the additional money.
The state “has received and distributed an unprecedented amount of federal funding to help Nebraskans weather the storm over these past two years,” he wrote in an opinion column. “But at a certain point, we must acknowledge that the storm has passed and get back to the Nebraska Way. We must guard against becoming a welfare state where people are incentivized not to work and encouraged to rely on government handouts well after an emergency is over.”
But housing advocates say his decision will leave many vulnerable tenants without a lifeline. Tenants in rural areas often have fewer resources, including affordable housing, internet access and reliable transport.
Lawmakers passed a bill last month requiring the state to apply for the money. But Ricketts vetoed the bill, saying the state “must guard against big government socialism.” If lawmakers don’t override his veto, the money is likely to be reallocated to other states by the Treasury Department.
“We know from communities across Nebraska that the need is not only there but is fairly severe,” said Erin Feichtinger, director of policy and advocacy for the social service agency Together. “There is really no good reason to pass up these funds. It’s money that is allocated to Nebraskans. Nothing bad will happen if we accept this funding, but lots of bad things can if we don’t.”
Associated Press reporters Stephen Groves in Sioux Falls, S.D.; James MacPherson in Bismarck, N.D., and Lisa Rathke in Marshfield, Vt. contributed to this report.
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