Saga continues: Will Nebraska’s new governor accept millions in federal rent aid?

LINCOLN — Many Nebraskans are still seething over then-Gov. Pete Ricketts’ rejection last year of $120 million in emergency rental aid the federal government had set aside for the state’s 91 smaller and rural counties.

Now critics are taking another stab at tapping what’s left of that money: $48 million. 

Legislative Bill 715, introduced by State Sen. John Cavanaugh of Omaha, would require Ricketts’ successor, Gov. Jim Pillen, to seek the release of the funds waiting in the U.S. Treasury.

Cavanaugh told a legislative committee Friday that he was  “cautiously optimistic,” given ongoing talks with Pillen and his staff, that the new governor was going to act on his own accord. But the bill is a backup.

“There really is not a downside to accepting ERA II funds,” Erin Feichtinger, policy director of the Women’s Fund of Omaha, told the Government, Military and Veterans Affairs Committee. Feichtinger has been advocating for the aid and working with various state and federal officials on the process since last year’s legislative session.

She noted that Nebraska has learned lessons from the first round of Emergency Rental Assistance and expects that a second disbursement would be designed better and delivered more efficiently.

Can be used to build housing

To qualify, applicants would still need to meet income requirements, not to exceed 80% of median area household income. Both rental and utility aid would be available, but supporters envision the second funding tranche to be used also for supportive services.

A sizable chunk — $12 million of the $48 million — is expected to go toward the much-cited demand for affordable housing development.

Nearly $5 million could be used for “housing stabilization services” such as outreach and case management services.

About $7 million would be used for administration costs.

Given the flexibility of federal guidelines, Feichtinger and others said, Nebraska could add requirements such as a certain amount of work hours and limitations on the months of aid provided. 

“We can address the concern that this is a handout that keeps people out of the workforce,” she said.

Last year, Ricketts stood firm on his refusal to accept the second round of funds, saying that the pandemic storm was over and that Nebraska should guard against becoming a “welfare state.”

When a state senator stepped up to seek intervention from the full Legislature — and to force Ricketts’ hand in accepting the funds — lawmakers fell one vote short of overriding a gubernatorial veto.

Much of $120 million lost to other places

Ricketts was not swayed, either, by an outreach from Deputy U.S. Treasury Secretary Adewale Adeyemo, who sent a letter expressing disappointment and urging the governor to draw down on the account Congress had set aside for Nebraska on behalf of “tens of thousands” of households in need of assistance.

The passage of deadlines on the original $120 million amount means that much of the money that was to go to Nebraska’s 91 counties outside of Douglas and Lancaster has been reallocated to other places.

Douglas and Lancaster Counties and the Cities of Omaha and Lincoln are large enough to obtain a second round of Emergency Rental Assistance  — and they did.

Cavanaugh said Nebraska’s other counties are in the only state that did not seek the second round of emergency rental and utility aid, available through the American Rescue Plan Act of 2021.

Salvageable now is the $48 million, and Cavanaugh said that would be available to Nebraska for those smaller, rural counties until September 2025.

But advocates say the need is now. LB 715, co-sponsored by State Sen. Ray Aguilar of Grand Island, seeks to ensure the state’s participation.

‘Need is still there’

Leaders of several nonprofit organizations appeared before the legislative committee Friday to attest to growing demands in their communities.

“It’s absolutely necessary to provide people in need of rental and utility assistance a short term fix to stabilize housing,” said Karen Rathke, president of Heartland United Way of Grand Island.

She called the aid a “lifeline” for many families in rural areas that are still struggling from the pandemic and facing mounting challenges due to inflation.

Meanwhile, she said, demands on her agency are growing. “The need is still there — just the funds are not.”

In 2020, Rathke said, the Grand Island agency provided $429,000 in assistance to 664 households. In 2022, the amount was down to $167,000 for 288 households. 

Among those voicing support for the bill were housing officials including Amber Marker of the Nebraska Housing Developers Association and Carolyn Pospisil of the Housing Foundation for Sarpy County.

“The need for more housing of all types in our state has been emphasized over and over the past two years,” said Marker, noting that a portion of the funds could be used to create housing.  That option kicks in after three-fourths of the initial funding is spent.

Said Pospisil: “It is irrational to turn these funds down.” 

Problems in first round

In addition to about 10 proponents who spoke, 37 people wrote in favor of the bill. Eight people objected in writing, and one opponent spoke in person.

That was Jessica Shelburn of Americans for Prosperity, who noted that the state had problems distributing the first round of rental assistance to the 91 counties.

Part of Ricketts’ resistance to additional funding, he said then, was that Nebraska’s rural areas did not use enough of the first round of aid. Several nonprofit agencies said the need was there, but described the earlier online application program as cumbersome and one that bogged down the process.

Shelburn asked what would happen after the federal government aid dries up.

“Is the state going to need to come in and come up with this additional funding to help in this situation? Or do we need to look at other options that have more longevity?”

State Sen. Jane Raybould of Lincoln, a committee member, said the funds would be distributed to other states if Nebraska chose not to accept them.

“That to me is unconscionable,” she said. “Those are our federal dollars allocated for our state. We have ways we can use them.… The need is huge.”