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Battle escalates over remaining federal rental aid

In her office at a central Nebraska nonprofit, Karen Rathke regularly meets with residents still bitten by the pandemic and hoping to get help with their rent.

Rathke, president of Heartland United Way, hoped to tap into an additional $120 million in federal emergency rental assistance to help them. But that money, part of what’s called ERA2, is in jeopardy after Republican Gov. Pete Ricketts said he doesn’t want it.

Many other states have returned tens of millions of dollars in unused rent assistance in recent months because they have so few tenants, but only Nebraska has flatly refused assistance.

“I’m very concerned that I don’t have anything,” Rathke said of the federal money, which can be allocated over the next three years for everything from rent to eviction-preventing services to affordable housing operations.

“All of these nonprofits, when people come to them asking for help, the bucket will be empty,” she said. “It’s hard to say no to people, to tell people that we don’t have the funds to help them.”

The debate is unfolding across the country as the Treasury Department begins reallocating some of the $46.5 billion in rent assistance from places that are slow to spend to others that are short on funds.

States and localities have until September to spend their share of the first allocated $25 billion, known as ERA1, and the second $21.55 billion, known as ERA2, to by 2025. So far, the Treasury says $30 billion has been spent or allocated through February.

The Treasury announced earlier this month that more than $1 billion in ERA1 funds would be moved, for a total of $2.3 billion reallocated this year. Big states like California, New York, New Jersey and Texas get hundreds of millions more. Native American tribes, including the Oglala Sioux Lakota in South Dakota and the Chippewa Cree in Montana, are also receiving tens of millions of dollars in additional aid.

Those losing money are almost all small Republican states with large rural populations and fewer renters. Many were slow to spend their share as required by the rules of the program, so they voluntarily returned the money or had it taken. Some, like South Dakota, Wyoming and New Hampshire, unsuccessfully offered to use the money for other things like affordable housing.

Treasury officials, housing advocates and many Republican governors say there’s still plenty of money to help renters in those states and that reallocation gets money where it’s needed most. . Montana, for example, brought in $54.6 million but still has $224.5 million. West Virginia brought in more than $42.4 million but still has $224.7 million, according to the Treasury.

“We’re trying to reallocate as best we can,” said Gene Sperling, who is overseeing the implementation of President Joe Biden’s $1.9 trillion coronavirus rescue package. “It’s a balancing act, but rooted in a commitment to providing as much funding as possible to as many people in need.”

North Dakota returned $150 million of its $352 million, saying it couldn’t effectively spend all the money before the deadline. The state believes that the remaining funds are sufficient to meet the needs of those who are eligible.

Some Democratic lawmakers disagree.

“Outrageous and unacceptable: Returning rental assistance funds as claims mount and people are evicted,” tweeted Democratic 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. Governor Kristi Noem suggested the money was unnecessary, adding, “Our tenants are enjoying something even better than government handouts: a job.”

But Democratic Senator Reynold Nesiba said there was a lack of awareness about rental assistance and criticized the state for not doing more to promote it. He pointed to a $5 million tourist advertising campaign that was paid for with coronavirus relief funds and wondered why that level of promotion hadn’t happened for pandemic relief programs. .

Meanwhile, organizations helping to administer the rental assistance still available expect continued need. The state has long faced a race for affordable housing, which has only been exacerbated during the pandemic.

“Housing costs are just too high,” said Sandy Miller, who coordinates the housing assistance program for an organization called Community Action in the western half of South Dakota. “It’s harder for them to get into a house, it’s harder for them to stay in their house.”

Several states have argued that the reallocation fixes a flaw in the program, which created a funding formula based on population, not the number of tenants in a state.

“Congress … failed to take into consideration Wyoming’s small population, income levels, the real needs of renters, and the fact that the majority of Wyoming households – 70% – are owner-occupied,” said Rachel Girt, the state’s rental assistance communications coordinator, after the state returned $164 million of $352 million. An additional $2.8 million was transferred to the Northern Arapaho Tribal Housing Program and the Eastern Shoshone Housing Authority.

Josh Hanford, commissioner of the Vermont Department of Housing and Community Development, noted that the $352 million received far exceeded the $25 million given to Memphis, which has a similar population.

“As long as we are able to serve all of our eligible households, I hope people will see that there is greater need in other parts of the country which have received far less aid per household,” said said Hanford, when asked about the return of $31 by the state. million.

In Nebraska, the loss of funds is expected to hit rural areas the hardest.

The state program has already reallocated $85 million of its $158 million in ERA1 to its largest cities of Omaha and Lincoln and their respective counties. He still has close to $30 million. Without the additional $120 million in ERA2 money, an analysis by the Center on Children, Families and the Law at the University of Nebraska-Lincoln found that tenants in Omaha and Lincoln will still have help after September. but not those of other counties.

Ricketts, the governor of Nebraska, defended the decision not to accept the extra money.

The state “has received and distributed an unprecedented amount of federal funding to help Nebraskanians weather the storm over the past two years,” he wrote in an opinion column. “But at some point we have to recognize that the storm has passed and come 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 long after an emergency is over.

But housing advocates say his decision will leave many vulnerable tenants without a lifeline. Renters in rural areas often have access to fewer resources, including affordable housing, internet access and reliable transportation.

Lawmakers passed a bill last month requiring the state to request 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 will likely be reallocated by the Treasury to other states.

“We know from communities in Nebraska that the need is not just there, but it’s quite severe,” said Erin Feichtinger, director of policy and advocacy for social services agency Together.

“There really is no good reason to let these funds pass. It is money that is allocated to Nebraskans,” she said. “Nothing bad will happen if we accept this funding, but a lot of bad things can happen if we don’t.”