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Five things to know about the billions coming to Maryland from the American Rescue Plan

Maryland’s state and local governments have been awash in federal money to help with the response to the coronavirus pandemic. The latest is the American Rescue Plan Act, which has sent billions of dollars to Maryland over the last several months.

State lawmakers were briefed Wednesday on how the process has been going on getting the money out to people and programs needing assistance. Here are five key facts they learned.

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1. Maryland is getting almost $12 billion from the American Rescue Plan.

Maryland’s state government, local governments, school systems and other agencies are expected to receive a combined $11.9 billion through the American Rescue Plan, according to David Brinkley, the budget secretary for Gov. Larry Hogan.

Of that, $3.7 billion goes to the state government and $2.3 billion goes to local governments. Elementary and secondary schools got another $2 billion.

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The rest is divided up among a variety of programs, from funding mass transit and helping renters to assistance for childcare providers.

2. The state government already has a plan for how to spend its money.

When the American Rescue Plan was approved by Congress in March, Hogan’s team worked with the Democratic leaders of the General Assembly on how to spend the state government’s share of the money. Those adjustments were worked into the state budget.

The spending — which is in progress — has included replenishing the state unemployment insurance trust fund, making direct payments to certain low-income Marylanders, increasing funding to nonprofit organizations, providing aid to small businesses, supporting schools in reopening for in-person classes and improving transportation and broadband internet.

Many of these programs were created before the American Rescue Plan and were going to be paid for by dipping into the state’s “rainy day fund.” The influx of federal money means that the rainy day fund didn’t have to be tapped as much.

3. But the state plan needs to change.

It turned out that Maryland received about $178 million less than it expected through the American Rescue Plan, Brinkley said. Also, some of the ways the state was going to spend the money aren’t allowed, such as using the money for tax credits.

Brinkley said he’ll work with the General Assembly’s budget leaders on how to adjust the spending so that all the programs still can be funded. Those adjustments likely will be reflected in Hogan’s next proposed budget, which he’ll unveil in January.

“We will maintain the spirit of what we agreed to with you,” Brinkley told lawmakers.

4. This has been tough on city and county governments.

Some of the American Rescue Plan money goes from the federal government to the state government and then on to local governments. Other parts of the money goes directly to local governments.

“This is a big undertaking,” said Kevin Kinnally, legislative director for the Maryland Association of Counties.

County governments aren’t used to having so much money coming in with very specific — and often changing — rules about how to use it. County government employees have had to create programs for figuring out how to distribute money, and they also have to keep precise track of the money and report back to the federal government.

People who understand how to do that are a “hot commodity” in local governments, Kinnally said.

Local governments must make sure that they are using money for the right purpose and before time runs out. All the money from the CARES Act, which was passed way back in early 2020, hasn’t been spent yet, so getting that money out the door first is a focus, Kinnally said.

Local governments also need to make sure that they’re using money efficiently, Kinnally said.

For example, some of the American Rescue Plan money can be spent on infrastructure projects like roads and sewer systems — but Congress also has been trying to pass another infrastructure spending bill, which makes for tough decisions on whether to fund projects now or wait until later.

Baltimore has hired several new staff members to begin assessing and scoring internal applications for the $641 million the city is receiving. The city will open applications for nonprofit groups to apply for funding next month, and Mayor Brandon Scott plans to provide regular updates about how the money is being spent.

Kinnally compared the challenge to trying to “put puzzle pieces together” with the “multiple deadlines, multiple rules and regulations for different pots of money.”

5. A few local governments opted out.

The American Rescue Plan sends money to town and city governments, which in Maryland range from tiny communities to larger cities like Frederick and Ocean City. (Baltimore City is generally included among counties when it comes to financial matters.)

The state’s 148 towns and cities are eligible for up to $529 million over two batches of money, and 124 already received nearly $225 million combined in the first round.

Some towns and cities don’t have the staff or expertise to sort through all of the paperwork and reporting to handle the money. The state government is working with six small municipal governments to help them through the process, Brinkley said.

But three small municipalities opted not to accept the money at all, Brinkley said, though he did not name them. They’re losing out on a combined $1.5 million.

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