This State Just Turned Down $120 Million in Federal Rental Assistance Funds

It's a move some people aren't happy about.

Millions of Americans lost their jobs early on in the COVID-19 pandemic, when local restrictions forced many businesses to close their doors on a temporary basis. Many people who suffered income loss at the time and didn't have savings to fall back on got behind on their rent payments.

Lawmakers put a federal eviction ban in place in 2020 to prevent a homelessness crisis. But that ban expired last year, and since then, tenants have been scrambling to catch up on past-due rent.

The last two stimulus packages signed into law allocated a combined $46 billion in federal rental assistance funds to help tenants catch up on rent and avoid eviction. That money was then distributed to states, which were tasked with distributing it individually.

At this point, many states have depleted their share of that $46 billion pot. And while some are still processing existing rent relief applications, they aren't open to taking new ones.

That said, there is additional rent relief money available to some states -- but only if they opt in. And one state recently made the decision to pass up that additional funding, much to the dismay of housing advocates.

Nebraska says no to additional aid

The $46 billion that was designated to states for rent relief purposes was split into two allocations. The first $25 billion allocated was known as ERA1 and the second $21.5 billion was known as ERA2.

At this point, many states have spent down their ERA1 funds, and even their ERA2 funds. But some states are still entitled to rent relief money under the latter.

Nebraska is one of them. The state had the potential to access an additional $120 million in federal rent relief funds. But Republican Governor Pete Ricketts expressly does not want that money, and so he turned down the option to take it.

The logic behind that decision, as per Ricketts, is that the state has already received and given out an unprecedented amount of federal funding to help struggling Nebraska tenants get caught up on rent. But now, he says, those handouts should stop since the storm has passed.

Specifically, Ricketts doesn't want Nebraska residents to be incentivized not to work, thinking they'll be bailed out by federal aid. But housing advocates in the state warn the decision to turn down $120 million in rent relief funds will leave many vulnerable tenants in a situation where they risk losing their homes. This especially applies to tenants residing in rural parts of the state, as they tend to have access to fewer resources to begin with.

A matter of debate

Last month, Nebraska lawmakers passed a bill requiring the state to apply for more rent relief funds. But Ricketts vetoed that bill. And unless lawmakers manage to override that veto, Nebraska will lose out on that funding.

The silver lining is that the money Nebraska passes on could be allocated to other states in need of additional rent relief funds. But that doesn't help Nebraska tenants who still need a lifeline.