Nevada has withdrawn $52 million in pandemic relief funds previously allocated to enhance broadband access in rural parts of the state. The decision comes with approximately three months remaining until a federal deadline mandates that the state spend its total $2.7 billion in pandemic relief funds.
State lawmakers were informed on Thursday that Stimulus Inc., a contractor involved in the broadband expansion initiative, determined it would not be able to complete specific high-speed internet connections in the Pahrump area by the year-end deadline. This inability means that certain sections of the Pahrump region will not receive the planned broadband buildout. Furthermore, Stimulus Inc. had intended for the Pahrump project to serve as a central hub for extending broadband access to other areas, placing those broader expansion efforts in question. While the state has not yet identified all specific locations that will be considered "unserved" as a result of this change, northern Pahrump is anticipated to be significantly affected.
Britta Appel, director of the Governor's Office of Science, Information and Technology (OSIT), which oversees the project, described the decision as challenging to make. She explained it was based on the overall circumstances. The federal government requires all pandemic relief funds to be spent by the end of the year to ensure their utilization.
The $52 million that has been redirected constitutes more than a quarter of the initial $200 million in pandemic relief funds originally earmarked for broadband expansion. These funds have now been reallocated to several other state programs, including supporting mental health services in jails, a state initiative to address food insecurity, and efforts to boost multifamily housing development.
Rural communities in Nevada, much like those nationwide, have consistently faced challenges in accessing high-speed internet, falling behind urban centers. Nevada has been engaged in a multi-year effort to improve this situation, an endeavor that has been described as tumultuous. A substantial portion of the project's funding originates from the 2021 Broadband Equity, Access, and Deployment (BEAD) program, a Biden-era initiative. Earlier this year, the Trump administration significantly reduced Nevada's allocated share from this program.
Due to the intricate nature of the state's broadband initiatives, which involve multiple funding sources and have encountered setbacks such as sudden federal fund rescissions, Ms. Appel indicated that it remains unclear when or how these impacted areas might eventually receive broadband buildout. Despite these complexities, state officials had previously expressed confidence that the broadband funds would be spent on schedule.
Last October, then-OSIT Director Brian Mitchell had expressed certainty that projects would be completed by December 31, 2026. In April, Ms. Appel conveyed confidence to lawmakers regarding the project's ability to be finalized.
During a Thursday meeting of the state's Interim Finance Committee, a legislative panel responsible for funding decisions when the Legislature is not in session, Assm. Howard Watts (D-Las Vegas) criticized what he described as a change in sentiment from state leadership. He conveyed frustration, stating it was aimed at OSIT and particularly at previous leadership, who he believed minimized the risks of the current outcome. Assm. Watts further characterized the situation as "clear as mud," noting that the frustration stems from knowing there will be impacts to broadband access in communities without clarity on what those impacts are or when they will occur.
Warning signs about potential delays had emerged months prior. At the committee's August meeting, Nathan Whittacre, CEO of Stimulus Inc., hinted that some project components might not be completed on time. Delays had occurred in securing utility poles due to fires in Washington, and a new requirement for a franchise agreement also pushed the project back by approximately one month. Stimulus Inc. had also submitted bids for certain BEAD funding with the expectation that the Pahrump project would act as a central point for expanding broadband to nearby rural localities. Ms. Appel confirmed that the company is currently reviewing these bids. There is also a possibility for the Pahrump region to secure funding through a second round of BEAD allocations, though Ms. Appel noted that this is not guaranteed.
