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November 22, 2021 In In The News

States Must Use Caution When Spending ARPA Funds to Avoid Waste

From: Citizens Against Government Waste

The American Recovery Plan Act (ARPA) included $350 billion in the State and Local Fiscal Recovery Fund, $195.3 billion of which was given to the states, with the remaining $154.7 billion divided among local governments, tribal governments, and territories.  Because states are not required to obligate their share of the funds until December 31, 2024, or spend them until December 31, 2026, several states have elected to take a patient approach to distribution.  The National Council of State Legislatures reported that 13 states have yet to allocate any funds sent to them by the Department of the Treasury, while the most of the others have allocated only a fraction of the funds given to them.

Thus far, local governments have used their portion of the grants on a wide array of projects ranging from the expansion of broadband access and infrastructure repair to the promotion of green energy and the development of athletic fields.  In Alabama, the state’s only use of APRA funds has been the allocation of $400 million for the construction of two prisons.  Hawaii’s legislature designated $1 million for a Sea Urchin Hatchery in addition to $300,000 for an engineering assessment of Aloha Stadium.  Use of grant money designed to provide relief from the COVID-19 pandemic for these and similar projects takes a page from Sen. Kirsten Gillibrand’s (D-N.Y.) infrastructure playbook, when she claimed that paid leave, child care, and caregiving are all infrastructure.  Just as everything fits under infrastructure, so too can anything be sold as COVID relief, sea urchins included.

As state and local governments prepare to appropriate their remaining ARPA funds in their upcoming 2022 legislative sessions, governors and legislators must allocate the money with caution to avoid funding wasteful projects unrelated to COVID relief or creating unsustainable programs that will be unaffordable when the federal well runs dry. Read more.