POLICY RECOMMENDATIONS Fiscal Health

Policy Recommendation 4:

Working with intermediary organizations like The Council of State Governments, state leaders can request an extension past the Dec. 31, 2024, date by which they are required to obligate American Rescue Plan Act funds.

The American Rescue Plan Act (ARPA) provided a once and a lifetime funding opportunity that has allowed states to create programs that positively impact their communities. Due to unforeseen labor and supply shortages, project utilization of these funds has been severely delayed. Full utilization of ARPA funding is crucial to every state's fiscal and infrastructural future.”

The Fiscal Health Subcommittee approved this recommendation, citing various issues leading to delays in obligating funds. The subcommittee recognizes that some states are struggling to meet the deadline more than others, so extending the cutoff date will be beneficial.

The American Rescue Plan Act includes $350 billion in new funding for state, local, territorial and tribal governments through the Coronavirus State and Local Fiscal Recovery Fund. Within this fund, $195 billion is distributed directly to state governments and Washington, D.C., through one or two disbursements. States must obligate this funding by Dec. 31, 2024, and expend it by Dec. 31, 2026.1

The limited duration of many state legislative sessions sometimes makes quick allocations difficult.2 Policymakers also are concerned that labor shortages and supply chain issues will delay necessary projects. This necessitates more time to obligate and spend these funds.

State Examples

Oklahoma has only allocated 12.2% of its State and Local Fiscal Recovery Fund allocation. Most allocated funds have gone toward water and sewage improvements.3

West Virginia and four other states have only allocated 20-40% of their respective funds. Replacing revenue lost during the pandemic is the leading use of funds nationally.4

Additional Resources

ƒ The Council of State Governments State American Rescue Plan Act Utilization Database — https://web.csg.org/recovery/state-utilization/

ƒ Missouri State Government: American Rescue Plan Act Funding Toolkit for Local Governments — https://oa2.mo.gov/ARPAtoolkits

ƒ National League of Cities: American Rescue Plan Act Local Relief FAQ Guide — https://www.nlc.org/covid-19-pandemic-response/ american-rescue-plan-act/arpa-local-relief-frequently-asked-questions/#slerf-reporting

Endnotes

1 The Council of State Governments. (n.d.). State ARPA Utilization Database. Retrieved October 14, 2022, from https://web.csg.org/recovery/state-utilization/

2 Lazere, E., & Hinh, I. (2022, Sept. 15). How States Can Best Use Federal Fiscal Recovery Funds: Lessons From State Choices So Far. Retrieved October 14, 2022, from Center on Budget and Policy Priorities: https://www.cbpp.org/research/state-budget-and-tax/howstates-can-best-use-federal-fiscal-recovery-funds-lessons-from

3 Ibid.

4 Ibid.