Clock is ticking for local governments to use billions of dollars of federal pandemic aid
It appears the Phoenix suburb of Gilbert hasn’t done much with the $24 million it received in federal pandemic aid.
The site where it plans to spend the most money on a crime victims’ center remains a vacant lot. And only a quarter of the funds have been earmarked for projects, according to the most recent federal data. But city officials say contracts should be in place soon to spend the rest.
For Gilbert and thousands of other local governments across the U.S., the clock is ticking to use their share of the $350 billion in COVID-19 relief funds approved by Congress and President Joe Biden in 2021. Governments must use all of their American Rescue Plan Funds for specific projects by the end of this year, or return the remainder to the U.S. Treasury Department.
About 80% of all funds had already been obligated in March, according to the latest data reported to the Treasury Department by more than 26,500 local, state and territorial governments. That’s right on track to be completed on time.
But some governments seem to have much more work than others.
About one in five governments reported committing less than half of their funds as of this spring, according to an Associated Press analysis, and about 3,500 had committed less than 25%. That includes 2,260 governments that reported no projects, making it unclear whether they had plans for the money. Some of them may have already used the money, but could not describe the purpose to the federal government.
The Treasury says it is conducting extensive outreach work to help communities understand their reporting requirements.
From the beginning, the American Rescue Plan was received criticism by some Republicans and government watchdog groups for allowing unnecessary and excessive spending, including on things that are hardly connected to the coronavirus pandemic. But some state and local officials say the funding has allowed them to carry out long-awaited projects they otherwise wouldn’t have been able to afford.
Gilbert officials decided to spend nearly all of their American Rescue Plan funds on a single project: a $43 million facility where victims of sexual abuse, child abuse and domestic violence can undergo forensic exams and interviews necessary for prosecution, while also receiving counseling and therapy services. Officials identified the need for the center several years before the pandemic but had no funding source. The federal money will cover just over half the cost, with the rest coming from Gilbert’s general fund.
The goal is to provide “a comprehensive wraparound center where a survivor of interpersonal violence can come and have a really safe and healing journey,” Assistant City Manager Leah Rhineheimer said. It’s “one of the most meaningful projects the city can undertake.”
City officials hope to award a construction contract this fall, which would satisfy the Treasury Department’s requirement to release the money by the end of the year. But actual construction won’t begin until next year, Gilbert Police Chief Michael Soelberg said.
Under Treasury rules, an obligation typically requires a government to place an order for services or property, enter into a contract, or make a grant to another entity. Governments that miss the obligation deadline then face a second deadline to spend the funds by the end of 2026.
Other local officials interviewed by the AP described a mix of reasons why they had not reported obligating a large portion of their funds. Some said they did not think they had to detail how the money was used because they categorized it as a replacement for local income lost during the economic downturn of the pandemic. Others described challenges in figuring out what to do with it.
“There is no question that some of this money was not needed and is being wasted,” said Tom Schatz, president of Citizens Against Government Waste, a Washington, D.C.-based nonprofit.
The Detroit suburb of Dearborn Heights, which received more than $24 million, listed only one liability in its spring Treasury Department report: about $79,000 for administrative costs of selecting and implementing projects funded with federal aid.
Dearborn Heights Mayor Bill Bazzi said the federal funding arrived shortly after he took office, making it difficult to simultaneously “identify what the city needs” and assemble staff to manage it. The city plans to use the money for stormwater, sewer and water projects, among other things, and should have most of it allocated soon, Bazzi said.
Progress was delayed because “we had to go through a laborious process” before putting projects out to tender, he said.
As the federal deadline approaches, some states and local governments are making contingency plans to ensure they use all the money.
This spring, Missouri told the Treasury Department that it had committed 99 percent of its nearly $2.7 billion allotment. But some projects have fallen through or don’t appear to need their full funding.
So lawmakers and Republican Gov. Mike Parson approved a revised spending plan that cut $49 million intended for COVID-19 response efforts and $16 million to convert an old mental health facility for use in a sex offender rehabilitation program, among other things. Those funds were reallocated to dozens of new projects, including a college engineering building and a health care worker training program.
The Missouri Legislature also budgeted $150 million in American Rescue Plan funds for public K-12 schools as an alternative option if other projects fail to materialize. Several lawmakers in the conservative Freedom Caucus voted against it, suggesting that the federal pandemic aid would increase federal debt and inflation.
“I think it’s fine if we give it back,” Republican Sen. Rick Brattin, chairman of the Freedom Caucus, told the AP. “At least we can hold our heads up and say we’re not going to continue to contribute to the financial collapse of the U.S. dollar.”
Missouri Senate Budget Committee Chairman Lincoln Hough, a Republican, said lawmakers do not have to approve the federal funding to use it.
“If we have it, I think we need to invest in our communities and in our future workforce,” Hough said.
Given the prospect that some of Connecticut’s $2.8 billion allocation from the American Rescue Plan could go unused, General Assembly of the State This year, $365 million was reallocated to new purposes. The legislation also laid out a backup plan, directing Democratic Gov. Ned Lamont’s administration to reallocate any funds that appeared unlikely to be received on Oct. 15 to instead go to deficit spending and higher education.
The city of New Orleans reported obligating 55% of its $387.5 million federal allotment as of spring. But it has moved quickly to use the money. By September, 86% had been obligated, said Gilbert Montano, New Orleans’ chief administrative officer. Over the summer, the City Council diverted pandemic relief funds from a few projects that faced timing issues, instead funding homeless shelters and cleaning up illegal dumping sites. Other slower-moving projects are on a watch list for possible reallocation before the end of the year.
“We’re not going to give that money back,” Montano said. “There’s too much need.”
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Kavish Harjai, an Associated Press data journalist, contributed to this report.