What the First Batch of Treasury Department Reports Tells Us About How Governments are Using Their ARPA Money
Some Preliminary Takeaways Heading link
Some Preliminary Takeaways
To sum up, the evidence on how state and local governments are using SLFRF thus far points to four major patterns.
First, while there is wide variation in how state and local governments are using SLFRF dollars thus far, the data Treasury has collected suggests that the 1,756 governments included in this first release of spending data have obligated a little more than a quarter of the funds they had available to spend (the first tranche of funds transferred to governments).
Second, this lag reflects not only the fact that state and local governments were hesitant to obligate funds before Treasury finalized program regulations, but also the vagaries of the legislative process, as well as administrative burdens associated with getting funds out the door.
Third, and perhaps understandably, reported obligations tend to be concentrated in areas such as revenue replacement that have comparatively low levels of administrative burden (including premium pay for public employees and, for states, deposits in Unemployment Insurance trust funds).
Fourth, standing up new programs—including Biden administration priorities such as CVI—has taken longer. While nine state and 79 local governments have thus far reported 168 CVI projects to Treasury, adopting budgets totaling $470 million for these programs, only $79 million was obligated as of December 31, 2021.
In sum, while in quantitative terms the SLFRF represents a once-in-a-generation investment in state and local government, the funds alone do not appear to have solved the decision making or implementation challenges that make using resources difficult, especially where novel policy interventions are concerned.