How Cities and Counties Are Thinking Big With Their ARPA Plans

Across the country, some local governments are using federal aid from the American Rescue Plan to launch "transformational" projects in areas like affordable housing, public safety and ridding homes of lead—things that will endure long after the money is spent.

When President Biden signed the American Rescue Plan Act into law on March 11, 2021, the fiscal future for states and localities looked bleak. Public officials on both sides of the aisle were predicting that the pandemic was putting their cities and counties in dire financial straits and they would not recover for the foreseeable future. As a result, many anticipated that the $350 million of ARPA money that was going to states and localities would be used to simply dig the country out of a covid-based hole.

Forecasters, as is often the case, turned out to be wrong, and state and local economies have recovered at a far speedier pace than could have been seen. As a result, many are using the flexibility in the Treasury Department guidelines for ARPA to make truly transformative investments, some putting money into projects that were long shots at best, had there never been a pandemic.

“There’s been a shift in the paradigm, as the economy has allowed entities to think of using ARPA funds for purposes outside their basic operational expenditures and instead using it for something that can help in the long term.” says Emily Brock, director of the Government Finance Officers Association’s Federal Liaison Center.

While the investments governments are making are nowhere near the magnitude of many proposed by President Biden in his Build Back Better initiative, states and localities are using some of their ARPA money to make up for the giant piece of legislation that ran into the rocky shoals of congressional infighting.

“There are some things that only the federal government can afford,” says Ed Lazere, senior fellow at the Center on Budget and Policy Priorities. “But the combination of the pandemic and the hopes for important new public investments that Joe Biden’s win brought, seems to have enhanced the desire for states and localities to pursue similarly groundbreaking new investments, of particular importance because many pieces of Build Back Better are unlikely to pass anytime soon.”