(Headline USA) For thousands of local governments, the clock is ticking to spend their share of $350 billion in COVID-19 relief funds approved by Congress and Joe Biden in 2021. Governments must obligate all their American Rescue Plan funds for specific projects by the end of this year or else return the rest to the U.S. Treasury.
About 80% of all funds had been obligated as of March, according to the most recent data reported to the Treasury by more than 26,500 local, state and territorial governments.
But some governments appear to have a lot more work to do than others.
About one in five governments reported obligating less than half their funds as of this spring, according to an Associated Press analysis, and about 3,500 had obligated less than 25%.
That includes 2,260 governments that reported no projects, leaving it unclear whether they had any plans for the money.
From the beginning, the American Rescue Plan faced criticism from some Republicans and government watchdog groups for allowing unnecessary and excessive spending, including on things hardly connected to the coronavirus pandemic.
Under Treasury rules, an obligation generally requires a government to place an order for services or property, enter into a contract or award a grant to another entity. Governments that meet the obligation deadline then face a second deadline to finish spending the funds by the end of 2026.
“There’s no question that some of this money was not needed and it’s being spent wastefully,” 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 just one obligation on its spring Treasury report — about $79,000 for administrative expenses to select and implement projects funded with the federal aid.
As the federal deadline nears, some states and local governments are making backup plans to ensure they use all the money.
This spring, Missouri told the Treasury it had obligated 99% of its nearly $2.7 billion allotment. But some projects have fallen through or appear unlikely to need their full funding.
So lawmakers approved a revised spending plan that eliminated $49 million intended for COVID-19 response efforts and $16 million to remodel an old mental health facility for use in a sex offender rehabilitation program. 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 of American Rescue Plan funds for K-12 public schools as a fallback option if other projects don’t get moving. Several lawmakers in the conservative Freedom Caucus voted no, suggesting the federal pandemic aid was driving up federal debt and inflation.
“I’m fine if we were to give it back,” Republican state Sen. Rick Brattin, the Freedom Caucus chairman, told the AP. “We could at least hold our head high and say that we didn’t continue to contribute to the financial collapse of the American dollar.”
Facing the prospect that some of Connecticut’s $2.8 billion American Rescue Plan allotment could go unused, the state General Assembly this year reallocated $365 million to new purposes. The legislation also laid out a backup plan, directing Democratic Gov. Ned Lamont’s administration to reallocate any funds that appear unlikely to be obligated as of Oct. 15 to instead go toward budget shortfalls and higher education.
The city of New Orleans reported obligating 55% of its $387.5 million federal allotment as of this spring. But it’s been moving quickly to use the money. As of September, 86% has been obligated, New Orleans Chief Administrative Officer Gilbert Montano said. During the summer, the City Council shifted pandemic relief funds away from a couple of projects that faced timing questions to instead fund homeless shelters and clean up illegal dumps. Other slower-moving projects are on a watch list for potential reallocations before year’s end.
Montano made his position clear, “we’re not going to give any of that money back.”
Adapted from reporting by the Associated Press
