The American Rescue Plan Act (ARPA) of 2021, specifically the flex dollars it made available to states and local governments through the State and Local Fiscal Recovery Funds (SLFRF), has marked a generational experience of fiscal federalism. It has not been since the late 1980s that Washington has engaged in general revenue sharing with state and local governments. And this time, the scale of investment – $350 billion over two years – was much larger.
The context of ARPA was also very different. Congress has allocated substantial aid to help address the potentially devastating fiscal, economic, and health impacts of the COVID-19 pandemic at the state and local levels. Under the regulations implementing the SLFRF, recipient governments must report information to the Treasury Department on how they plan to use these funds, according to a set of broad categories of eligible expenditures under ARPA. However, much of this information varies in quality, consistency, coverage and comparability, hampering efforts to understand spending priorities and better coordinate investments across places and time to support a widespread economic recovery.
These factors have motivated our respective organizations—Brookings Subway and BIGGEST MSP—to create tools that collect, summarize and visualize how local governments are leveraging SLFRF funds. Brookings Metro has partnered with National League of Cities and the National Association of Counties to produce the Local Government ARPA Investment Tracker, which tracks data on SLFRF-supported projects in more than 300 major cities and counties nationwide. And as part of his MSP Federal Funding Center ProjectGREATER MSP has partnered with 12 cities and 17 counties in the Minneapolis-Saint Paul area to generate the ARPA MSP tracking, which tracks the spending plans of these jurisdictions using the same categories as the Local Government ARPA Investment Tracker. Our organizations have used these tools to assess the rate at which local governments are committing SLFRF funds to specific projects, the top spending priorities they identify, and how these vary by city and county and by size of jurisdiction.
We see three common benefits of sharing this unique data through our respective Trackers:
- Increase government transparency. Local policymakers have considerable discretion over how to use SLFRF dollars, consistent with the goal of advancing a strong and equitable recovery from the pandemic economic crisis. And while local governments are required to publicly account for their use of funds, communication and community engagement vary widely. Some cities and counties have strong ARPA websites and communication strategies, while others have none. Trackers fill in the gaps and provide taxpayers, policymakers, media and researchers with an easy-to-use window into how local governments use funds. This helps answer questions such as: Are cities and counties investing the funds in the communities hardest hit by the pandemic? Are they addressing both short-term acute needs and the longer-term challenges that the pandemic has exacerbated? What types of agencies and organizations do they work with to deliver ARPA-funded programs and services? Making data consistent and transparent through trackers like these also offers a possible model for tracking how dollars are allocated from other large federal programs that rely on local delivery, such as those funded under from Infrastructure Investment and Employment Act (IIJA)and increase understanding and engagement around the realities of US fiscal federalism.
- Improve regional orientation and collaboration.The ARPA MSP tracking noted that the local governments of the region had committed themselves 25% of their SLFRF dollars so far to meet the housing needs of low-income residents. This was nearly three times the average recorded in all major cities and counties in the Local Government ARPA Investment Tracker. The Twin Cities Region’s outsized effort is the result of long-standing efforts by GREATER MSP and its partners to highlight growing pressures for affordable housing and create relationships and vehicles that could begin to address these challenges at large scale. Benchmarking how local governments deploy ARPA funds can reveal where communities may be over- or under-spending relative to local or national standards, and help local decision-makers and the public ask more informed questions about meeting unique needs. Additionally, promoting a better understanding of how neighboring jurisdictions are making their money work can create opportunities for co-investment in shared programs and strategies. For example, the city of Minneapolis is working with neighboring Hennepin County using ARPA funds to make public health improvements to its emergency homeless shelters. Similarly, suburban Washington County and Dakota County are co-investing ARPA funds in a homeless youth shelter. Unlimited possibilities exist for cross-jurisdictional or state-level relationships.-local collaboration with uncommitted local ARPA funds, which Trackers can highlight.
- Add up investments to chart longer-term impact. Local governments have until the end of 2024 to fully commit their flexible ARPA funds, and then another two years to ensure they are fully spent. How will we know if the funds made a difference in the end? Tracking the specific ways local governments are using them can help us understand whether the dollars have ultimately reduced evictions or food insecurity, improved broadband connectivity and community safety, stabilized local finances over the long term, or achieved dozens of other results of interest at multiple levels of potential impact (local, regional, state, national). For local leaders hoping to advocate for flexible future federal aid in times of economic crisis, harnessing this data can provide a valuable evidence base.
Brookings Metro and its partners and GREATER MSP will continue to update our trackers with new data as it becomes available. In the Twin Cities Region and other cities and counties across the country, local decision makers still have significant SLFRF resources that they have yet to budget and spend. By highlighting their efforts, we hope to inform their decisions in ways that increase program impacts and broaden awareness of opportunities to support equitable growth and prosperity in the wake of the pandemic.