The Coronavirus State and Local Fiscal Recovery Funds (SLFRF) program allocated $350 billion to states, local governments, tribal governments and territories, as part of the America Rescue Plan Act of 2021.  Nearly all that funding was allocated by the date required -- December 31, 2024.  But another deadline looms. States and local governments must spend the money by December 31, 2026.  

On February 12, the U.S. Government Accountability Office (GAO) issued a report that provided a spending update for 2025. Based on the most recent data available, the states and Washington D.C. have spent 80 percent of the dollars they had allocated. Six states – Mississippi, New Jersey, Oklahoma, South Carolina, Tennessee and West Virginia have spent less than half of their total rewards. Only three of the states have spent their full award: California, Massachusetts and New York, in addition to Washington D.C. 

Meanwhile, based on the most recent data, localities have spent some 85 percent of the $127.8 billion in rewards they received. 

The majority of the SLFRF money that has been allocated is supposed to be used to replace revenue lost due to the pandemic, This provides a great deal of latitude for the recipients, as they “can use these funds to cover a broad range of government services (i.e., generally any service traditionally provided by a government) up to the amount of revenue loss experienced during the pandemic.”

For example, reported the GAO, Texas has spent $159 million for grants for victims of crimes starting in June 2023. Meanwhile, much smaller New Hampshire spent $13.3 million to purchase hospitals to provide inpatient psychiatric services.

The report concludes that “as with the states, cities and counties largest area of spending to address the negative economic impacts of the pandemic was providing assistance to households. Cities spent most of this assistance on investments in outdoor public spaces, such as parks and public plazas.  Counties spent most of these funds on affordable housing including addressing housing insecurity and affordable housing.”

When it comes to spending the last part of the money that was allocated, there are several issues that are preventing dollars from going out the door. These include labor shortages faced by the governments themselves, and smaller sub-contracting entities or non-profits that may have signed contracts to perform services, but do not have the current staffing or resources that allows them to move forward.

 In addition, some of the money that still needs to be spent falls into areas that are prone to project delays, such as water, sewer and broadband projects. 

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