The Phoenix suburb of Gilbert has yet to utilize the full $24 million allocated to it through federal pandemic aid, with much of the funding remaining unspent. Currently, the primary site for a proposed crime victims center is still an empty lot, and only 25% of the funds have been earmarked for specific projects, according to recent federal data. However, local officials are optimistic that contracts will soon be finalized to allocate the remaining funds.
As the deadline looms for local governments across the U.S. to obligate their share of $350 billion in COVID-19 relief approved by Congress in 2021, Gilbert officials are on a timeline. They must commit all American Rescue Plan funds to designated projects by the end of the year or risk returning the unused funds to the U.S. Treasury. As of March, around 80% of the overall funds had been allocated, putting many municipalities on schedule to meet the deadline.
Despite this, some local governments face challenges meeting their obligations. An analysis indicates that approximately 20% of local governments reported obligating less than half of their funding, with around 3,500 entities having committed less than 25%. This situation raises concerns about whether these governments have viable plans for the funds, as many have reported no projects at all.
The Treasury Department is actively working to ensure communities understand their reporting requirements as they navigate the complexities of fund allocation.
The American Rescue Plan has been met with scrutiny from various factions, criticized for enabling unnecessary expenditure disconnected from pandemic relief. Nevertheless, state and local officials maintain that the funding has opened doors for vital projects that would have otherwise remained unfunded.
In Gilbert, nearly all American Rescue Plan funds are slated for a $43 million crime victims facility, which will offer essential services for victims of sexual assault, child abuse, and domestic violence. This center was identified as a necessity long before the pandemic, with federal funds intended to cover over half of the costs, supplemented by the town’s general funds.
The aim is to establish a “comprehensive wrap-around center where a victim of interpersonal violence can come and undergo a safe and healing journey,” according to local officials. Plans are in place to award a construction contract this fall, aligning with the Treasury’s stipulation to obligate funds by year-end, though construction itself is not expected to commence until the following year.
Under Treasury guidelines, obligations need governments to contract services or commit funds to other entities. After meeting the obligation deadline, governments then have until the end of 2026 to utilize the funds fully.
Officials from other areas have shared varying reasons for low obligation rates, with some believing they were not required to detail the usage of funds designated as replacements for revenues lost during the pandemic. Others expressed difficulties in determining productive uses for the funds.
Concerns surrounding potential waste and misallocation of resources have emerged, with critics suggesting that certain funding has been poorly managed. For instance, in Dearborn Heights, Michigan, where over $24 million was allocated, only about $79,000 has been committed to date for administrative costs related to project selection.
As the deadline approaches, various states and local governments are proactively reallocating funds to ensure maximized utilization. In Missouri, for example, lawmakers revised spending plans to reassign nearly $65 million from COVID-19 response efforts to new projects, including educational initiatives.
Other states, like Connecticut, are similarly preparing backup strategies to guarantee effective use of their American Rescue Plan allotments while balancing their budgets and addressing educational needs.
In New Orleans, officials reported a significant increase in obligated funds, with 86% of its $387.5 million allotment now committed. The city has prioritized funding for urgent community needs, including homeless shelters and cleanup efforts, ensuring no funds will go unutilized.
