Capital Construction Received Largest Percentage of ARPA Funds

Covid stimulus has gone to fund large public works projects nationwide.

Source : Metropolitan Transportation Authority

February 8, 2023

Author : Alex Bustillos

In 2021 congress put $198 billion into the American Rescue Plan Act (ARPA), which at the time was also known as the Covid-19 stimulus package.

Of this, $173 billion has already been allocated to the states, the District of Columbia, and Puerto Rico. Much of the money was used to address the COVID-19 public health emergency, such as social initiatives for low-income neighborhoods and grants to help small businesses stay afloat.

The remaining $25 billion of ARPA funds remain at the discretion of the states.

The Center on Budget and Policy Priorities, an independent research institute, has examined ARPA fund appropriations since 2021 and found that many have been used for capital construction.

Capital construction refers to construction that helps in the upkeep or improvement of infrastructures.

According to CBPP data, capital construction accounted for 21% of allocations through December of 2022. Capital construction received the highest percentage of ARPA allocation, with certain states, such as Montana, dedicating 79% of their funding to capital construction projects. 

Capital construction involves the construction, expansion, renovation, or replacement of existing buildings or facilities, and costs come together from land expenses, engineering, architectural planning, and contract services required to finish the project.

While many state initiatives focused on broadband, water, and sewer infrastructure, part of the investment was unconnected to "equitable recovery," according to CBPP policy analyst Iris Hinh.

Alabama dedicated $400 million, or over 20% of its funds, to constructing two new prisons in 2021. In Arizona, $4.2 million in recovery funds were set aside to provide offices for Department of Corrections personnel. 

The spending on prisons has been protested by the ALCU.  In a January 2022 letter to the Deputy Inspector General  of the Treasury Department the ACLU called for an investigation into the use of ARPA funds for jail and prison expansions. The letter claimed that such construction "does not mitigate the effects of the COVID-19 pandemic and does not fall under any of the eligible uses of ARPA funds."

According to the CBPP, highway construction received 23 percent of Florida's funds. Colorado, Louisiana, and North Dakota also invested significant money in constructing roadways.

The report extolls that state authorities should use the remaining resources to assist those most impacted by the pandemic and prevent long-term damage to state health, education, and social services, not for capital construction processes.

Meanwhile, Eric Adams, the mayor of New York City, has proposed a comprehensive initiative to reform the capital construction process. He launched the Capital Process Reform Task Force to review the city's capital process comprehensively.

Officials in the Adams administration argue that they are committed to make government work better for New Yorkers, including prudent stewardship of taxpayer dollars in delivering world-class public facilities and critical infrastructure.

The task force's initial recommendations cover a variety of capital process aspects, including improving the project pipeline, streamlining approvals, managing projects more effectively, reforming procurement, and growing the number of New Yorkers who can participate in these projects. 

Category : Economic Stimulus Federal Government Investment in Infrastructure Market Watch State Government Public Works Treasury Department

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