The New Jersey State Policy Lab has released a report analyzing the allocation and use of American Rescue Plan Act’s Coronavirus State and Local Fiscal Recovery Funds (ARPA-SLFRF) by local governments in New Jersey compared to those in other states. The ARPA-SLFRF represents a $350 billion investment aimed at helping state and local governments tackle the economic and public health challenges posed by the COVID-19 pandemic.
The study focused on how these funds were used, the efficiency of fund obligation ahead of the December 2024 deadline, and the equity of funding distribution based on fiscal and socioeconomic factors. According to the study, "New Jersey local governments allocated a smaller share of ARPA funds to revenue replacement (40%) compared to other states (57%), while dedicating a larger share to public health, infrastructure, and public sector capacity projects."
Differences were noted across government tiers. Tier 1 local governments in New Jersey prioritized public health and public sector capacity more than their counterparts outside the state. Meanwhile, Tier 2 and Tier 5 local governments across all states showed a higher tendency towards allocating funds for revenue replacement.
By April 2024, New Jersey had obligated 84% of its ARPA-SLFRF funds, slightly more than other states at 82%. Particularly among Tier 1 jurisdictions in New Jersey, nearly 90% of funds were obligated compared to 81% elsewhere. This indicates that larger jurisdictions in New Jersey progressed efficiently toward meeting the obligation deadline.
The study also highlighted that ARPA funds were distributed more generously to local governments with greater fiscal need. Economically distressed areas received about $175 per capita while wealthier areas received around $100 per capita. Larger municipalities with higher pre-pandemic revenue per capita received over $150 per capita.
Two key implications for future federal aid programs emerged from this analysis: maintaining flexibility allows for tailored spending according to unique needs; prioritizing distressed areas could ensure equitable resource distribution.
