Most of the $350 billion in State and Local Fiscal Recovery Funds (SLFRF) allocated under the American Rescue Plan Act (ARPA) remains unspent. County governments, in particular, have been slow to spend or obligate their fiscal recovery funds compared with cities and states. Those that have spent a large share of their allocation have generally used the funds for basic revenue replacement, which makes it less likely counties will take advantage of the flexibility allowed under SLFRF rules to make new investments to advance equity. Counties have myriad opportunities to use remaining SLFRF dollars to help working families, and advocates should encourage them to do so.

County governments were granted $65.1 billion in fiscal recovery funds, and $52.4 million of that went to 882 larger counties that have more frequent reporting requirements than smaller counties. As of the last reporting deadline on December 31, these larger counties have spent less than 27% of that money and obligated just 41% of it. This is substantially less than the pace of SLFRF spending by cities and states, as shown in Figure A below. Counties only have until December 31, 2024, to obligate these funds.

Even the 27% figure doesn’t tell the whole story, however, because half of counties have spent less than 20% of their funds, and more than one in four has yet to spend even 10% of their allocation.

Counties have needs that SLFRF dollars could be meeting right now. Like other state and local governments, public services in counties had barely recovered from the decade of austerity following the Great Recession when the pandemic hit. While the private sector has completely made up the jobs shortfall from the COVID downturn of 2020, state and local government employment is still 1.4% below the pre-pandemic level.

Counties also have tremendous opportunities to invest in low-income communities, support policies to help working families, and advance equity. Counties employ over 200,000 public health workers, some 93,000 fire and Emergency Medical Services (EMS) first responders, and more than 300,000 health professionals in county-run hospitals. They play important roles in housing, broadband access, and transit. They can and should expand their capacities with fiscal recovery to better address the needs of working families.

However, the counties that have spent most of the SLFRF dollars have largely used them for revenue replacement rather than other allowed uses like dealing with the negative economic impacts of COVID or water, sewer, and broadband infrastructure.

The picture that emerges is one where a relatively small number of counties have already spent most of their SLFRF dollars on revenue replacement, while most counties are holding onto their money, missing opportunities to make transformative investments. Following a decade of austerity budgets, it’s understandable that counties might look to SLFRF as a de facto rainy-day fund, but these funds should be used to address the very real needs of working families.

Many local governments have used their allocations in creative, equity-building ways, such as a Massachusetts transit district eliminating bus fares or an Iowa county fighting against wage theft. County governments can draw inspiration from these examples, and advocates should contact policymakers at the county level to encourage the use of fiscal recovery funds to support strong public services.