Early Data Shows State and Local Governments Are Committing Recovery Funds to Build 

an Equitable Recovery

By Jacob Leibenluft, Chief Recovery Officer

During the Great Recession, state and local governments were forced to make deep budget cuts, 

resulting in devastating service cutbacks and creating strong headwinds for the economy. As 

Secretary Yellen said in March, fiscal challenges meant cities and states to “had to slash 

spending, and that austerity undermined the broader recovery.” The American Rescue Plan

(ARP) was designed to avoid repeating that history by establishing the Coronavirus State and 

Local Fiscal Recovery Funds (SLFRF) to provide $350 billion to state, local, territorial, and 

Tribal governments to bolster their response to the COVID-19 emergency and its economic 

impacts. Following the ARP’s passage, Treasury quickly provided over $240 billion—over 99% 

of funds available in the first year—to state, territorial, local, and Tribal governments. Now, 

governments are putting these funds to use. Based on initial reporting received from recipient 

governments, Treasury estimates that states have appropriated or budgeted 45% of the funds they 

had on hand as of July 31, with likely even a higher proportion of funds allocated in the last two 

months.

Within the first seven months of implementation, these funds have prevented severe cuts and 

layoffs, bolstered pandemic response efforts, and allowed states and localities to plan longer term 

investments that will put them on stronger footing coming out of the pandemic. The first benefit 

of these funds can be seen in what hasn’t happened: simply knowing these funds were in their 

coffers has allowed state and local governments to avoid budget cuts and layoffs, preventing a 

repeat of the Great Recession. For example, in January 2021, Hawaii’s governor announced 

plans for furloughs for over 10,000 state employees and said that the state would have to cut its 

budget by $600 million. Less than a week after the American Rescue Plan was passed, the 

governor announced that these cuts were off the table. Other state and local governments who 

did make cuts are now using their funds to rehire public sector employees: Wichita, Kansas plans 

to use funds to hire for positions that have been held vacant since March 2020 due to budget 

uncertainties, and has already begun the hiring process.

Congress designed these funds so that governments could both meet their immediate needs and 

help power a long-term economic recovery. And as the efforts to combat the Delta variant have

shown, providing the capacity for states, localities and tribes to respond to unforeseen challenges 

has been especially important. In just the first few months since states and localities have had 

access to these funds, early data illustrates that governments are balancing both the short-term 

uses of these funds to address immediate needs with making longer-term investments in their 

community’s prosperity, especially with funding available through 2026. An early review of the 

reports received by Treasury shows some of the key investments that the State and Local Fiscal 

Recovery Funds are supporting, including: 

Combating the spread of COVID-19: With 186 million Americans vaccinated, the nation has

made significant progress in defeating the COVID-19 virus, but the pandemic is still ongoing. 

The majority of states and localities who submitted initial reports to Treasury plan to use a 

portion of their funds to address the immediate public health crisis, especially with the surge 
related to the Delta variant. For example, Leon County, Florida plans to expand vaccine access 

for high-risk and underserved populations by supplementing state and federal funding to hire 

additional staff at vaccine clinics and conduct additional community engagement to promote 

vaccines through partnerships with churches and other non-traditional providers reaching

underserved populations. The Pasqua Yaqui Tribe was one of the first to create a $100 vaccine 

incentive to support Tribal citizens who receive vaccines and they have been using this to 

combat the high-rates of COVID-19 in Arizona Tribal communities. Utah has appropriated funds 

for the state department of health’s vaccine operations, including expanded staffing, to prepare 

for vaccine booster shots. The City of Boston is also planning to use funds to remove barriers to 

vaccination, including providing mobile vaccinations, community vaccine ambassadors, and 

vaccine incentives programs. 

Fostering a robust, equitable economic recovery: To foster a robust, equitable economic 

recovery, governments are using the State and Local Fiscal Recovery Funds to get more people 

into the workforce and grow their local economies – with special focus on the disadvantaged 

communities hardest hit by the pandemic. For example, Snohomish County, Washington is 

funding programs to provide dislocated workers with job training to enter high-demand 

occupations in growing industries. Orange County, Florida is planning to fund childcare in highpoverty areas, in order to provide more equitable access for families as well as help more 

working parents re-join the workforce while the City of San Jose is similarly planning to use 

funds to continue childcare programs for vulnerable families that were originally funded by 

CARES Act funds. 

Making long-term investments: Many governments are using these funds for long term priorities 

that will address disparities exacerbated by the pandemic and enhance economic opportunity for 

many years to come. The State of Colorado is planning to invest $75 million to expand 

broadband infrastructure throughout the State, including to currently unserved areas. The State of 

Kentucky is also planning to invest in broadband infrastructure, spending $300 million to expand 

services to unserved and underserved communities, and devoting $250 million to water and 

sewer infrastructure projects, which Kentucky notes will deliver safe and reliable water to people 

across the state while also creating more than 3,800 direct and indirect jobs. 

Engaging communities: Even as they respond to the immediate challenges posed by the 

pandemic, states, localities and Tribes are also engaging in deliberate planning to make the best 

use of their resources. To combat historic inequities, many governments are conducting robust 

community engagement efforts to ensure that these funds address their residents’ needs. 

Jurisdictions like Cleveland, Ohio, Buffalo, New York, and Durham, North Carolina, are using 

online surveys, discussions with advocacy groups, and listening sessions to understand the needs 

of their communities and address inequities, while Harris County, Texas has already established 

an equity framework to guide its investments. These and other equity focused approaches will

lead to smarter investments in the future.

Just over six months since the passage of the American Rescue Plan, these funds are ensuring 

that state, local and tribal governments can do the crucial work of responding to the pandemic 

today and building for a stronger recovery—rather than face devastating choices that would hold 
the economy back. And looking ahead, the State and Local Fiscal Recovery Funds has positioned 

these governments to do even more as they invest in their communities.

For additional information on how recipient governments are using State and Local Fiscal 

Recovery Funds see highlights here.

The examples cited above are based on an initial review of recipient reports, and their inclusion 

in this blog does not constitute an explicit approval of these projects by Treasury.