The deadline for state agencies, local governments, and community organizations to obligate federal American Rescue Plan Act (ARPA) funds is about 16 months away. 

The State of Alabama received about $2 billion in federal funds that were then allocated by the state to various cities, counties, state agencies and nonprofit organizations for costs incurred during COVID-19 or future infrastructure investments such as broadband.

The deadline for those funds to be obligated on projects is December 2024. Obligated means the local government or community organization has legally contracted to buy a specified good or service. The deadline for the funds to be expended is December 2026.

Some legislators inquired at an ARPA Oversight Committee meeting on Wednesday about whether all of the ARPA money allocated by the state in recent years would be expended by the deadline and result in completed projects.

State Sen. Chris Elliott (R-Josephine) asked at the meeting, “When does the Department of Finance start saying we’ve got to have an internal deadline that is prior to December of 2026? When do we start saying if we’re going to try to clawback some of this money because we’re concerned it’s not going to be expended in time. When are we going to set that date so that we then have the opportunity to go put it somewhere else that’s meaningful and that’s my concern is if we’re not able to get some of this done in 18 months over here or 16 months over here what makes us think that we’re then going to be able to claw that back and turn that back around in an allowable use time?”

Bill Poole, Alabama Finance Director, said at the meeting, “Of those two hurdles, obligated in many respects is the easier hurdle to cross.” 

“You’ve got to award the funds. I think where some of the real pinch points are going to be are in some of the bigger categories,” Poole said. “The water/sewer projects are complicated. The broadband is going to be complicated for just scope, volume, supply chains, so on and so forth. Then I think where we’re going to really need to stay on focus is some of these community service areas. There’s just a lot of disparate distribution channels and getting information out and getting it back is going to be really important. Now, moving to the expended (deadline) that’s where the rubber is really going to meet the road because that’s when you’re looking at deadlines and the potential of clawback.”

State Sen. Greg Albritton (R-Atmore) said the committee would meet again around the middle of September for further updates on ARPA spending and projects.

“There’s a lot of money still floating around out there. To do this correctly and to make sure the legislature is comfortable with what we’re doing I anticipate that we’re going to start having these meetings more frequently,” Albritton said. 

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