First published in NH Business Review, August 9, 2024

The federal American Rescue Plan Act, enacted in 2021, provided flexible federal funds to county, city, and town governments in New Hampshire that can be used for a wide variety of purposes. Governments can use these funds to respond to the economic and health impacts of the COVID-19 pandemic, as well as for necessary water, sewer, and broadband infrastructure and premium pay to essential workers. They can also use these funds to replace revenue that was lost due to the pandemic, such as reduced tax receipts, for most types of government services.

Recently published federal data, which provides information on the status of these funds at the end of March 2024, show that some local governments may need to make significant decisions to ensure these funds are not recouped. The federal government has established a deadline to obligate these funds by December 31, 2024, and they must be spent by December 31, 2026, or be given back. While most local governments may have budgeted these funds for particular purposes, obligation has a specific federal definition that, in most cases, requires a contract or other binding agreement that requires spending these funds.

For example, a town deciding to spend $100,000 of these funds on a fire truck would be budgeting those funds, but the funds would likely not be considered obligated by the federal government until a contract exists to purchase that truck for that amount with the company selling it.

Communities with funds not meeting the specific definition of obligated by New Year’s Eve are at risk of having their funds recouped by the federal government. Data reported by county governments in New Hampshire indicate that, as of the end of March 2024, New Hampshire’s 10 counties collectively had about $52 million unobligated. These dollars may have been budgeted for various purposes, and may have been successfully obligated in the months since March, but the data suggests some county governments may still need to take action to avoid recoupment.

While the data for cities and towns are incomplete, about $31 million was unobligated as of March 2024. Based on available federal data, 113 cities and towns reported obligating or spending at least 95% of their allocation, but 13 reported obligating or spending less than 25%, and five towns had not obligated any of their funds. If local governments want to be able to deploy these funds to help residents of New Hampshire, many may need to take additional action in the coming months.

Phil Sletten is research director for the NH Fiscal Policy Institute. The NHFPI Policy Memo is a partnership of the NH Fiscal Policy Institute and NH Business Review.