Tennessee spent only 10% of American Rescue Plan allotment. Use it or lose it by Dec. 31

Now is the time for the governor and the state legislature to use the money they have to make things better for working families.

• Dave Kamper is senior state policy strategist for the Economic Policy Institute.

President Ronald Reagan loved to say that the nine most terrible words in the English language were, “I’m from the government, and I’m here to help.”

The American Rescue Plan Act, enacted three years ago in March, proves Reagan wrong: Government action − when timely, targeted, and sufficient in size − can make all the difference for people across the country. It’s a model we’d do well to follow in future crises. It’s also a model that Tennessee seems to have ignored, to the disadvantage of the state’s working families.

One of ARPA’s key elements was sending $350 billion directly to state and local governments with few strings attached. These State and Local Fiscal Recovery Funds (SLFRF) were designed to tackle the myriad ills plaguing communities in the wake of COVID, and it did its job. 

Here’s how other states are using their ARPA funds

Typically when the federal government gives cash to state and local governments, it’s for specific uses at specific times − so many dollars for fixing roads, or buying new fire trucks, or securing our elections, that sort of thing.

But when President Joe Biden took office in January 2021, his team knew that if ARPA tried to micromanage how state governments spent the money, it would have missed the mark. Instead, SLFRF could be used for effectively anything responding to the pandemic or the economic impact of the pandemic such as making up lost government revenue, hero pay for frontline workers, or infrastructure spending, whatever the state thinks is best. 

Some states have used their funds in inventive and helpful ways. Minnesota allocated $500 million in “hero pay” for frontline workers. Connecticut announced a plan to pay off the medical debts of thousands of families with fiscal recovery funds. Other states used the money to rebuild public services, which had never fully recovered from budget-cutting that many states adopted in the decade following the Great Recession.

States closer to Tennessee have also used these funds to strengthen their economies and rebuild public services. Kentucky spent $168 million to repair and renovate school buildings. North Carolina spent almost $500 million in grants to businesses to help recover from COVID. Georgia spent $1 billion of ARPA money in 2022 to give cash assistance to poor families.  

Nearly 90% of Tennessee funds have not been spent yet

And Tennessee? Tennessee has barely touched the money. According to the latest data available from the U.S. Department of the Treasury,

Tennessee has spent just 10.5% of the $3.7 billion it received in fiscal recovery funds in 2021. While other states have rebuilt infrastructure and supported working families, Tennessee has done almost nothing.

More: Nashville OKs use of COVID-19 relief funds to stabilize rocky Fisk University finances

While the state rolled out an ambitious plan for using the money, very few of those paper plans have been approved by the legislature, and even less money has gone out the door. $500 million was allocated for broadband, but only $44.6 million has been spent. $1.3 billion was budgeted for wastewater infrastructure – just $36 million has been spent. $15 million was earmarked for Habitat for Humanity to support low-income housing, but none of those funds have yet been appropriated by the legislature. 

It’s an open question whether they ever will. Tennessee only has until Dec. 31 to formally obligate the funds, or it loses them forever. Now is the time for the governor and the state legislature to use the money they have to make things better for working families. If they don’t, they will have wasted a once-in-a-generation chance to do good.

Dave Kamper is senior state policy strategist for the Economic Policy Institute.