Some legislative budget leaders on Tuesday signaled concern about state and local agencies’ ability to spend hundreds of millions of dollars in American Rescue Plan Act funding on infrastructure projects in less than four years.
And those concerns could impact how they dole out a remaining more than $1 billion in ARPA funds this spring. Spending discussions are ongoing.
“(Timing) is certainly a factor,” Sen. Greg Albritton, R-Range, told Alabama Daily News on Tuesday. The ARPA funding, of which the state received about $2.12 billion, must be allocated by the end of 2024 and spent by the end of 2026. If it’s not spent, it could have to be returned to the federal government.
“Losing it would be worse than never having it,” said Albritton, chairman of the Senate General Fund budget committee.
When you’re talking about water, sewer and broadband infrastructure projects, some small government agencies, potential supply and labor shortages and inflation, 2026 is not far away, Albritton said. Meanwhile, other states are also trying to spend similar piles of federal funding on infrastructure, creating competition for contractors and crews.
Albritton and other lawmakers on an ARPA oversight committee were briefed on Tuesday on the spending of the first $1.06 billion tranche of ARPA funds they allocated last year. That included $225 million for water and sewer projects, distributed by the Alabama Department of Environmental Management.
Water systems across the state asked for a combined about $3 billion in funding for more than 1,000 projects. About 175 projects have been awarded ARPA funding and ADEM Director Lance LeFleur said lawmakers could fund more with this year’s second round of ARPA. But Albritton noted the number of new construction projects and asked about the availability of contractors.
LeFleur said with so many projects and competition from other states, some localities are finding it difficult to find contractors to do the work. But that’s out of the agency’s control, he said.
“Once those funds are granted to the (local water and sewer) system, it’s out of our hands,” LeFleur said. “It is then up to them to make sure the engineering and the contracting is complete. Now, if you’re asking me if it would be a good idea for Congress to provide some flexibility on the deadline…”
Albritton quickly interrupted that line of thought, saying, “we try to not make a habit of counting on the feds around here.”
Lawmakers and Gov. Kay Ivey put the $225 million in ARPA funds into three categories: $120 million for sewer systems for “emergency or high need projects;” $100 million as matching grants; and $5 million for Blackbelt sewer projects.
Sen. Chris Elliott, R-Josephine, on Tuesday publicly questioned LeFleur on how projects are awarded funding. His south Baldwin County district has gotten none of it despite significant growth, he said.
“That’s not acceptable,” Elliott said. “I would submit that one way to make sure we deal with the problem of spending this money in a timely manner is not to exacerbate the problem by providing more (funding) and instead use it in a different manner.”
There are three projects being funded in Baldwin County, according to ADEM.
“You point out that Baldwin County is one of the fastest growing areas of the state,” LeFleur said. “… It is very fortunate that their systems can fund growth.
“… Systems that are not growing do not have the opportunity to put in new equipment that some of the faster growing ones do.”
Later, Elliott, who is on the Senate General Fund committee, said he is worried about the 2026 deadline too.
“Regardless of whether or not we’re able to put some guardrails on this, I have real concerns about our ability to put those projects on the ground that already have appropriations and grants, much less (allocating) additional funding.”
Outside of the state’s ARPA money, counties and municipalities received their own funding. Greg Cochran, executive director of the Alabama League of Municipalities, said cities are working under the assumption that 2026 is a hard deadline for spending.
“It’s best for the Legislature, if they’re going to allocate these funds, to do it earlier than later,” Cochran said. “ The later you put it off, then the shorter the window is to get the needed supplies and the engineering reports and those sorts of things.”
Albritton told ADN he would like to see the second round of ARPA funds spent “quickly and cleanly and well within the guidelines the feds give us.”
That spending plan is expected to be a priority early in the legislative session that starts in two weeks, but Albritton said discussions among state leaders have led “to disagreements over priorities.”
Alabama Daily News’ Todd Stacy and Alexander Willis contributed to this report.