Dr. Pengju Zhang: Assessing Equity in the Utilization of the Coronavirus State and Local Fiscal Recovery Funding: Evidence from New Jersey and Beyond
By Dr. Pengju Zhang, Associate Professor, Rutgers SPAA
with Dr. Michael Hayes
Research Funded by the New Jersey State Policy Lab
The American Rescue Plan Act’s Coronavirus State and Local Fiscal Recovery Funds (ARPA-SLFRF) provide $350 billion to state and local governments, making it one of the largest federal aid programs to local governments in American history. The unprecedented infusion of funds aims to bolster local governments’ capacity to recover from the pandemic’s economic impacts. Compared to previous federal support during fiscal crises, such as the American Recovery and Reinvestment Act (ARRA) during the Great Recession, ARPA is notably more generous, direct, and flexible (Sheiner 2022).
Local governments can use these funds to replace lost revenue, invest in infrastructure, or enhance social welfare programs. Both policymakers and the public are eager to understand how effectively this aid has been utilized in practice. This policy blog explains how our current research project is designed to answer this critical policy research question.
Our current study aims to address two primary research objectives. The first research objective will be to focus on equity among residents, as ARPA legislation encourages progressive investments aimed at redistributional equity to achieve transformational impacts (Warner & Kelly, 2023). By collecting and analyzing ARPA data nationwide, we will assess how these funds have been allocated and used in New Jersey compared to other states. A comparative analysis will allow us to understand the fiscal decisions made by New Jersey’s local governments relative to those elsewhere, providing insights into whether these funds are being used equitably to benefit residents, particularly those in disadvantaged communities.
The second research objective is to examine equity among local governments. Some local entities have predominantly used this one-time funding to compensate for lost revenue or cover recurring expenditures. This approach raises concerns about the potential long-term impacts of ARPA funding on fiscal disparities among local governments. To investigate this, we will merge local financial data with ARPA funding data to depict the fiscal landscape over time. By doing so, we will analyze how local governments have used ARPA funds during and after the pandemic, identifying patterns and disparities in funding utilization.
Our study’s methodology will employ multiple data sets and various research methods, including surveys of local government leaders, rich descriptive analysis, and regression analysis. This comprehensive approach will allow us to capture the nuanced impacts of ARPA funding on local fiscal policies and outcomes. Through this research, we aim to provide a clear picture of how local governments are navigating the complexities of post-pandemic recovery and the extent to which ARPA funds are fostering equitable outcomes.
In summary, our research project will address the critical need to understand the practical implications of ARPA-SLFRF funding on local governments. By focusing on equity among residents and local governments, we hope to contribute valuable insights that inform future policy decisions and ensure that such significant federal aid achieves its intended transformative impacts.