Michigan local governments face challenges spending federal COVID relief funding, U-M survey finds

July 5, 2023
Written By:
Daniel Rivkin, Ford School of Public Policy
Main street. Image courtesy: U-M Center for Local, State and Urban Policy

Michigan local governments are facing challenges in spending the $4.4 billion in COVID relief allocated to them in the 2021 American Rescue Plan Act, according to a new survey.

The funds were intended to support local governments to stabilize their budgets, invest in their communities and stimulate local economies, and were targeted at counties, cities, villages and townships.

Twice in the past two years, the Michigan Public Policy Survey asked local leaders about their experiences with ARPA, including problems their jurisdictions may be facing regarding funding or projects. The most recent results are from the spring 2023 wave, which took place Feb. 6-April 17 and included 1,307 jurisdictions statewide.

A majority of local leaders report concerns in 2023 about inflation and other cost challenges (63%), as well as problems with other procurement issues such as lack of available contractors and supply chain challenges (56%). Overall, concerns with procurement issues increased compared with last year, while problems with navigating state and federal bureaucracies declined.

There also continue to be considerable challenges regarding the one-time nature of the federal funding and uncertainty once allocations are spent.

Among 13 project categories for ARPA spending presented on the survey, Michigan local governments most commonly report funding particular types of capital improvements, with a majority statewide (53%) spending or planning to use funds for facilities such as public buildings and public parks. Roads and other transportation infrastructure (38%), water and sewer infrastructure (31%) and public safety (27%) are the next most common targets for spending, and these percentages are essentially unchanged from 2022.

“We see that the uncertainty that comes with one-time funding is holding some of these communities back, as well as the supply chain issues that have plagued the economy as a whole,” said Debra Horner, the survey’s senior program manager.

Only 15% of local governments statewide report engaging in regional or multijurisdictional collaboration on projects, down from 20% in 2022. Larger jurisdictions are more likely to report pursuing community engagement efforts to help guide spending (23%) and to have public-private partnerships (35%).

“While some challenges have continued or worsened in the last year, it’s encouraging to see that bureaucracy-related issues have eased,” said Tom Ivacko, CLOSUP executive director. “Improved federal, state and local government interoperability has important payoffs for all of us and our communities.”

The survey has been conducted by the Center for Local, State, and Urban Policy since 2009, and reaches out to village, township, city and county officials in all 1,856 general purpose local governments in Michigan.