If ARPA feels like it’s been part of your budget forever, you’re not imagining it. The American Rescue Plan Act (ARPA) has, for many organizations, shifted from a special funding source to a critical backstop, supporting essential services, staffing, technology, and infrastructure across cities, counties, and agencies.
Since 2021, the American Rescue Plan Act (ARPA) has helped cities, counties, and agencies keep services running, fund long-overdue projects, and navigate years of uncertainty. For many organizations, ARPA dollars became less of a “special funding source” and more of a critical backstop, quietly supporting everything from staffing to technology to infrastructure.
Now, as we move through 2026, ARPA is entering its final chapter for local governments.
The scramble to obligate funds is behind us. What remains is arguably harder: making sure every obligated dollar is spent on time, documented properly, and defensible if questions arise later. At the same time, many local leaders are beginning to feel the weight of what comes next: budgets without ARPA, programs that need sustaining, and heightened scrutiny around how these historic funds were used.
This year isn’t about big announcements or new allocations. It’s about execution, accountability, and planning for life after ARPA.
Where ARPA Funding Stands Today (2026)
Under ARPA’s State and Local Fiscal Recovery Funds (SLFRF) program, recipients were required to obligate all funds by December 31, 2024. Obligation meant an order was “placed for property and services and entry into contracts, subawards, and similar transactions that require payment.”
Once funds were obligated, recipients were granted an additional two years to complete the work. All obligated funds must be fully expended by December 31, 2026, meaning goods must be delivered, services completed, and payments made.
For many governments, this final stretch of ARPA doesn’t feel like a clean wrap-up; it feels like threading a needle.
Projects that started years ago are still in motion. Some involve multiple departments. Others depend on vendors, construction timelines, or approvals that don’t always move on schedule. At the same time, finance and procurement teams are under pressure to make sure every dollar is spent correctly, on time, and with the right documentation behind it.
And while teams are focused on closing out ARPA projects, many leaders are also looking ahead and feeling uneasy about what happens when this funding is gone.
Local Governments Are Bracing for the End of ARPA
According to the National League of Cities, the end of ARPA funding is already top-of-mind for city leaders across the United States.
In fact, the 2025 State of the Cities Report found that 69% of respondents believe the end of ARPA funding will negatively impact their budgets and overall city management, which is a clear signal that these dollars have been doing more than funding one-off projects.
For many communities, ARPA helped fill gaps that existed long before the pandemic. As those dollars wind down, the challenge isn’t just compliance; it’s figuring out how to maintain momentum without them.
Why 2026 Is the Most Important Year Yet for Agencies Leveraging ARPA
By 2026, most ARPA decisions are already behind you. The dollars are committed. The plans are approved. What’s left is making sure everything actually gets across the finish line.
For many agencies, that’s easier said than done.
Projects that looked straightforward on paper can start to feel complicated in practice, especially when timelines stretch, vendors fall behind, or internal approvals take longer than expected. A contract signed in 2024 doesn’t help much if work isn’t completed or paid for before the end of 2026.
That’s why 2026 tends to expose the weak spots: where departments aren’t fully aligned, where project tracking lives in spreadsheets instead of systems, or where no one is quite sure whether an invoice has been paid or just planned for. These are the natural result of managing multi-year projects under pressure.
The agencies that navigate this year successfully are the ones that slow down just enough to take stock. They’re checking in with vendors. They’re reconciling commitments against actual spending.
And they’re asking hard questions now instead of at the end of the year when options are limited.
Common ARPA Risks in the Final Year
As agencies enter the last stretch of ARPA, several risks consistently emerge:
- Projects falling behind schedule, leaving insufficient time to complete work and issue payment
- Incomplete or inconsistent documentation, especially for payroll and administrative costs
- Fragmented financial systems, making it difficult to reconcile expenditures across departments
- Underestimating reporting workload, particularly during close-out and audit preparation
Institutions such as the UNC School of Government have emphasized that managing SLFRF projects after the obligation deadline requires ongoing oversight, not a “set it and forget it” approach.
Planning for a Post-ARPA Fiscal Reality
While ARPA funding ends in 2026, its impacts and the decisions made with it will shape budgets for years to come.
Local governments are increasingly focused on:
- Sustaining programs launched with ARPA funds
- Replacing one-time federal dollars with local revenue or alternative grants
- Evaluating which investments delivered the most long-term value
According to the National League of Cities, many communities are already shifting attention toward long-term fiscal resilience as ARPA support phases out.
Agencies that treat 2026 as both a close-out year and a planning year are better positioned to navigate the transition.
Final Takeaways for 2026
- Expenditure Deadline Is Critical: The ARPA obligation deadline has passed, but the expenditure deadline of December 31, 2026 remains critical.
- Reporting Continues: Reporting and documentation obligations continue into 2027.
- Budget Impacts Are Widespread: 69% of city leaders expect negative budget impacts once ARPA funding ends.
- Strong Execution Required: Success depends on clear documentation and proactive project management.
- Transition Planning Is Essential: Agencies should prepare for fiscal realities after ARPA funding ends.
Conclusion
The final year of ARPA is a pivotal moment for local governments. Agencies that focus on ARPA final year strategies, prioritizing execution, clear documentation, and proactive transition planning, will be best positioned to deliver outcomes and sustain progress beyond this historic funding.
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FAQ
What are ARPA final year strategies for local governments?
ARPA final year strategies include ensuring all obligated funds are expended by the deadline, maintaining accurate documentation, and proactively planning for fiscal sustainability after ARPA funding concludes.
Where can agencies find guidance on ARPA close-out and compliance?
Agencies can consult resources from the U.S. Department of the Treasury, the UNC School of Government, and the National League of Cities for best practices on ARPA close-out, compliance, and reporting.
How can local governments sustain programs after ARPA funding ends?
Local governments can explore replacing one-time ARPA funds with local revenue, alternative grants, and by evaluating which programs deliver long-term value for continued support.
