Turns out, smaller cities are surprisingly good at managing money when a pile of federal cash lands in their lap. According to the National League of Cities, many of these communities sidestepped debt entirely, opting to pay for big infrastructure projects with good old-fashioned cash.
Because apparently, when you're under 50,000 residents, issuing debt can be a bit of a headache. So, these cities leaned on their general fund — think of it as their municipal piggy bank. And that piggy bank got surprisingly plump over the last four years, thanks to robust property tax revenues and a healthy dose of federal American Rescue Plan Act (ARPA) funds.
Let that satisfying number sink in: 20% of cities surveyed used only cash for their infrastructure projects from 2022 to 2026. Another 71% used a mix of cash and debt, which is still a pretty savvy move. Only 9% relied solely on borrowing. This cash-first approach helped them avoid the often-fickle bond market, which is a win in any accountant's book.
We're a new kind of news feed.
Regular news is designed to drain you. We're a non-profit built to restore you. Every story we publish is scored for impact, progress, and hope.
Start Your News DetoxThe Party's Winding Down, But They're Ready
Now, the ARPA party is winding down. Those federal funds are expected to be spent within the next three years, and if property taxes decide to take a breather, smaller communities will need to get creative again. But here's the kicker: they didn't blow the federal windfall on keeping the lights on.
Instead, these smaller cities mostly used ARPA money for big, one-time projects like building bridges and roads, not just patching potholes. They kept their regular savings for the day-to-day maintenance. This means that as the December 31 ARPA funding deadline approaches, many of them are actually in a pretty good spot.
Farhad Omeyr, NLC's program director for research and data, was pleasantly surprised. He expected cities to treat the ARPA money like a free-for-all, but smaller communities largely used this one-time revenue for one-time programs, demonstrating some seriously solid budgeting and financial management. Who knew fiscal responsibility could be so... exciting?
