ARPA Deadline 2026: What Local Government Finance Directors Must Do Now

In 2021, the American Rescue Plan Act (ARPA) delivered a lifeline. The State and Local Fiscal Recovery Funds allocated $350 billion to governments nationwide—covering payroll, services, and infrastructure their budgets couldn’t fully support.

The lifeline expires December 31, 2026. All funds must be fully expended by then. That means goods delivered, services completed, and payments made.

The problem is that many governments used ARPA to cover recurring operating costs rather than one-time investments. When the funding disappears, so does the budget cushion. According to the NLC’s 2025 State of the Cities report, 69% of mayors say the end of ARPA will negatively impact both their budget and city management.

For finance directors, that gap has to be filled somehow. Increasingly, the answer is property tax, which means more scrutiny from taxpayers and more load on your legacy system.

The clock is ticking. Here’s what you need to do now.

What the ARPA Deadline Means for Your Budget

In many cases, ARPA was used to avoid hard choices. Now those choices can’t be avoided.

Many municipalities used federal relief funds to avoid raising property taxes. In New York, counties reduced their property tax levy by 1.2% (or $75.7 million) from 2022 to 2023 after receiving ARPA aid, according to the New York State Comptroller. That relief is gone now.

Compounding the problem, state aid hasn’t kept pace with inflation, and local revenue growth has slowed. That leaves local governments with fewer places to turn when ARPA disappears.

States are already bracing for impact. Pennsylvania’s Department of Community and Economic Development (DCED) has requested a $10 million increase to its municipal hardship fund in anticipation of the local government budget gap that will follow the ARPA expiration. That response is notable, and it underscores how real the risk is. But hardship funds are a backstop, not a strategy.

For most local governments, property tax is the most reliable and stable source of revenue. But most legacy property tax systems weren’t built to handle higher collection volumes, tighter deadlines, and zero margin for billing errors.

Why Acting Now Pays Off

The December 31, 2026 deadline isn’t just an accounting problem. It’s a planning problem too, because implementation takes time. Waiting means either a rushed transition or another year on the same legacy system—with all the limitations that come with it.

By onboarding a modern solution now, you can be live and collecting before the deadline hits.

Better collection rates require better tools, not raising taxes. Most jurisdictions leave 2–5% of their authorized levy uncollected every year. On a $50 million tax roll, improving property tax collection efficiency by a single percentage point equals $500,000 in recovered revenue. At five points, that’s a $2.5 million bump in revenue.

That’s not wishful thinking. It’s based on what your jurisdiction is already authorized to collect.

Done right, government revenue modernization funds itself. The gap ARPA leaves behind doesn’t have to be replaced dollar-for-dollar with new taxes or service cuts. Better collection technology can close part of it—quietly, efficiently, and without a significant tax increase.

What CentralSquare Property Tax Delivers

For many finance directors, the ARPA deadline is also a wake-up call for government revenue modernization. CentralSquare Property Tax is built for exactly this moment. Here’s how.

Legacy Replacement

On-premises billing systems come with servers to manage, maintenance windows to schedule, and infrastructure risk that grows every year. Property Tax moves everything to a single, integrated cloud-based platform hosted on AWS. It eliminates the overhead so your team can focus on collection.

Collection Efficiency

Legacy systems create manual work and billing errors—both of which leave money on the table. Property Tax drives digital payment adoption above 60% in year one, reduces billing errors, and cuts the manual processes that slow down your team. The result is more revenue collected, faster.

Citizen Transparency

As property tax rates rise to close the gap, residents will have questions. A citizen-facing portal with 24/7 bill access, payment history, and self-service options reduces call volume and builds trust when your office needs it most.

Compliance Reporting

During this time, councils and taxpayers will demand visibility into how revenue is being collected and allocated. Property Tax includes built-in reporting tools—so when your team needs any compliance report, it’s ready and accessible.

Integrated Finance Ecosystem

In Property Tax, your tax data connects directly with land management and finance modules. This gives your team a unified view of municipal operations and eliminates the silos that make post-ARPA budget restructuring harder than it needs to be.

What to Ask Your Finance Team This Week

The ARPA deadline is quickly approaching. The time to start asking hard questions is now, not after the budget is already under pressure. Here are a few to get started with.

What share of our current operating budget was covered by ARPA funds, and what replaces it in 2027? This is where planning needs to start, both as a budget exercise and a strategic decision about how your agency funds core services.

What is our current property tax delinquency rate, and what would a 1-point improvement be worth on our roll? Run the math on your own tax roll. The revenue opportunity may be larger than you think, and it doesn’t require a tax increase to capture.

Is our billing system capable of supporting higher digital payment adoption before the next billing cycle? If the answer is “no” or “we’re not sure,” that’s a signal. Low digital adoption means slower collection, more manual work, and more room for error.

If we started a technology evaluation today, what would our implementation timeline look like? Implementation takes time. Agencies that start now have options. Agencies that wait until Q4 may not.

Start the Conversation Now

Governments that start evaluating now will have options before December 31. Every month of delay narrows the path to a clean transition. And rushed implementations carry risks that no finance director wants to explain at council meetings.

The good news is that getting started doesn’t require a major commitment. A 30-minute conversation about CentralSquare Property Tax will address your state requirements, your current system, and what implementation looks like before the deadline.

Request a demo today. The conversation is free. The delay isn’t.