Orange County Cities Getting $715 Million, Local Leaders Consider how to Spend It
Friday, April 16, 2021
Each of Orange County’s 34 cities will receive a share of about $715 million from the American Rescue Plan Act, and for some, the two-year aid bill corrects their exclusion from earlier rounds of federal assistance.
Since the coronavirus pandemic forced businesses to slow down, most cities in Orange County have lost tax revenue and borne unexpected expenses. In last year’s CARES Act, the county itself got $554 million, but that bill only allowed cities with populations of 500,000 or more to get money directly, so no OC city made the cut.
This round of federal aid “is going to go a long way in helping cities who have had a parallel track of issues happen,” said Melanie Perron, the League of California Cities’ deputy executive director of advocacy and public affairs. “By providing relief to cities, this is going to help our economy recover faster.”
Some local city leaders are happily considering how to spend a windfall; others say their share won’t even plug all their growing budget holes.
The $1.9 trillion federal bill allocates $130 billion for local governments, with half going to counties and the other half to cities and towns. Local government allocations are based in part on population, and Santa Ana, the county’s second biggest city, is set to get the biggest share, $143 million, while the county’s least populous city, Villa Park, will get the smallest, $1.1 million.
All the cities will get half the money sometime in May, and the other half a year later.
Getting aid for all cities, not just the biggest ones, in the latest bill was “a huge deal,” said Congressman Mike Levin, D-San Juan Capistrano, whose 49th district stretches from south Orange County into northern San Diego County. He was part of a group of legislators who lobbied hard to get money for smaller cities.
Not only did the initial round of funding skip all but the biggest municipalities, it restricted spending to COVID-19 expenses. So Levin said he pushed for the American Rescue Plan Act to allow “latitude and flexibility for these cities to be able to use those funds in a way that will be most meaningful to them.”
Broad guidelines for the new funding include some clear limits (for example, the money can’t be used to pay down pension liability), but several city leaders said they’re waiting for more detailed rules from the federal Department of the Treasury on what kinds of spending are allowed. Here’s what some cities said about their plans for the money.
The money coming to Irvine, $53.2 million, is a one-time infusion of cash. Because of that, Interim City Manager Marianna Marysheva said it probably won’t be used to cover ongoing expenses.
Plus, she added, the City Council adjusted spending early in the pandemic so “we kind of balanced our budget on our own.”
But Irvine does have infrastructure needs, including aging roads, parks, and other facilities that could benefit from the federal dollars. Another possibility is to improve sanitation at parks and playgrounds and air filtration in city buildings. Marysheva expects to present spending options to the council later this month.
“Anything we get in terms of federal assistance will go to address our budget deficit,” Anaheim spokesman Mike Lyster said. In March, the City Council voted to borrow more than $200 million to cover current and projected shortfalls, and Lyster said the $107.5 Anaheim expects to receive in new relief “is not a windfall for us.”
About 100 city workers accepted an “early separation” offer, but no one’s been laid off, Lyster said. The federal aid will help backfill personnel costs for ongoing services, including police and fire, and community services workers who were dispatched away from shuttered park and library programs to staff COVID-19 testing and vaccination sites and food distribution.
City Manager Ken Domer said the $34.7 million coming to Fullerton could patch a number of budget holes, but the city is waiting for clearer rules on how to proceed. “So, instead of guessing, we are going to digest the guidance and then look at best use.”
The pandemic has reduced Fullerton’s tax revenue, forced staff layoffs, and slashed some city programs and services. “All of those will be a priority,” Domer said.
Asked if the aid is the right amount at the right time, Domer added, “Better late than never!”
City leaders are looking at four areas where their share of the pot – $50.6 million – might best be spent.
“Number one, certainly, is trying to get ourselves out of this COVID recovery and continuing to have a balanced budget, protect our reserve funds – the long term financial picture of the city is critical,” City Manager Scott Stiles said during the March 23 meeting of the Garden Grove City Council.
The other three areas are infrastructure, public safety and quality of life issues, including parking and homelessness.
“This money is going to be a godsend,” Stiles said, referring to restored budget cuts and 22 de-funded city jobs.
Because the pandemic forced the closure of Disneyland and other theme parks, Garden Grove hotels have tumbled. The city is down $25.7 million in hotel tax revenue since March 2020, according to a city staff report.
While city leaders say they won’t know the full impact of the pandemic until it’s over, they are hopeful the $12.8 million in assistance will start to make a difference.
City revenues from retail sales are down around 25%, while transient occupancy taxes from the hotels are down about 50%.
At the start of the pandemic, the city acted quickly to cut costs. Some facilities were closed, including the just-opened $80 million Civic Center. But officials sought to keep services going, partnering with the Red Cross and nonprofits to hold blood drives and food distributions there.
Lake Forest entered the pandemic debt-free, city officials said, so they were able to continue park renovations and annual street maintenance programs.
While city officials say Newport Beach tax revenues might not recover to pre-pandemic levels for several years, they expect the projected $9.3 million in federal aid to help make up the difference.
The City Council was forced to stall capital projects, freeze non-essential hiring, and eliminate vehicle and equipment purchases.
“It’s nice to have taxpayer funds returned to the city and to local government,” said Mayor Pro Tem Kevin Muldoon. “We’ve had a strong budget so we’re not in need of it as desperately as other cities.”
Muldoon expects some money will go toward infrastructure, such as road improvement and dredging of Back Bay.
San Juan Capistrano
While the city manager is making mental notes of priorities for the city’s expected infusion of $6.7 million, all city leaders are waiting to see specific Treasury Dept. rules before carving up the funds.
“We expect the ARPA funding will offset our pandemic-related revenue losses, and allow for additional investment in public infrastructure within the community,” said City Manager Ben Siegel.
City Manager Kristine Ridge called the city’s expected $143 million “a watershed moment,” and Mayor Vicente Sarmiento deemed it “a once-in-a-century kind of thing.”
The money boosts Santa Ana’s general fund nearly 44% from a year ago. And at a March 16 meeting, Santa Ana council members discussed a range of possibilities for how it could be used, including giving needy residents additional cash relief, acquiring new land for parks, improving infrastructure and creating a city health department.
“This is a moment to think bigger,” Sarmiento said.
Santa Ana spokesman Paul Eakins said residents can share their needs and ideas for how the money should be spent in town meetings and via a community survey. The next community meeting will be later this month, but the date has not yet been set.
Category: Economic News, orange county, Irvine