City Council OKs plan to spend an expected windfall of $153 million in federal funds

The Long Beach City Council on Tuesday approved a proposed plan to spend $153 million Long Beach is expected to receive through the federal American Rescue Plan signed into law last week.

The approved spending recommendations were nearly unchanged since Mayor Robert Garcia unveiled the Long Beach Recovery plan early last week. Later in the week, the mayor revealed the city would receive an additional $12.35 million that it could spend at the city’s discretion.

On Tuesday Garcia said the additional money would be allocated to more housing support like down-payment assistance for first-time homebuyers ($5 million), early education and child care ($1 million), micro-mobility and guaranteed income programs ($2 million each).

The plan will also invest in economic empowerment zones ($1.25 million), expanding translation services ($500,000) and eliminating library fees as well as increasing the city’s immigration defense fund ($300,000 each).

“This is just a piece of what’s happening around economic recovery,” Garcia said Tuesday, noting that additional state and federal grants could ultimately bring more money to Long Beach businesses.

Some of the new proposed allocations reflected community demands for greater investments in communities hard hit by the COVID-19 pandemic and its economic toll.

Long Beach has over $230 million in federal funding to spend, but large chunks of it are tied to previously approved programs to help renters with back rent, or are dedicated to specific parts of the city like the airport, homeless services and COVID-19 testing and contact tracing.

The distribution of funds will come in two waves, with the city receiving half of the funding in the first 60 days after the federal government begins sending money to states and cities, and the other half a year after the first distribution.

The funding must be spent by the end of 2024.

City Manager Tom Modica again cautioned the council that the city does not know exactly how the feds will allow the money to be spent. Modica said that more-defined guidelines are expected to be released by the federal government in the next 60 days.

“We really shouldn’t be committing these dollars to anything we can’t undo before those regulations are out,” Modica said.

One of the largest allocations the city proposed is to plug budget holes, end furloughs and replenish the city’s reserves with over $83 million of the $153 million from the federal government.

Federal guidance on whether this is allowed has not been released. Shoring up the city’s finances, however, could put off painful budget cuts, some of which were made worse by the pandemic, city officials said.

The council approved using $30 million to patch an anticipated budget shortfall in the coming fiscal year, but the city still faces a $37 million shortfall in the fiscal year starting Oct. 2022.

“We can respond to the emergency because we had the reserve to do so, and now part of this plan is to replenish it so we can respond to the next pandemic or natural disaster,” Garcia said.

The plan also pledged $51 million to directly support businesses, including a $13 million grant that will allow the city to provide free testing and contact tracing as more businesses start opening and operating indoors.

Tens of millions more were allocated to cleaning up business corridors, providing basic-needs services like food distribution events and helping to close the city’s digital divide.

Approval of the funds could ultimately change if federal guidelines released over the next few months conflict with the city’s plan. A more complete breakdown of the city’s proposed plan can be viewed on the city’s website.

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Jason Ruiz covers City Hall and politics for the Long Beach Post.
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