In March, city officials announced that Long Beach would receive over $153 million in federal relief money through the American Rescue Plan Act and the City Council promptly approved a spending program that was designed to prop up struggling businesses, non-profits and communities. However an unexpected reduction in those federal dollars has led to proposed cuts.
When Long Beach leaders revealed the proposed 2022 budget last week, it showed that the city had actually received about $18 million less in flexible federal funding than it had anticipated, leading to proposed reductions to programs designed to help restaurants, and people experiencing food insecurity and homelessness.
While the Long Beach Rescue Act included nearly $250 million in federal and state aid money much of it was tied to specific uses like the city’s $51 million rent relief program and a $15 million grant earmarked for the Long Beach Airport.
Assistant City Manager Linda Tatum said that the federal government didn’t provide an explanation for the reductions.
“I think it’s important to acknowledge that we got less and that we tired to be fair and equitable when we made reductions,” Tatum said.
Any program that received more than $300,000 was reduced by 10%, while those under that amount were left alone. Programs with over $2 million in funds were reduced by 20%.
The largest reductions came from funding set aside to help businesses, with those funds being reduced by nearly $4.5 million. Relief funds to help struggling restaurants, bars and breweries. gyms and other personal care businesses, as well as funds to help clean the city, were all cut by $1 million each.
Other programs aimed at helping to close the digital divide, provide basic needs to residents in need and fund legal counsel for renters experienced smaller cuts ranging from tens of thousands to hundreds of thousands of dollars.
The city initially planned to spend $83 million of the federal funds on replenishing its reserves, but will reduce that amount by $6.5 million. Most of that money, however, was rolled into a $5 million safety plan approved by the City Council Tuesday night that includes violence prevention programs and $75,000 for gun buybacks, according to Tatum.
Officials still plan to balance this year’s budget with $30 million from the federal government and ending city employee furloughs.
Ciaran Gough, owner of The 908 in East Long Beach and president of the Long Beach Restaurant Association, said it is unfair that programs meant to help residents and business owners took up to 20% reductions but city programs didn’t see the same reductions.
“That’s money that could’ve gone out to help people, help businesses,” Gough said, adding that it’s the city’s job to make sure the budget is balanced, and it shouldn’t rely on federal funds to do it this year.
Gough said that other than funds that helped develop patio space for restaurants other aid has been slow to reach business owners and many have figured out how to survive without the help of aid money.
He’s unsure how much the funding through the restaurant relief fund, which offers maximum grants of $25,000, would help full-service restaurants, which he said suffered the most during the shutdowns.
“We probably lost over $2 million in sales at the very least,” Gough said.
Steve Goodling, president and CEO of the Long Beach Convention and Visitors Bureau, said that the $125,000 reduction to funds set aside to help attract visitors back to the city and help the hospitality industry recover might be offset by deals his team was able to strike with state tourism officials and other in-kind advertising opportunities.
“We understand that money was short, and we’re grateful for what we got, but we were able to multiply it and grow its impact,” Goodling said.
Goodling said he’s hopeful that if additional aid money becomes available, that more flows into the tourism sector, saying the support is critical to getting people back into Long Beach restaurants, hotels and attractions.
Tatum said that there is hope that additional state and federal funding could be on the way that could allow the city to potentially bolster city programs and help close funding shortfalls in other areas.
Just this week the state approved a $6 billion broadband infrastructure spending bill that could send funds to Long Beach to address digital divide and connectivity issues, and possibly allow the $900,000 currently set aside in the city’s budget to be moved elsewhere.
But trying to factor that money into the upcoming budget could be tricky, Tatum said. The City Council is required by law to adopt the budget before the Oct. 1 start date of the next fiscal year.
“We don’t know the timing, we don’t know the amount and we have a date-certain to pass this budget,” Tatum said.
The council is currently scheduled to take its first vote on approving the budget at the end of August.