Coronavirus

Local Officials Mull Next Steps for Millions of Federal Dollars Pouring In

Santa Cruz County is set to receive $52.9 million from the American Rescue Plan

The city of Watsonville is set to receive $18.8 million from the American Rescue Plan Act. The money could help the city close the gap on roughly $40 million of deference maintenance projects, which include ailing roads and parks. PHOTO: TARMO HANNULA

On his first day in office, President Joe Biden announced the American Rescue Plan. The legislation, also known as ARPA, was signed into law on March 11 and called for $1.9 trillion to be disseminated nationwide to speed up the country’s economic recovery from the Covid-19 pandemic—and Santa Cruz County will soon see the benefit of these funds.

Roughly $130 billion will be for local governments, with $65.1 billion for counties, $45.6 billion for metropolitan cities and $19.6 billion for towns with less than 50,000 residents. Santa Cruz County is set to receive $52.9 million from the fund, half of which will be disbursed in May and the other half to arrive no earlier than May 2022. Watsonville—with roughly 53,600 residents who largely work in various sectors of the agricultural industry—will receive $18.8 million, with smaller amounts sent to the neighboring cities of Scotts Valley, Capitola and Santa Cruz.

While the funding may sound significant, local representatives are cognizant of what this funding will need to be focused on first and foremost—and that this support will not negate the economic burdens the pandemic has placed on all 273,000 Santa Cruz County residents.

HELP WANTED

When the ARPA was originally proposed, the goal was to build upon the CARES Act from March 2020 and the Consolidated Appropriations Act from December 2020.

While both of these bills called for loans available via the Paycheck Protection Program, assistance checks for eligible individuals and loan repayment deferrals, there were still long-standing issues. Unemployment rates peaked at levels not seen since 1948 (when the federal government began collecting the data), with a high of 14.8% unemployment in April 2020. Some industries saw greater drops, such as the leisure and hospitality field—with 39.3% unemployment at its height, also in April.

With the continued issues stemming from unemployment, many cities and counties nationwide saw steep drops in their generated revenue streams. Santa Cruz County, which relies heavily on the tourism and hospitality industries, cited revenue losses of over $15.5 million, or an 80% drop, during the pandemic, contributing to a decrease of $11.6 million of the General Fund.

Yet, with the forthcoming money, President Biden believes that this funding could dramatically improve things, both on the individual and county levels.

“What you all did with it and the refinements you made, it directly addressed the emergency in this country,” he said in March. “Because it focuses on what people need most.”

DUAL DISASTERS

Now, as Santa Cruz County and its cities await the funding, many officials are breathing a slow sigh of relief—albeit, a temporary one. 

According to 5th District Supervisor Bruce McPherson, his team aims to respond to the issues that arose from Covid-19 and the CZU Lightning Complex fire through the funding first.

“Our economy is so dependent on agriculture and tourism that we needed to reach out and ensure employees are covered,” he says, noting the county’s efforts to get residents vaccinated and assist lower-income communities, particularly in South County.

Following the fires of last August—leading to more devastation for the area, with nearly 60,000 residents evacuated and more than 900 homes destroyed—McPherson also aims to accommodate residents through the ARPA funding as much as possible. The county requested $55 million from FEMA in relation to the fires.

“We won’t know until later this year—probably into the 2021/2022 budget year—how much we’re going to get of that $55 million that we claimed is needed,” he says. “In general, that’s the loss we’re still waiting on to see what we get from the federal government.”

Of the nearly $53 million set to come into the county from the ARPA, most of that funding will go toward health and human services and homelessness services. While the funding sounds like a lot, McPherson explained that the money will allow the county to fully restore furloughed staff, complete road repairs and restore reserves.

“There’s some specifics about what we have to do and how to use this funding,” he says. “It’s pretty specified—we may be asking for some help in some of our hotels and vets halls, but I think it’s going to fit in with what the federal government gave us in the plan.”

MOST IN NEED

The $18.8 million designated for Watsonville will amount to only some of what the city’s officials hope to focus on moving through 2021 and beyond.

“It’s hard to overstate what an incredibly challenging and unpredictable year it’s been, and really having to respond to circumstances that we’ve never encountered before,” says City Manager Matt Huffaker.

Huffaker noted that Watsonville has further been disproportionately impacted by the pandemic, with the largest industries being first responders. Through the last year, Huffaker believes the pandemic has taught the city more about troubleshooting and overcoming challenges which could “permanently impact the way we operate as we emerge from the pandemic.”

Currently, Watsonville has more than $40 million in unfunded capital improvement projects for general fund operations, which includes facilities, parks and road infrastructure. Huffaker hopes that some of the funding can be used to fund these projects quickly, while also expanding on broadband access for the community in the new virtual landscape.

City Councilmember Lowell Hurst—who’s been on the council on and off since 1989—says he and other officials await the details of how the funding can be used, and he believes plans can’t really be but in place until those guidelines are reviewed.

“It sounds like a lot of money, but some of these projects require a lot of money,” he says. “We don’t want to run into a situation where we inadvertently take on something that can’t be done under the guidelines.”

Huffaker agreed, noting that the Treasury department is set to release detailed instructions surrounding the plan within the coming days.

“We’re excited by the opportunity, but there’s a lot we don’t know at this point,” he says.

Some South County residents feel that the funding provides a good opportunity to address community needs—or at least raise the importance of them.

Watsonville native Raquel Pulido believes the city should allocate some of the funding toward rehabbing Ramsay Park, one of the only open green spaces for city residents and children, including her 13-year-old son. She cites limited overhead lighting and the grass field as two major deterrents for athletes and community members, and she is discouraged that the park’s rehabilitation hasn’t begun since the master plan was approved in 2019.

“Ramsay Park is central—it’s the only soccer location open to the community,” she says. “A lot of our families don’t have access to space outdoors, and we really have the need.”

POCKET CHANGE 

In neighboring cities, the funds will also be impactful, albeit to a lesser degree.

Santa Cruz will see just over $14.1 million, which city spokesperson Elizabeth Smith says will only make up for some of the estimated $22 million revenue deficit through the 2022 fiscal year.

Smith and the city’s team will release their proposed budget for the coming fiscal year Friday in relation to the funds, and will fortunately be able to meet their status quo budget. However, there is still a projected $8 million shortfall—and the city will need to figure out other revenue shortages for the ongoing gaps.

“We really see this as revenue replacement, as a way to give us a lifeline, so we can keep the same level of service for our residents as we can,” she said. “We are so grateful for the funding, but its purpose is really revenue replacement and continuing on as we figure out how to fill the gap.”

Scotts Valley—a city of just under 12,000 residents—is set to receive approximately $2.2 million spread out over the next two fiscal cycles.

City Manager Tina Friend says city staff are in the process of developing next year’s proposed budget, and they are in the early stages of analyzing some potential and recommended use of the ARPA funds. The Scotts Valley City Council is expected to discuss the funding at its May 19 meeting, when Friend is also expected to present a draft budget.

Because the budget and planning is still in its early phase, the council will be more prepared to assess funding needs and community feedback in the coming weeks and months.

For Capitola, Mayor Yvette Brooks is expecting $1.88 million to come in for the city of 10,121 residents—but she is pumping the brakes on large expenditures and capital projects.

According to Brooks—who assumed the role in December 2020—she and the city’s officials were anticipating no more than $4 million in budget cuts from the pandemic. Leadership began furloughing and cutting discretionary funding but were unsure of what exactly to expect in both the short- and long-term. Ultimately, the tourism-reliant city lost approximately $2.5 million in revenue during the pandemic.

“I think we’ve seen a lot of ebbs and flows—from a full shelter in place to having some businesses being able to open, some outdoor dining opportunities,” she says. “We’ve really had to act as a city in a reactive sense—we’re constantly trying to accommodate our businesses and accommodate our community grant recipients.”

To be as safe as possible, the city created a Covid-19 Contingency Fund, which now has some funding set aside in case of potential issues akin to the pandemic. Further, Capitola was granted Community Development Block Grant – Covid-19 Relief Funding last fall, and it recently reapplied for additional assistance.

“For the first time ever, we’re reaching out to the state for funding in different ways, and it’s available,” she says. “It just takes a lot of staff work and a lot of outside organizations—we’re a really small city, so we have to lean on other organizations or contractors to support us when we do apply for grants like this.”

Brooks says that the ARPA money will likely be used to make up for the lost revenue, as Capitola continues to support its community as much as possible. She hopes to move forward her three goals as mayor—strategic budget planning, addressing inequities in the community and creating equitable policies within city departments—following these next steps.

“We’re setting priorities as a full council, and then figuring out what we can do moving forward,” she says. “Thank goodness it’s not as dire as we anticipated—I hope that we can meet the governor’s goal of reopening June 15 and get out of this.”

CONNECTING CITIES

Looking forward, McPherson believes the experience of the last year has made clear the need for stronger health care practices throughout the county, and more of a focus on a healthy community, a large part of which relates to housing and homelessness.

“Those are the two areas we need to focus on to see that people can be protected as much as we can,” he says.

Huffaker believes connecting with other cities will alleviate the continued stressors in the region and provide much-needed support and growth for the communities at large.

“With $280 million coming to the Monterey Bay region as a whole, I think there’s also a big opportunity to explore partnerships to tackle regional needs,” he says.

However, as of now, Hurst notes that the county should still be cautious of what’s to come with the funding: “We’re not done with Covid-19 in many respects.”

“What we do now sets the stage for how we respond later,” he says. “We need to be as prepared as we possibly can and try to be open to modifying our plans as we go along.”


1 Comment

1 Comment

  1. Tressa Schaller

    May 26, 2021 at 3:04 pm

    Scotts Valley should not get any funding until they
    start building low income housing.
    We need to make them accountable and start questioning why they don’t have to help with our housing crisis. The “not in my backyard” mentality needs to stop and so does the funding they receive.

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