Los Angeles Mayor Eric Garcetti and City Controller Ron Galperin announced Wednesday that the city will receive $1.35 billion in direct aid from the federal stimulus package passed by the U.S House this week.
The package, which was subsequently signed by President Joe Biden on Thursday, specifically allots $350 billion in aid for individual cities, counties, and states hit hardest by COVID-19. In total, California will receive $42.6 billion, with $26 billion going directly to the state. Many counties will also be receiving significant funding, with LA County alone being earmarked for $1.9 billion. And while other Californian cities will be receiving stimulus money, such as $306 million going to San Diego and $223 million going to San Jose, Los Angeles is by far the largest city beneficiary in the state.
Both Garcetti and Galperin praised the package, noting its historical significance.
“The American Rescue Plan is a watershed moment in the life of our nation and our response to COVID-19 — with historic investments in vaccine distribution, relief for working families, jobs for frontline workers, and support for children, students, parents, small businesses, and tenants,” said Garcetti on Wednesday. “For Los Angeles, that translates into preserving vital services threatened by our pandemic-driven budget crisis; protecting jobs jeopardized by this public health emergency; and placing us on stronger financial footing to ensure equity in our vaccination efforts and lift up our most vulnerable neighbors.”
However, the sudden windfall of $1.35 billion to the city has started a debate among city leaders on how the money should be spent.
Among the most pressing concerns for the city is the current city debt of $550 million, up from $400 million in September 2020. LA has taken many extreme measures, including furloughing 15,000 city employees, in an attempt to ease the debt, but have only succeeded in slowing the growth of the shortfall.
Both Garcetti and Galperin noted during their respective briefings on Wednesday that removing the debt caused by the COVID-19 pandemic and the following economic crisis is the priority.
A critical need to end the deficit in Los Angeles
“During this time, we took all of our savings account, our reserve fund, and spent it down so that we could protect you,” said Mayor Garcetti on Wednesday. “We took out our credit card and starting buying things on credit like PPE and other things so that our hospital workers would be protected.”
“Now with this money, we can put that money back into the savings account, we can pay off the credit card and any cuts that we’ve made in critical services we can restore. That money has to go first and foremost to stabilizing our finances, replenishing our reserve fund, paying off the credit card that we have.”
“That money has to go first and foremost to stabilizing our finances.”
In addition, Mayor Garcetti emphasized that other funds should go to helping the economic health of the city, as well as continuing vital public health programs.
“For Los Angeles, that $1.35 billion translates into preserving vital services threatened by our pandemic-driven budget crisis, protecting jobs jeopardized by this public health emergency; and placing us on stronger financial footing to ensure equity in our vaccination efforts and lift up our most vulnerable neighbors,” added Garcetti.
Galperin also noted the necessity of filling in the debt gap, especially since Los Angeles recently exhausted a significant portion of reserve funds and was planning to take out a $150 million loan to get into the next fiscal year. However, Galperin said that community investment and the restoration of city services cut over the past year, especially to underserved communities, is also an important goal.
“Revenue losses have been staggering,” Galperin said on Wednesday. “And (they) will continue for at least a few more months.
“We need to replenish the reserves that the city has been dipping into through the pandemic. What remains should fund one-time programs and projects that create good local jobs in disadvantaged communities, enhance equity and hasten economic recovery citywide. It should be our priority to ensure that neighborhood services families rely on don’t get cut or reduced and to fully restore any that have suffered, especially in historically underserved communities.”
“Funding should also be used to replenish the city’s reserves, which have helped us get through the pandemic this past year. What remains should fund one-time programs and projects that create good local jobs in disadvantaged communities, enhance equity and hasten economic recovery citywide.”
Economic needs in Los Angeles
In a follow-up Tweet, while Galperin emphasized bridging the debt, he also reiterated the need for the city to “jumpstart” the economy.
“This bill is monumentally important for L.A,” Galperin Tweeted on Wednesday. “While this will allow the City to transform a very dire financial situation into a much better one, maintain services, build equity and jumpstart the economy, it’s incredibly important to be financially prudent with the $$$ we receive.”
This bill is monumentally important for L.A. While this will allow the City to transform a very dire financial situation into a much better one, maintain services, build equity and jumpstart the economy, it's incredibly important to be financially prudent with the $$$ we receive. https://t.co/IwOIXHXcZR
— LA Controller Ron Galperin (@LAController) March 10, 2021
Meanwhile, other groups and lawmakers have eyed the funding as well and have pushed for specific spending not outlined by Garcetti or Galperin.
Community Coalition, InnerCity Struggle, and other non-profit groups in LA have said that $500 million of the stimulus funding should go to housing, child care, elder care, basic income, rent relief, mortgage relief, utility relief, and other basic needs by LA citizens.
However, for the most part, local lawmakers agreed that city needs to come back from revenue losses caused by the pandemic.
“Our first priority must be to recover from the revenue losses that we have already suffered and will likely continue to suffer,” said Los Angeles City Councilman Paul Krekorian on Thursday. “No one should see this as ‘found money’ to be spent on new programs.”
In city hall, the mood is also one of paying down debt.
“It’s not exactly sexy spending,” an unnamed city hall worker explained to the Globe. “But it’s necessary. Everyone getting the $1,400 check is doing something important with it. Well, LA got a much bigger check but, like individual people, there are COVID-19 issues that need addressing first. That’s the likely plan.”
The final spending plan for the stimulus funds to Los Angeles are to be likely announced in the coming weeks.