With an estimated $7 billion revenue shortfall expected to pummel California’s cities over the next two fiscal years, local leaders and advocacy groups are sounding the alarm. The vast majority of local governments say they will have to cut services to account for the fiscal crisis.
While the federal government funneled assistance to cities above 500,000 through the CARES Act, the League of California Cities has already said it’s not enough.
The CARES Act provides for many of the immediate needs of municipal governments to prevent economic decline. Unfortunately, for the governments themselves and their residents, it will prove insufficient for intermediate and long-term economic stabilization, particularly for those communities that have not yet fully recovered from the Great Recession. Funding distribution should rely not only on population, but also economic need, COVID-19 impact and fiscal capacity of local governments to meet the needs of their communities.
To mitigate fallout, California’s cities are seeking additional help from the state. The League has called on Gov. Newsom to create a stabilization fund and to put some of the $9.5 billion the state received from the CARES Act toward local governments.
“The case we’re trying to make is that some of those resources that they've received from the federal government should flow down to cities,” said the League’s Executive Director Carolyn Coleman. “If we are truly partners in recovery … then we’re asking our state partners to step up and to help our cities manage through the impacts of Covid-19.”
Cities are having a hard time planning for the future because no one knows what the future will look like or exactly when social distancing measures will end. CalMatters recently examined actions by the state’s 10 largest cities in response to both the health and economic impacts of COVID-19. Measures taken include cash cards for struggling families and an emergency COVID response fund in Los Angeles; converting the San Diego Convention Center into a homeless shelter; a similar plan for hotel rooms in San Francisco; Anaheim Mayor Harry Sidhu’s $15 million plan to restart the local economy; San Jose’s launch of Silicon Valley Strong; a small business fund in Fresno; and the creation of the Long Beach Medical Reserve Corps.
Local governments are still hoping for additional federal relief, but they've been put off by statements from leaders like Mitch McConnell who's declared he’d rather see states and local governments go bankrupt than have them benefit from a “blue state bailout.”
Gavin Newsom called McConnell’s statements “offensive” on Thursday. Right as he was, indignation won’t pay the bills.
For more on the problems facing California’s local governments, read Perfect storm clobbers California cities by Dan Walters.