The City of Morgan Hill will use about $8.65 million in federal stimulus funds to bring back public safety services, community events, street repair investments and city staff that were cut shortly after the Covid-19 pandemic started in March 2020.
The city council voted 4-1 to approve these expenditures of funds from the American Rescue Plan Act (ARPA), and other mid-year budget adjustments at the May 26 meeting. Council member Yvonne Martinez Beltran voted against the budget plan.
Other adjustments approved by the council include a $450,000 grant from Destination Home to assist in local plans to end homelessness; new salary schedules for city staff; and a resolution to declare a climate emergency and adopt a climate action plan.
The $1.9 trillion ARPA is the third and latest round of federal stimulus funds, approved by President Joe Biden in March. The plan dedicates about $65.1 billion in direct aid to counties throughout the nation—and about $55 billion to cities and towns—through the Coronavirus Local Fiscal Recovery Fund.
In California, the state itself expects to receive about $26 billion from the American Rescue Plan. Cities and counties in California will collectively receive another $16 billion, according to the Legislative Analyst’s Office.
Jurisdictions—including local school districts—that receive American Rescue Plan funds can use the money only for specific purposes identified in the law. According to the LAO, permitted uses of the funds are: respond to the Covid-19 public health crisis or its negative economic impacts; support essential work; fill in revenue losses that have occurred since 2018; or water, sewer or broadband infrastructure.
Morgan Hill and cities all over the country suffered a quick and sizable loss of revenue throughout 2020 due to restrictions on business and public gathering imposed by the Covid-19 pandemic and stay-at-home orders. As a result, city hall has cut about 9.5 full-time staff positions and about $4.8 million in expenses for the two-year 2020-22 budget.
City Manager Christina Turner noted at the May 26 meeting that the $8.65 million allocated from ARPA is about half of the $17.3 million in expected revenue loss to the city since the pandemic started. That number represents losses in sales and hotel tax revenues from the general fund, as well as other revenues from recreation programs, planning and development and other taxes.
“The main theme for the use of those (ARPA) funds is the restoration of services that were cut due to Covid-19 and revenue loss,” Turner told the council when presenting the city staff recommendation. “These funds are meant to be a stimulus, to bolster our response (to the pandemic) and address some of the impacts.”
Specifically, the council ultimately voted to use the ARPA funds to restore the following programs and staff that were cut in last year’s budget approval:
– Restore more than $40,000 for community promotion funding, including downtown twinkle lighting, Freedom Fest events, Healthier Kids Foundation and Safe Trick or Treat;
– Funding for Economic Development position;
– Staff funding for recreation as summer programs begin to phase back in;
– Certain funds for police and animal services, and for public safety-related community programs such as the Citizens Police Academy, National Night Out, Parent Project and reserve officer pay;
– Funding for a full-time Accounting Assistant;
– General liability and insurance;
New programs to be funded by the ARPA funds in Morgan Hill include:
– $300,000 for an Economic Recovery Downtown Revitalization program. That expense includes $50,000 for a study on the Monterey Road lane reduction plan approved by the council in May;
– Audiovisual equipment upgrades at council meeting chambers;
– Downtown maintenance and cleanup;
– Funding for full-time Utility Worker;
– Climate action plan.
The ARPA funds will restore these services and expenditures—as well as others—over the next four budget years, city staff explained.
ARPA is the third major stimulus package approved by the federal government since the pandemic started. In early 2020, Morgan Hill received about $570,000 from the $2.3 trillion CARES Act.
The Destination Home grant approved by the council is unrelated to the ARPA funds. The $450,000 will be spent over the next three years, and will allow the city to hire a full-time case management position to address homelessness, Turner told the council.
The city still has a list of unfunded needs as compared to expenditures before the pandemic. These include $1.3 million for police, $2.3 million for fire, $600,000 for infrastructure; and about $1 million lost due to the suspension of the city’s growth control policy.
Martinez Beltran voted against the budget adjustments because she thinks more of the ARPA funds should go directly to nonprofits, businesses and organizations that helped Morgan Hill get through the pandemic but suffered financially.
“This (ARPA) money, I see us funding the same things,” Martinez Beltran said. “There is no shift in priority. That makes me very sad. I would have liked to have seen us have a conversation about how we were going to spend the money, what we identify as the needs of our community, in a public forum.”
BUDGET ADJUSTMENTS
The Morgan Hill City Council on May 26 approved the following mid-year budget additions:
– $8.65 million from the American Rescue Plan Act will mostly be used to restore services and staff that were cut by the Covid-19 pandemic. The funds will be distributed to the city over the next 12 months;
– $450,000 grant from Destination Home to help the city address homelessness;
– Climate Action Plan.
