Small Cities Left Out of CARES Act Hope the County Is Feeling Generous - Voice of San Diego

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Small Cities Left Out of CARES Act Hope the County Is Feeling Generous

While the city and county saw almost immediate money in the bank to combat the health crisis, the remaining 17 cities across the region are left with smaller pittances with strings attached.

Escondido City Hall / Photo by Adriana Heldiz

San Diego County cities that didn’t qualify for direct federal coronavirus stimulus funds are hoping county supervisors are feeling generous with their $334 million relief fund, or that the federal government sends more aid their way.

That’s because nearly all cities across the county were largely left out of direct CARES Act funding – which targeted aid to municipalities with populations of 500,000 or more. In contrast, San Diego County – the entity quarterbacking the region’s response efforts – received $334 million and the city of San Diego received $248 million for its 1.4 million residents.

The reality is that while the city and county saw almost immediate money in the bank to combat the health crisis, the remaining 17 cities across the region are left with smaller pittances with strings attached.

They expect some Federal Emergency Management Agency reimbursements, smaller CARES Act block grants and in some cases, restricted funds for things like airports or sheltering the homeless.

The city of Oceanside, for instance, received $30,000 for its municipal airport and nothing else so far, said Michael Gossman, Oceanside’s assistant city manager, even as other costs pile up and long-term revenue declines in sales and tourism taxes come into focus. The city eventually anticipates another $800,000 to help low-income residents, though the money has yet to arrive.

City officials from across the county say existing financial supports are not enough and are pleading for more direct aid from whoever will give it.

Associations like the League of California Cities are lobbying Congress and state leaders for more stimulus money for smaller cities. They’re also asking for more flexibility in spending any money that does come, so it can be used to help cover lost revenues – something not allowed under the current CARES Act rules.

Whether those advocacy efforts will be fruitful remains to be seen.

“I’m not holding my breath, which is very disappointing, because the cities have taken a lot of frontline responsibilities,” said Escondido City Manager Jeffrey Epp.

Escondido has its own police and fire departments, as well as sewer and water utilities – essential services that need funding, Epp said.

First responders like paramedics need extra gear and protocols, and “those things cost money,” he said.

Epp expects FEMA to cover a “few hundred thousand at the most.”

Chula Vista Mayor Mary Salas said her city has taken on police security work around county-run COVID-19 testing sites along with other new costs, and has asked the county for help.

The city has seen a disproportionate share of coronavirus cases and is estimating a $5 million deficit for this year’s budget alone.

Salas and other city officials across the region have implored county officials to come to their aid.

CARES Act aid-sharing is allowed but not required of counties under current U.S. Department of the Treasury guidelines. Doing so would require county supervisors’ approval and could potentially set up a competitive race for limited dollars.

“We’ve been financially impacted by this virus and have had to provide extra services while our revenues are taking a deep dive,” Salas said.

Imperial Beach City Manager Andy Hall, who is expecting a roughly 8 percent hit to his city’s budget, said he is hoping more relief is coming.

For now, he’s only expecting to receive a nearly $65,000 block grant allocation at a time when his city is facing increased costs tied to the pandemic and has been forced to temporarily lay off about 15 part-time staffers, pull from reserves and put planned projects, including a skate park expansion, on hold.

“The county has always been fair with Imperial Beach,” Hall said. “We are just hoping, because we don’t have access to any of the CARES money, perhaps we can access those funds from the county so we can weather this as well.”

But an initial attempt at relief didn’t go as hoped.

On Tuesday, Hall said he and officials from Santee and Vista made a request on behalf of nine cities that rely on the Sheriff’s Department for police services that the county put off a scheduled 5 percent cost increase to their contracts – and perhaps use CARES Act funds to cover the difference instead.

“They told us that the CARES Act could not be used in that fashion,” Hall said.

That’s left Hall mulling other possibilities. For example, could the county use CARES Act funds to pay for a meal program for vulnerable Imperial Beach residents or help with public safety cost overruns tied to the city’s beaches?

“We’re desperate,” Hall said.

It’s unclear how the county will respond to all city requests – or when.

Andrew Pease, executive finance director for the county’s Health and Human Services Agency, said during a Tuesday presentation to the Board of Supervisors that up to $100 million of the county’s CARES Act dollars could be doled out to the 17 cities that didn’t receive the large coronavirus checks the city and county got from the federal government to spend on things like law enforcement or sanitation needs tied to the pandemic, or grants for small businesses.

Pease said no decisions had been made yet, and that the variety of options placed before supervisors exceeded the county’s $334 million CARES Act allocation by nearly $200 million. He also said the $100 million estimate was simply included for the purpose of discussion with supervisors.

“For this area, no action so far has been taken or proposed however the CARES Act does allow counties to transfer funds to a city within their region,” said Pease, who noted that the state could also direct CARES Act money it has received to smaller cities.

A group of state legislators wrote Gov. Gavin Newsom Tuesday asking for the state to share more of its CARES Act funding with cities left out of earlier rounds of direct payments.

Newsom has appeared wary of such requests recently. When a reporter asked Newsom last week during a press conference if the state would send more aid to smaller cities, he highlighted the state’s projected budget deficit totaling tens of billions of dollars.

“I am going to do everything to work with these cities and counties, but I can assure you this. We are not going to be in a position, even as the nation’s fifth largest economy, to provide for the needs of all the cities and the counties without federal support,” Newsom said. “And that’s why the federal support is the foundational framework that we are hoping to advance and successfully so, to help us bridge these deficits which we anticipate not just this year, but over the course of the next few years.”

San Diego County’s pot might be the best shot cities have, but it is unclear whether county supervisors are interested in entertaining such requests. None of the five supervisors weighed in on the proposition during Tuesday’s meeting.

Cities argue they are grappling with many of the same economic calamities and challenges faced by larger cities across the nation.

As they navigate the pandemic, cities are left interpreting, amplifying and enforcing a dizzying array of frequently changing public health orders coming from various levels of government, including rules around parks and beaches. Many are also increasing sanitation, ordering protective gear for employees and some run their own fire-medic departments responding to COVID-19 calls.

Gossman of Oceanside said direct emergency response costs there approached $1 million according to a tally in mid-April, and included staff time for police educating business owners about the rules and closures, added cleanings and handwashing stations, protective gear for city paramedics, meals and other things.

Beyond the initial emergency costs are the longer-term impacts on revenue streams that are worrying cities and leading to budget cuts. Essential city services like roads, police, fire and lifeguards are often paid for with a combination of city revenues that includes sales and tourism taxes, which have taken a big hit everywhere.

“Really, this isn’t frivolous, feel-good stuff … This is the really core basic things the city is supposed to provide and it’s affecting cities all over,” Gossman said. “Businesses need help and local governments need help as well.”

“It’s really missing the elephant in the room to somehow say cities or the county shouldn’t get any additional support from the federal government because their costs haven’t been higher,” Epp of Escondido, said. “Arguably, the barbershop that closed down doesn’t have higher costs. The whole point of the support is to deal with the revenue loss, and cities are in the same boat in that regard.”

For this current fiscal year, which ends June 30, Epp said Escondido estimates a $4.6 million loss to COVID-19 closures.

Escondido already furloughed 74 employees, most of them part-timers, including those in parks and recreation. Escondido will have to tap its reserve fund set aside for pensions to get through the coming year, and departments were asked to identify cuts totaling 3 percent.

City staff also plan to continue to recommend putting a 1 cent sales tax measure on the November ballot.

“We had strong support before and if anything, it’s more necessary than ever,” said Epp.

Del Mar City Manager CJ Johnson, whose city recently projected a 12 percent drop in city revenues, said Del Mar’s expected $7,925 in coronavirus aid will do little to offset coronavirus-related expenses like signage and staffing – or to help the city bolster programs to help residents in need.

“There is a lot of money flowing from the federal government to the state and the county,” Johnson said. “It’s not flowing down to the cities very well.”

Gossman in Oceanside remains hopeful more help will come.

“I’m optimistic that we will see something in the next stimulus package … Oceanside has seen real resurgence or boom in last 10 years or so with new development and new restaurants … hate to lose that. I am hoping we can resume that.”

Maya Srikrishnan contributed to this report.

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