Modesto weighs questions in how to spend $47.3M windfall from COVID-19 stimulus plan
Who knew it could be so hard to spend $47.3 million?
That is the challenge facing Modesto officials as they start thinking about how to spend this windfall from the federal government’s latest COVID-19 relief package, the $1.9 trillion spending plan that President Joe Biden signed into law March 11.
Modesto’s $47.3 million is part of the $350 billion from the package — called the American Rescue Plan — going to U.S. territories, tribal governments, states and their counties and cities to help them deal with the economic cost of the pandemic. About $196 million is coming to Stanislaus County and its nine cities, including Modesto’s funding.
Modesto’s challenge includes balancing its own needs against the communities. For instance, city officials have talked for years about the need to replace its dilapidated Fire Station No. 1 but could not find the money.
Councilman Bill Zoslocki said at Monday’s City Council Finance Committee meeting that he recalled the cost to replace the station was about a $11 million a few years ago. The city’s parks and trees also need attention, but these also are expensive projects. And nonprofits and community groups are seeking financial help for their worthy projects.
Council members also have their own priorities on how the money should be spent, from tackling homelessness and affordable housing to blight and hiring more police officers. That is why Zoslocki suggested council members use the city’s strategic plan in setting spending priorities. The plan provides a road map to a better city.
$24M to dig city out of its hole
And then there is the city’s own budget.
City Manager Joe Lopez gave a preliminary estimate at Monday’s Finance Committee meeting that Modesto could need about half of the $47.3 million to recover its own costs from the pandemic, including increased expenses and lost revenues.
The $47.3 million has to be spent by the end of 2024. Modesto expects it will have wide latitude in how it spends the money. But Lopez stressed this is one-time money so it should not be used for recurring expenses.
The Modesto City Council’s committees are discussing potential uses of the money ahead of more in-depth discussions and recommendations at the council’s budget workshops in mid April. The Economic Development Committee met last week and the Finance Committee met Monday. The Safety and Communities Committee meets April 12.
The public can participate in committee meetings and the budget workshops, but city spokesman Thomas Reeves said Modesto is looking at an additional way for the public to weigh in, perhaps through an online survey, on how to spend the money.
Another issue is the $1.9 trillion American Rescue Plan has lots of other funding for Modesto and the community. For instance, there is an additional $7.25 billion in the Paycheck Protection Program, nearly $10 billion for homeowners behind in their mortgage payments, an additional $22 billion for tenants behind in their rent and utilities and more than $28 billion for the Restaurant Revitalization Fund to help the owners of 20 or fewer restaurants, brew pubs, bars and similar establishments.
And there is more money for governments, including $30.5 billion for public transportation systems and an additional $200 million for the SAFER grant program that allows local governments to hire firefighters.
Lopez, the city manager, said the city does not want to spend the $47.3 million on city projects that can be funded through other sources from the American Rescue Plan.
Question on helping restaurants
And Councilman David Wright said at Monday’s Finance Committee meeting that Modesto should not provide funding to businesses and other others that can receive their own funding through the American Rescue Plan.
He said that is why he opposes the Economic Development Committee’s recommendation from last week that the City Council provide $650,000 in funding for the Modesto Downtown Partnership’s Relief Across Downtown digital gift card program.
The program lets customers double their money for purchases made downtown. Funded through donations, the RAD Card lets someone buy up to $100 in a universal gift card to be used at participating locally owned downtown restaurants and other businesses and then matches that amount. A large majority of the participating Modesto business are restaurants and similar establishments, according to the program’s website.
Wright said struggling restaurants and similar businesses can avail themselves of the Restaurant Revitalization Fund.
The City Council is expected to consider the Economic Development Committee’s recommendation at its Tuesday meeting.
Lopez said Modesto expects to receive the $47.3 million from the U.S. Treasury in mid May along with complete guidance.
A city report states the American Rescue Plan legislation states local governments can spend the money responding to “the COVID-19 emergency or address its negative economic impacts, including assistance to households, small businesses, and nonprofits, or aid to impacted industries such as tourism, travel, and hospitality.”
This story was originally published April 1, 2021 at 4:00 AM.
