Berkeley could get as much as $68 million in federal relief funds from the recently passed American Rescue Plan, the city said this week.
The money will be an “economic windfall for our city,” City Manager Dee Williams-Ridley said during a town hall meeting Monday evening.
“Obviously we’re very appreciative and excited that the city of Berkeley is going to get this very significant amount of funding to not just address the revenue losses we’ve experienced over the last year but to also help support our COVID response,” Mayor Jesse Arreguín said at the town hall.
COVID-19 hit Berkeley’s economy hard, reducing taxes and adding unpredicted expenses such as the city’s emergency response to the pandemic. Last year, city staff projected a $40 million general fund deficit for the current fiscal year, which began July 1, 2020. A recent report from the city’s Office of Economic Development showed that tax revenue had dropped 13% since the pandemic began in March 2020.
In a report the Berkeley City Council will receive Tuesday night, staff said mid-year general fund revenues had dropped nearly 5%, from approximately $107 million to $102 million, compared to the first six months of the prior fiscal year.
On the bright side, however, this year’s general fund revenues — estimated to reach about $205 million — are nearly 5% higher than expected, according to meeting documents.
The American Rescue Plan Act money will come to Berkeley in two batches about one year apart, Williams-Ridley said Monday evening. The money must be used by the end of 2024.
The federal support became available after President Biden signed the $1.9 trillion American Rescue Plan Act of 2021 into law last week. As a result, about $350 billion will go to cities and counties around the country. Oakland will get $192 million. Alameda County will receive $324 million, according to KTVU.
Berkeley is still waiting to learn how it can use the money. So far, it is clear it can be applied to help address the pandemic’s economic impacts on small businesses, nonprofits, households and hard-hit industries. The money also can be used to pay for essential government services and infrastructure needs, including water, sewer and broadband improvements, Williams-Ridley said. And it can be used to pay wage premiums for essential workers.
The money cannot be used to pay down pension liabilities or offset revenue resulting from tax cuts.
The Berkeley community will help determine where the American Rescue Plan money will go, said Williams-Ridley. The best way for that to happen is for community members to participate in the city’s upcoming budget talks. The first major discussion is set for May 11, followed by another meeting on the subject May 29. The City Council will also discuss city finances and how to use the federal money on June 1, June 15 and June 29, she said.