Sentinel staff report–
How Citrus Heights will be spending its allocation of $15.6 million in one-time federal relief funds was the topic of a live-streamed Zoom interview hosted by the city on Wednesday.
The 30-minute “Citrus Hi-lights” session was hosted by City Communications Officer Nichole Baxter, with the police chief and interim finance director answering questions from Baxter as well as from questions submitted live by viewers on social media.
Bill Zenoni, the city’s interim finance director, said relief funds from the American Rescue Plan Act (ARPA) have restricted uses and are intended to “provide support to government agencies in responding to the negative impact caused by COVID.” Preliminary guidelines were released in a 151-page U.S. Treasury document in May.
Zenoni described four broad categories of eligible uses, but he said two aren’t as applicable to Citrus Heights: offering premium pay and funding investments in broadband, sewer and water, which he said are services the city doesn’t offer.
The categories the city is focusing on are negative impacts to the city and local businesses, and funding government services. He said latter category is one the city is “following very closely and waiting for further guidance on.”
Zenoni said the federal government has strongly recommended that the money not be used for creating or expanding programs that would require ongoing fiscal support, due to the relief funding being a one-time stimulus. Funds are required to be used by the end of 2024.
The city received the first half of its $15.6 million on May 19 and hopes to receive the second half in May next year. The funds represent a significant boost to the city’s General Fund budget, which is around $39 million for the current fiscal year — not including the ARPA funding.
Police funding
A significant chunk, $5.3 million, of the funds have been allocated already to restoring 22 of 28 police positions, bringing staffing back to pre-pandemic levels.
Baxter said prioritizing funding of police services was in line with community feedback from a FlashVote survey the city conducted in May, where hundreds of respondents listed public safety as the number one priority.
Police Chief Ron Lawrence said his department is working “very quickly trying to hire as many people as we can,” and said a half-dozen positions have already been filled, mostly sworn officers. Filling the rest will take time, he said.
“Any type of police hiring takes longer than you might imagine,” said Lawrence, noting police background checks, psychological and medical exams and a lie detector test, for sworn officer positions.
“So really this isn’t like flipping a switch and just hiring — throwing the help wanted sign out front and hiring people,” he said. The chief estimated it will likely take until the end of the year to fill all 22 positions.
Lawrence also put out a call for local Citrus Heights residents with clean backgrounds to consider applying for a job with the Police Department.
Where the money can’t go
Zenoni said while approved funding uses are still to be determined, three specifically prohibited uses are: paying for unfunded pension liabilities, restoring city reserves and paying off debt.
Can the money go to road repair?
Zenoni said there’s a possibility that a “very small amount” of the money may be able to go towards pothole filling and road repairs. The portion of funds would come from the category of “making up for lost revenue,” which the finance director said would likely be an area where the city would have broad discretion over how to use the funds.
He cautioned his remarks by saying the city’s backlogged street improvement needs are in the range of $7 to 12 million per year, and said the one-time relief dollars “unfortunately will not solve that issue.”
Phase II funding
Zenoni said it’s still not clear how the second half of the funding will be used, as the city is still awaiting more information on how the funds can be used.
He also said public outreach will be conducted to assess impacts to the community and businesses from COVID-19, with staff returning back to the City Council “probably in several phases or steps… with recommendations for potential uses within the city and within the community for these remaining funds.”
Long-term funding
In answering a question about Police Department funding beyond two years, Lawrence said the one-time relief dollars won’t solve the city’s long-term fiscal woes and said the city will “have to find an alternative resource for funding” in the future.
“After this ARPA funding runs out, the city government’s going to have to find a way to maintain the services — or cut services, that’s another option,” said Lawrence. He cautioned that cuts would likely have to come from the Police Department, noting that police staffing makes up the majority of the city’s General Fund budget.
Although not discussed during Wednesday’s Zoom interview, data presented in April show the city’s financial situation is projected to improve with the arrival of new sustained funding from property taxes, which will stop being handed over to the county beginning in fiscal year 2022-23. The amount of funds expected annually from property tax revenue is estimated around $6.5 million.
According to the city’s two-year budget approved in April, the city’s books came just shy of fully balancing for the current fiscal year — without federal relief funds factored in. The following year’s budget shows a $3.7 million surplus, largely due to the city maintaining control of its property taxes for the first time, with the surplus going to boost the city’s reserves to a projected $9.3 million by mid-2023.
While property tax revenues will help, city staff have said the funds won’t resolve all of the city’s budget troubles.
To watch a recording of the “Citrus Hi-Lights” broadcast from July 21: click here.
