Article Executive Director's Message By League of California Cities Executive Director and CEO Carolyn Coleman

Federal clawbacks will further shift the burden to local governments

It seems hard to believe it was only three months ago that Gov. Gavin Newsom officially ended the pandemic state of emergency. As our communities continue to respond to and recover from COVID-19, there is no denying that the pandemic fundamentally changed our way of life and local economies. Once thriving urban cores with office buildings and brick-and-mortar retail stores are no longer bustling centers for economic activity that support jobs for residents and revenues for city services.

Cities are fighting hard to accelerate the adjustment to new economic realities. They are also grappling with record inflation, ballooning deficits, growing income inequality, and housing costs out of reach for too many of their residents.

With the rapidly changing landscape for local economies, both the public and private sectors are again trying to determine how best to support economic development activities through workforce development, small business incentives, adaptive reuse of buildings, and improvements in local infrastructure. This is all critical to ensuring good-paying jobs and services in our communities.

The economic development challenges in California are mirrored in every state across the country. But if our experience in California is any guide, the federal government may be losing sight of one of the key lessons learned from the pandemic as it responds to the latest national economic challenges: People and the communities that nurture people must come first.

From Yreka to Chula Vista — and everywhere in between — we survived the pandemic by coming together to take care of our most vulnerable residents and local businesses.

As you will read in this issue, cities like Santa Monica pivoted quickly and creatively to feed people in their community and sustain their local businesses, which are the bedrock of their local economy. The city leveraged local, state, and federal funding to invest in more than two dozen programs to accelerate local recovery, including rental relief, food pantries, and outdoor spaces so restaurants and businesses could continue to operate safely.

The direct, flexible funding relief the federal government delivered to cities through the CARES Act and the American Rescue Plan Act (ARPA) was a robust and extraordinary lifeline for local governments in a time of unprecedented crisis. The federal government recognized cities as a critical tool in our nation’s economic rebound and sent the resources directly to the local level so cities could be co-authors in their own recovery.

This federal funding enabled cities to protect the public health and safety of millions of Californians and pulled our cities back from the brink of economic collapse. This funding also allowed cities to make transformative investments for the future. This is why we must ensure that efforts at the federal level to claw back portions of these funds from cities do not succeed.

The most recent threat facing cities is cropping up in current negotiations to raise or suspend the debt ceiling. As part of these conversations, some federal lawmakers have proposed a clawback of ARPA funding to reduce federal spending. City officials — who must balance their budgets annually — know well the importance of fiscal responsibility. But let’s be clear: Federal clawbacks won’t reduce the need for federal investments in local communities to support unhoused residents, strengthen infrastructure, and bolster economic development. They will only shift the financial burden to local governments, leading to a slowdown of our already fragile recovery.

This was the message we delivered to several members of the California congressional delegation in late March when the League of California Cities Officers and I traveled to Washington, D.C., to advocate on the top issues facing California cities.   

With the deadline for the federal government’s fiscal year on the horizon, it is safe to assume that threats to claw back federal relief funding for cities — whether in debt ceiling negotiations or other legislative proposals — will continue to rear their ugly head. Cal Cities will remain vigilant, working closely with the National League of Cities and our other partners to ensure that cities don’t get left empty-handed.