Going forward, municipal finance will require new levels of leadership resilience
For new and seasoned city officials alike, the past two years of economic and fiscal uncertainty have been one for the books. The unanticipated expenditures and significant revenue losses caused by the pandemic have had an undeniable impact on funding for services, availability of staffing, and demands to support the local economy. Across the state, city leaders commonly used words like “pivot,” “innovate,” and “reimagine” as we have searched for the best ways to continue vital city services.
Local leaders know all too well how the pandemic exacerbated existing inequities and accelerated burgeoning challenges. And local leaders are astutely aware that the pandemic is not over and that our local communities continue to reel from its public health and fiscal impacts.
Despite this uncertainty, city leaders continue to press forward as we chart a path to recovery. And prudent financial decision-making will be critical in our recovery efforts.
As the level of government closest to those we serve, city officials are uniquely positioned to address these recovery and municipal finance issues. “We recognize and respect the accompanying responsibility,” wrote Rolling Hills Estates Mayor Frank V. Zerunyan in “The value of local public service.” The Sol Price School of Public Policy professor also emphasized, “In a world of constant competition for power and influence, [local officials] govern through values of collaboration and compassion.”
A critical tool in our cities’ recovery and rebuilding efforts is the $8 billion in funding for California cities secured in March 2021 through the American Rescue Plan Act (ARPA). The unprecedented flexible ARPA funding gives us, as city leaders, the extraordinary opportunity to go beyond recovery and to reimagine and reinvent our communities. We have the opportunity to not only address the immediate needs of our communities but also to invest in a way that positions our communities for long-term success.
Of course, this unprecedented level of funding also creates a myriad of competing choices and, as we seek to maximize the benefits of the funding, it can be difficult to know where to begin or what to prioritize. This month’s issue of Western City magazine offers a series of stories of how local officials are using ARPA funds to create transformative change in their cities.
Housing supply and affordability, rising homelessness, income inequality, and access to broadband services have been decades-in-the-making crises made glaringly evident during the pandemic. In “Transformative and desperately needed: The American Rescue Plan Act one year later,” you can read how five cities are tackling these issues with their ARPA funds.
- Salinas is investing to boost the production of affordable housing and increase services for unhoused residents.
- Anaheim is investing in small businesses and is focused on filling its multiyear budget deficit.
- Chico is investing in a citywide broadband expansion project and expanding services for those experiencing homelessness.
- Citrus Heights and Hermosa Beach are both investing in economic development and in restoring important city services.
- Merced is investing in affordable housing and addressing infrastructure deficiencies.
For the city of San Bernardino, ARPA has created the opportunity to invest $1 million to expand existing violence prevention efforts. In the story, “San Bernardino is breaking cycles of violence with community partnerships and flexible funding,” you will learn how the city partnered with community organizations to help prevent gang gun violence and de-escalate tensions with gang members and at-risk youth.
As with so many aspects of local government, the last two years have taught us many things about municipal finance. For example, although we can’t predict the future, we can be better prepared. We need to be able to swiftly analyze information and make decisions quickly and decisively. We have been reminded of the imperative of adequate reserves and of the value of diverse revenue streams that offer a balance during difficult economic times.
Bottom line, the rules of municipal finance are no longer absolute, and there is little likelihood that we will “go back to normal” any time soon. The fiscal horizon raises more questions and offers few answers. Will inflation and rising costs further slow recovery? How long will our cities suffer from the Great Resignation, and how will this affect our expenses or even our ability to deliver services? Is the shift to remote work more permanent than temporary, and what will be the resulting impacts on commercial office space and, in turn, the retail, restaurant, and parking revenues generated from office workers of a daytime economy?
Our way of governing will continue to evolve and will require new levels of leadership resilience. But time and again, city leaders have proven we are up for the challenge, and I know we can draw from our experiences and navigate a path forward where all communities thrive.