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June 19, 2021

Council mulling $10.9M in relief funds

Officials hope to further refine plan in upcoming budget talks

The City of Gilroy is expected to receive $10.9 million in Covid-19 relief funds. But how it will be spent is still uncertain as officials review the numerous requirements set by the federal government, City Administrator Jimmy Forbis told the Gilroy City Council on May 17.

President Joe Biden signed the American Rescue Plan Act into law on March 11. The plan dedicates about $65.1 billion in direct aid to counties throughout the nation—and about $55 billion to cities and towns—through the Coronavirus Local Fiscal Recovery Fund.

In California, the state itself expects to receive about $26 billion from the American Rescue Plan. Cities and counties in California will collectively receive another $16 billion, according to the Legislative Analyst’s Office.

Jurisdictions—including local school districts—that receive American Rescue Plan funds can use the money only for specific purposes identified in the law. According to the LAO, permitted uses of the funds are: respond to the Covid-19 public health crisis or its negative economic impacts; support essential work; fill in revenue losses that have occurred since 2018; or water, sewer or broadband infrastructure.

Forbis presented a conceptual plan to the council, which will be further defined as the city undergoes budget talks later this month and in June.

That could include investing $3.2 million into streets over the next two fiscal years, as well as $2.2 million to hire positions that were cut in 2020 due to the pandemic-induced recession.

The preliminary plan also includes $4.3 million to account for loss of revenues, as the city burned through most of its reserves over the last year, Forbis said.

Forbis pointed to the plan to maintain streets with some of the funding, saying city officials interpret that as one of the qualified uses of American Rescue Plan money.

“But we also aren’t completely sure that streets qualify as infrastructure improvement,” he said. “We are still somewhat confused, and are making some assumptions that we are pretty sure we will have to further refine.”

The council will hold a May 24 study session on the budget and consider it in June.

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