City Plans to Spend $270 Million in COVID-19 Relief

Public health, economic support, and emergency response are the broad priorities for spending the $270 million the city expects to receive in federal relief funding as it weathers the COVID-19 pandemic. That's the preliminary framework that Deputy Chief Financial Officer Ed Van Eenoo laid out to City Council at its work session on Tuesday, May 19, along with several guiding principles: ensuring public health remained a top priority, weaving racial equity throughout relief programs, protecting the city's fiscal health, and leaving room to change things up. Overall, the city budget office is recommending:

• $37.9 million of the anticipated funding to address medical and public health needs,

• $98 million for emergency response, and

• $101.2 million for economic support, with

• $33 million staying in a contingency fund.

Van Eenoo also aims to end fiscal year 2020 in September with a 12% reserve fund, or about $25 million, which is where the city began the year.

Federal funding is expected to cover about 75% of the costs the city incurred due to the pandemic – some through the Corona­virus Relief Fund established in the CARES Act, but also through Federal Emergency Management Agency Disaster Relief funds and other grants. Some of that money will reimburse the city for programs Council has already approved and funded, including the $15 million Relief in a State of Emergency (RISE) fund set aside for low-income Austinites who wouldn't receive direct relief under the CARES Act.

Staff is also recommending a new public health fund to support those who can't work while awaiting a COVID-19 test result or recovering from illness. Van Eenoo stressed that "to maximize the use of [federal] funds and to minimize the risk of claims being denied, we need flexibility in regard to which sources we apply to which programs." Expen­ditures for which the city claims reimbursement must follow U.S. Treasury guidelines.

The help will be badly needed. For the remainder of FY 20, staff projects declines in hotel occupancy tax and airport revenues of $36.7 million and $68.1 million, respectively, and an $8.9 million decline in parking revenues (about half what the city normally takes in annually). The city's March sales tax payment was down by 4.5% compared to last year, and Texas Comptroller Glenn Hegar has warned of further, steeper declines in April revenue.

Mayor Pro Tem Delia Garza and Council Member Greg Casar both urged staff to find more money for the RISE Fund, which nonprofits are burning through quickly to address the unprecedented economic needs created by the pandemic. "I'm a little disappointed in those numbers," Garza said. "I don't know how we're going to try and move things around, but I would like to see more allocated to RISE." Casar added that staff should not just pull funding from other relief programs to refill the RISE Fund, which he described as "just moving chairs around the table and not really changing anything."

Council likely will not vote to approve a final spending framework until June. Mayor Steve Adler indicated a special meeting would be called next week to take a closer look and give clear direction to help staff proceed with procurement contracts. The clock is ticking: Any dollars from the $270 million not spent by Dec. 30 cannot be claimed by the city; costs reimbursable by FEMA must be incurred by Sept. 21.