Fullerton Mayor Jennifer Fitzgerald has announced the formation of The California Mayor Coalition (CMC) formed to advocate for federal money to help cities in our state caught short economically by the ongoing COVID-19 pandemic. Mayor Fitzgerald spoke about organizing the new group during her virtual town hall on the morning of May 7. The mayors of 22 of Orange County’s 34 cities are members.
According to its website, “The California Mayors Coalition has been assembled so that we may work together and speak with one voice urging the State and Federal government to assist cities with our continuation of essential services.” CMC’s address is the same as Fullerton’s City Hall building. Inquiries about the group are to be directed toward Mayor Fitzgerald at her official Fullerton email address, or to Deputy City Manager Antonia Graham, identified on the CMC’s contact page as Mayor Fitzgerald’s “staff liaison.” Inquiries about the coalition sent to Ms. Graham from the Observer were not answered at press time.
A CMC letter to California’s Congressional Delegation members thanks them for “swift action” in passing the CARES (The Coronavirus Aid, Relief, and Economic Security) Act, but asserts that “While emergency funding provided to state and local governments through the CARES Act was urgently needed, it was not sufficient for smaller cities.” $339 billion, or 17% of the CARES Act, sent federal aid directly to local governments, but only a few U.S. cities exceeded the population threshold of 500,000 to qualify for these funds. Fullerton has a population of just under 143,000. The county of Orange, with a population of over 3 million, received $ 554 million as part of the unprecedented $2 trillion legislation.
CMC seeks direct federal aid to cities with fewer than 500,000 residents on a per capita basis “to be used to replace lost revenue due to impacts of COVID-19.” The letter urges swift passage of additional relief legislation, citing an estimated $6.7 billion in lost revenues to the State’s 482 cities, impacting “core city services including police, fire, emergency management, capital projects and housing projects.” Fullerton expects to lose millions of dollars in tax and other revenue as a result of business closures mandated by the State in response to the ongoing pandemic. The council met recently to discuss drastic cuts to City services to mitigate the losses.
Mayor Fitzgerald said she had met with 39th District Rep. Gil Cisneros, whose district includes Fullerton, about direct federal funding to cities.
A letter to California Governor Gavin Newsom, dated May 1 (available on the coalition’s website), asks Newsom for “a fair and equitable share across county lines from the $15 billion in federal funding coming to the State.” The letter also asks Gov. Newsom to use his emergency powers to institute a list of actions also found on the CMC website, including, free statewide COVID-19 testing, an advance of sales tax funding that cities would have collected over the next twelve months, a freeze to CalPERS discount rate, and workforce development programs and funding.
The latter request specifically references the elimination of Redevelopment funding, which Newsom’s predecessor Jerry Brown dispensed with in 2011 to balance the State’s budget. Agencies all over California, including Fullerton’s RDA, were shut down, ending forty years of development made possible, in part, by public funding, financed by the sale of agency bonds, which are paid to developers. CMC’s letter claims that “cities lost the ability to revitalize blighted areas of our communities and reinvest in commercial enterprises in order to bolster not only the city’s finances, but most importantly, put our local workforce back to work.”
Over the past few years, the California Public Employee Retirement Fund, or CalPERS, has been incrementally lowering its so-called discount rate, or the long-term interest rate, used to fund future pension benefits. Over 1.8 million public employees, including those employed directly by the city of Fullerton, have their pensions managed by the fund. As CalPERS lowers its discount rate in response to an anticipated decline in investment returns, cities like Fullerton are obliged to pay for the resulting loss in state contributions. The letter predicts that any further lowering of the discount rate would be a “death blow” to cities’ finances. CMC also requests consideration of suspending Cost of Living increases to retirees, which would include former police officers and firefighters, as well as the city’s administrative and other employees.
An April 29 editorial signed by Fitzgerald and Costa Mesa Mayor Katrina Foley published in the OC Register claims that “towns and cities are beyond frustrated that we’re being ignored by our counties, state and federal government when it comes to financial assistance.” In just the second paragraph, the editorial cites not only lost sales tax revenue, but, specifically, TOT or Transit Occupancy Taxes, typically levied on hotels and campgrounds. TOT revenues account for less than 10% of non-property taxes in Fullerton’s budgets, but could be a more significant source of revenue for cities with more hotels, like Anaheim, home of Disneyland, or cities closer to OC beaches. Anaheim’s Mayor Harry Sidhu is not a member of CMC, nor are the mayors of Huntington Beach or Newport Beach.
Like the letters to elected officials and CMC’s website, the April 29 editorial calls for “Workforce development programs and increased economic development funding,” but unlike the other documents, does not mention redevelopment.
Despite the Register editorial’s complaint that cities are being ignored by counties, Orange County CEO Frank Kim says that the County and its cities are working well together, and that the county signed a joint action alert with cities for federal funding. Kim says that he meets with city officials weekly by telephone and does not view the CMC as being in competition with the County for funds.
Asked if Fullerton expected to receive any of the aid sent to the County through the CARES Act, City Manager Ken Domer said, “We are working with the County to utilize portions of the CARES Act funding made available to the County. Eligible expenditures are those that are used for actions taken to respond to the public health emergency and items such as loss of revenue to a local government is not a permissible use. The City will first apply to FEMA for reimbursement of eligible expenditures and then to the County for the local share (25%) that is not covered by FEMA.” The Orange County Board of Supervisors will consider how to spend the CARES Act funding during its May 19 meeting.
At the present time, mayors representing more than forty cities across California, from as far north as Novato in Marin County to Solano Beach in San Diego County, are part of the coalition. Most of the cities are located in southern California, including several from L.A. County, and at least 7 from San Bernardino and Riverside Counties, but not the city of Riverside itself, the most populous in the Inland Empire.
Asked why he joined the coalition, Santa Monica Mayor Kevin McKeown said, ”I heard about Mayor Fitzgerald’s work by email, and immediately followed up. Santa Monica, like Fullerton, is already confronting a municipal budget disaster as anticipated revenues evaporate due to the pandemic. Like Fullerton, we are being forced to lay off hundreds of experienced, valued, loyal city workers, and explain to residents that traditional city services must be reduced or put on hold. Santa Monica has already been lobbying for federal help through our lobbyists in Washington and our Congressman Ted Lieu and our two Senators, but the California Mayors Coalition gives extra voice to our smaller cities, who were ignored in the first round of CARES funding.”
The U.S. House of Representatives unveiled new proposed federal relief legislation on May 12, which includes aid to cities. Senate Republicans immediately objected to the bill’s size and scope.