By Tex Yamada —
Palos Verdes Estates (PVE) Councilmember Kenny Kao and Rancho Palos Verdes (RPV) Councilmember Eric Alegria were invited to the Palos Verdes Democrats May Meeting to provide their city’s response to the COVID-19 regulations and to participate in a discussion with Congressman Ted Lieu.
Councilmember Kao led off the discussion reporting 42 cases of COVID-19 in PVE and how the city is following recommended social safety protocols. Considering the economic impact of the coronavirus pandemic, Kao said, “finance is something that, of course, has impacted every city, state, and county out there, and there is no government entity that is going to be unscathed by it.” Citing property tax and parcel tax as PVE’s main revenue sources, Kao projected a $1.5 million surplus in the current fiscal year, ending June 30. He explained that the city has posted lower revenue numbers, but even lower expenditure figures, as well as a “significant amount of attrition.”
Councilmember Kao offered a less rosy outlook for fiscal year 2020-21, saying “you’re not going to be unscathed by any means, as we too forecast a similar size deficit in fiscal year 2020-21.” He cited CalPERS 1% investment return, lower than recent years, as one of the reasons for the anticipated deficit.
Councilmember Kao then pivoted to Federal economic issues with a focus on recent Congressional legislation, intended to offer financial aid to the public and private sectors. Under the Coronavirus Aid, Relief, and Economic Security (CARES) Act, a provision was created to set aside $150 billion for financial aid in 2020 to states and local governments. In the trickle-down effect, about $1.8 billion was allocated to Los Angeles County and to Los Angeles City before final distribution, according to Councilmember Kao.
In an interesting exchange between Congressman Lieu and Councilmember Kao during the Question and Answer period, Councilman Kao informed Congressman Lieu that the approximately 87 cities in L.A. County (excluding L.A. City), have not yet participated in sharing the $1.8 billion pot. The CARES Act was signed into law March 27. Also, the law included instructions on funding distribution, which were less than clear.
Councilmember Kao raised some doubt if the distribution of CARES Act funding would reach the Peninsula cities, while hoping for better results with HEROES Act financial aid. “So, we’re trying to send a message that local cities need those funds as well, to a very large extent,” he said. “So, I’m happy to hear the Congressman breakdown the HEROES Act as far as State and local funding.”
Congressman Lieu responded that he helped introduce legislation in the HEROES Act that would allow easier access for all cities to the $375 billion available in the new legislation, passed by the House on May 15. The bill is currently in the Senate, pending review and vote.
Councilmember Alegria provided a detailed update of RPV’s efforts in dealing with the COVID-19 health and economic crisis. He reported that RPV is using a thoughtful and responsible approach to re-open the economy, coordinating with other Beach cities and South Bay cities in moving forward. He indicated that the City Council managed RPV’s finances responsibly, resulting in a surplus for FY 2019-20. However, next year due to an expected decrease in $2.5-3.0 million in transit occupancy tax received from Terranea Resort, RPV may not be able to duplicate the surplus results it posted in the current year. “Those are some of the updates. Although we have a healthy reserve, we are not planning to tap into that reserve at this time,” he explained. “We are going to continue to be very, very diligent in the coming weeks, months, and years.”
In the Question and Answer period with Congressman Lieu, Councilmember Alegria expressed his concern with the downturn in the economy. His question focused on what the Federal government could do to help the unemployed through legislative action.
Congressman Lieu responded that Congress provides resources, such as stimulus checks and Unemployment Insurance, the Federal portion. “It’s really cities, counties, and states that are executing on the front lines,” he explained. In the final analysis, Congressman Lieu thought the pathway to economic recovery will likely be a slow one. Some industry sectors of the economy will be harder hit than others by the virus until the medical/scientific field discovers a vaccine or a drug therapy.
Steve Zuckerman, Mayor Pro Tem of Rolling Hills Estates (RHE) and board member of the Clean Power Alliance (CPA) who spoke at our April meeting about the CPA, asked if the cities of PVE and RPV would reconsider and join the CPA. Both Councilmembers Kao and Alegria were open to their city joining the CPA, but said they needed their city residents to press the issue to win over their fellow councilmembers.