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Video: Fiscal Realities for Local Government

Mary Severance September 23, 2020
photo - Downtown San Diego

As part of our Speaker Series on California’s Future, PPIC invites elected leaders from across the political spectrum to participate in public conversations. The purpose is to give Californians a better understanding of how our leaders are addressing the challenges facing our state.

PPIC is a nonpartisan, nonprofit organization. PPIC does not take or support positions on any ballot measure or on any local, state, or federal legislation, nor does it support, endorse, or oppose any political parties or candidates for public office.

Local governments have been hit hard by the pandemic and its economic consequences. Last week, two California mayors—Kevin Faulconer in San Diego and Libby Schaaf in Oakland—talked with Mark Baldassare about the challenges they are facing and the lessons we can learn from the current crisis.

Faulconer and Schaaf described the challenge of setting budget priorities and adapting as the pandemic—and its economic impact—evolves. Stressing the heightened importance of government workers and services during this crisis, Schaaf said that Oakland has been “looking at a way to avoid layoffs and avoid a reduction in services that would be felt particularly by our most vulnerable.”

Faulconer noted that city budgets everywhere have been affected by precipitous revenue drops that happened “almost overnight.” Because San Diego’s economy relies heavily on tourism and conventions, he said, it has been difficult “to have no conventions in San Diego at all—zero— from March, and unlikely any for the rest of the year.” He estimated that “from a dollars and cents standpoint . . . we’re going to take a hit of about $300 million.”

Schaaf said that it was painful not only to cut $122 million from the city budget but also to suspend some of the policies that helped improve Oakland’s financial situation over the past several years. “We are all holding our breath and hoping that this economy recovers,” she added.

Indeed, the economic uncertainty created by the pandemic is a huge challenge. As Faulconer put it, “How do I make some of these tough decisions now, not knowing if or when the economy is coming back?” For Faulconer, shifting state guidelines are also challenging. “One of the things that I think so many Californians are struggling with is ‘open, closed, open, closed,’” he said, adding that it is essential to move toward “a new normal that keeps people safe.”

Schaaf and Faulconer agreed that cities urgently need more federal assistance. Schaaf noted that while the CARES Act provided much-needed support, the funding could not be used to make up for local revenue shortfalls. Faulconer added that federal assistance “is not a partisan issue. This is a what-is-the-right-thing-that-we-should-be-doing issue.”

Both cities have taken creative steps to meet their challenges. “Everything’s creative now!” Faulconer said. In addition to providing rent relief and small business relief, San Diego has been using its convention centers to shelter homeless residents. This, he said, “has allowed us to provide a range of services under one roof.”

Schaaf is proud of Oakland’s partnerships with local businesses to supply vulnerable residents with meals and other services, as well as its efforts to convert emergency measures into long-term solutions. For example, the city has not only moved homeless residents into hotels during the pandemic but also secured an option to purchase those hotels and use them to provide permanent housing.

Faulconer, a Republican, and Schaaf, a Democrat, do not agree on everything—they expressed differing views on Proposition 15, for example. But both believe that mayors must be pragmatic problem-solvers, regardless of their party affiliations. As Schaaf put it, “We are accountable to our people; we live in our communities.”

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