Orange County supervisors Tuesday approved distributing $26 million in funding for coronavirus-related expenses to cities in the county, but delayed a proposal to spend $75 million in federal relief funding on nonprofit organizations and small businesses.
Supervisors Andrew Do and Lisa Bartlett teamed up to propose the “HEART Plan,” which would provide financial help for small businesses and nonprofit organizations, but Chairwoman Michelle Steel and Supervisor Don Wagner favored a plan that would dole out $75 million to cities to distribute to small businesses.
The proposal introduced by Wagner and Steel failed, with the rest of the board voting no.
Instead, the board voted 3-2, with Wagner and Steel in opposition, to direct county CEO Frank Kim to draft a plan with various options on how to distribute $75 million to small businesses and nonprofit organizations and to use some of the money to “leverage” other funding that could continue to help.
Wagner argued that a letter from 31 mayors in Orange County supported his and Steel’s plan.
“The idea is that we get as much of this money as we can directly into the hands of the cities,” Wagner said. “A city knows its businesses better than we can and can nimbly execute this program.”
However, Bartlett said, “We want to help businesses not only in the short term, but long term as well.” She suggested a fund that could be used to “leverage” additional dollars.
“We also have a recession we have to deal with that’s not going to be over in the next six months or maybe even in the next two years,” Bartlett said.
Do said during the Great Recession in 2008-09, he nearly lost the restaurant that he built, but was saved by a line of credit from a bank, and suggested small businesses in the area need something similar to that.
Do said just issuing money to small businesses would be unfair because it will end up in supervisorial districts with the most businesses.
Wagner responded that Do’s and Bartlett’s plan would delay issuance of the funding to businesses.
“We keep hearing about how the government’s going to spend its money,” Wagner said. “It’s not our money. It’s your money. It’s coming back to you through the federal government, through the state. Let’s get it into your hands because it’s your money.”
Wagner doubted there was “nearly enough money to establish a line of credit. We’re talking about helping you pay the rent tomorrow and that’s money in our checking account today that could go to our cities this afternoon and can go out to you the next day rather than waiting to see how we hire an administrator and wait to see what they will do with the money.”
The funding in Do’s and Bartlett’s plan would be used to help small businesses that had to close during Gov. Gavin Newsom’s stay-at-home order, cities paying related expenses and providing food for the needy, among other charities.
The HEART Plan comes from the first letters of what its authors call “the most urgent needs facing Orange County”:
— Help for small businesses that remain closed;
— Expenditures to support communities affected by the coronavirus outbreak;
— Assistance to nonprofit organizations providing direct services to Orange County residents;
— Reimbursement to cities for direct COVID-19 expenses; and
— Temporary food assistance for vulnerable and at-risk populations.
Do told City News Service he believes his plan is more fair because some supervisorial districts have more low-income residents who would benefit more from money flowing to charities than small businesses.
Do said there are about 80,000 small businesses in the county, “so take the $75 million and divide it up by 80,000 businesses and you’re writing a check for $900 to each business. Does that really make any sense?”
Bartlett said the HEART Plan “is a much more comprehensive plan that affects all of the entities within the county.”
The money comes from the county’s share of $554 million received from the federal government’s Coronavirus Aid, Relief and Security Act.
County officials expect to use the funding to cover $453 million in expenses such as overtime for staff responding to coronavirus emergencies as well as public health and medical costs.
County officials said they plan to spend $75 million on testing, $128 million public health expenses such as personal protection equipment, $88 million in payroll for emergency responses, $91 million in costs related to homelessness, jails, and food assistance, and $71 million for behavioral health and sanitation costs.
The money must be spent by year’s end, Do said.
Do said cities can apply for reimbursement of some expenses from the Federal Emergency Management Agency, but nonprofit organizations may not.
City officials have been clamoring for a share of the CARES Act money, and have gotten behind the $3 trillion Heroes Act proposal approved last week by the House of Representatives.
County supervisors also directed staff to apply for variances from the state to reopen many “phase two” businesses, such as dining at restaurants.
Bartlett, the president of the California State Association of Counties, said Newsom’s announcement Monday was “very significant for Orange County,” saying the county has met “the parameters that have been modified for 53 of the 58 counties to move forward through the latter part of Phase Two.”
The previous benchmark of no COVID-19-related deaths for 14 days — which was the biggest stumbling block for more populous counties — has been done away with, Bartlett said.
“They’re really focusing more on positivity rates and hospitalizations, so the metrics have now changed to something that makes more sense, particularly for the larger counties,” Bartlett said.
Local public health officers have to file paperwork on their COVID-19-related statistics with the state to get approval to reopen businesses, Bartlett said.
Depending on how long the turnaround is with the state, Orange County could have its Phase II businesses open by this weekend or next week at the latest, Bartlett said.
Do and Wagner credited Bartlett’s work as CSAC president with state officials for convincing Newsom to change his standards for reopening Phase 2 businesses.
Orange County has had a spike in deaths in the past couple of weeks, but most of the fatalities are from outbreaks in skilled nursing home facilities, where county officials have increased testing and supplies of personal protection equipment, Bartlett said.
Orange County is at half-capacity in hospitalization so it can withstand a surge, Bartlett said.
“Orange County has done incredibly well relative to COVID-19,” she said.
“Our hospitalization rate is low, our positive counts on a daily basis are relatively low compared to other counties and our death rate is lower than other counties. Our statistics for COVID-19 are much better than our surrounding counties.”
Do said the county just needs to increase some of its stockpile for personal protection equipment such as gowns, gloves and face masks.
The county has been working through the state to acquire the PPE, but the board is expected to instruct county staff to acquire the goods on their own, Do said.
“The advantage of having our numbers being so good is we don’t have a whole lot left to do to meet the governor’s criteria,” Do said.
County budget officials painted a grim picture of the local economy at Tuesday’s board meeting.
As of mid-April, officials were forecasting a $32 million dropoff in Proposition 172 public safety sales tax revenue, which finances the sheriff’s department and District Attorney’s Office, for this fiscal year.
The decline in the 2020-21 fiscal year is expected to be $98.6 million.
State funding for the county’s prison reform measures is expected to fall by $36.9 million this fiscal year and $139.3 million.
Funding for health and human services programs such as the probation department is expected to fall by $3.5 million this fiscal year and $54.2 million next fiscal year.
Officials are expecting to use $126 million in reserves this fiscal year and another $16.4 million next fiscal year.
County supervisors will be given a shell budget to approval next month, just to be able to keep paying bills, but a more detailed budget is expected to be approved in mid-September.