Instead of spending on policing, local governments could have used the federal funds to acquire land for future development of affordable housing, provide financial assistance to homeowners or provide loans to affordable housing developers, according to the Treasury Department.
Key Points:
- The city of Los Angeles received over $1.2 billion in COVID relief funds under the American Rescue Plan Act (ARPA) to address pandemic-related challenges.
- Despite the funds being seen as an opportunity to invest in affordable housing, two years later, no money from the $1.2 billion has been allocated for building shelters or permanent housing for the homeless.
- Instead, a significant portion (about two-thirds) of the funds has been used to cover the salaries of police officers and firefighters, as indicated by a report from the City Administrative Officer (CAO).
- The report shows that more than $317 million from ARPA funds was used for Los Angeles Police Department (LAPD) officers' salaries in 2021, and over $475 million went toward salaries for both sworn and civilian Los Angeles Fire Department (LAFD) employees over the last two years.
- President Biden's encouragement to use ARPA funds to support law enforcement has been followed by many local governments, designating a substantial portion of the $350 billion provided for COVID recovery for this purpose.
- While ARPA funds could have been used for housing development, financial assistance for homeowners, and loans to affordable housing developers, the city of Los Angeles used the entire $1.28 billion received as general fund revenue to address a budget deficit caused by the pandemic.
- This approach allowed the city to balance its budget without using reserves or borrowing, and the aim was to support critical government services, address pandemic impacts, and counter historic inequities.
- The CAO report states that over 90% of the COVID relief funds have either been spent or allocated as of June 30.
- The spending breakdown of the funds includes allocations for critical government services (salaries for various government employees), healthy communities (improving parks and green spaces), small business recovery, household assistance (senior meals and financial aid), and broadband and digital inclusion initiatives.
- The spokesperson for Mayor Karen Bass declined to comment on whether the remaining funds would be allocated for housing initiatives.
- Despite the intended purpose of ARPA funds, the city's approach focused on maintaining critical services, addressing pandemic impacts, and mitigating historic inequities, rather than directly investing in affordable housing.
