(The Center Square) – California Gov. Gavin Newsom’s $40 billion fire aid request to Congress masks pre-fire budget woes and primes billions for nongovernmental organizations — largely government-funded groups providing government-type services.
Going into the new year, California’s largest cities, including Los Angeles, were already in weak fiscal shape.
Los Angeles City Controller Kevin Mejia said the city is “broke” and may soon be required to declare a fiscal emergency to make withdrawals from protected reserves after spending half of its reserves in the past year.
“Just one year ago, the reserve fund was historically strong, at $648 million,” said Mejia. “Less than three months into this fiscal year, the city is again dipping into its reserves to pay for liability claims (already $170M over budget). It’s getting close to going below the 2.75% mark, which when that happens, City Council must make a finding of a fiscal emergency.”
Newsom’s proposed fiscal year 2025-2026 budget, drafted before the fire, would withdraw $7 billion from reserves but lead to what the Legislative Analyst’s Office said would be “annual operating deficits beginning in 2026‑27 — growing from about $20 billion to about $30 billion.”
The state and local governments’ poor record of accountability suggests the funds may not be allocated well or fairly.
After an official state audit found $24 billion in state homelessness spending was not sufficiently tracked or evaluated, Newsom launched a statewide “accountability” website on homelessness, which provides little information beyond the total number of local homeless counted once per year and vague behavioral health statistics. Notably, this dashboard does not include homelessness spending and the number of people who have exited homelessness, which makes it difficult to use the dashboard to assess homelessness spending outcomes.
At the more local level, the chief executive of the Los Angeles Homeless Services Authority, which oversees nearly a billion dollars per year combined city and county homelessness spending, was recently found by LAIst to have “inadvertently” signed millions of dollars of contracts to the nonprofit her husband works at, violating the organization’s conflict-of-interest policy.
LAHSA CEO Va Lecia Adams Kellum earns $430,000 per year, or more than Los Angeles Mayor Karen Bass. Bass initially hired Adams Kellum as a consultant for a no-bid contract on homelessness advising for $60,000 for work she did between Feb. 6 and May 23 2023, or about $1,300 per day (including weekends).
Notably, Newsom’s executive order on disaster relief created a 60-day reporting extension for required ethics disclosures of behested payments or conflicts of interest for government officials in Los Angeles County, which — as billions of dollars comes flooding in — could lead to similar situations and possible impropriety.
Of the $40 billion Newsom requested from Congress, $5.3 billion is for Small Business Administration loans that Newsom’s letter says “most private nongovernmental organizations” are eligible for to cover their “working capital and normal expenses.”
Newsom requested another $4.3 billion for “business grants,” which the letter details as supporting “nonprofit organizations” and creating funding pools that will be “implemented by local jurisdictions” — which would include California, Los Angeles County and the City of Los Angeles.
This means these jurisdictions can retain funding for administering the funds, while doling out the money as “economic recovery grants,” “commercial acquisition fund[ing],” and “worker equity funds that allow recipients to meet emergency needs like rent and childcare.”
These grants can also be used for “public works grants” that broadly contribute to the local economy and its functioning, and would go to state and city governments, and post-secondary educational institutions such as public community colleges and the University of California and California State University systems.
Another $16.8 billion in “public assistance” includes up to $10 billion for cleanup. But Newsom also requested funding for “schools and students impacted by the fire,” which his letter says amounts to “over 1,000 schools” and “almost 700,000 students.” Also included in “public assistance” are costs related to “repair and restoration of healthcare facilities impacted by the fires,” which the letter says adds up to “160 facilities.”
Included in the $16.8 billion request was $2.8 billion for “hazard mitigation,” such as “home hardening and vegetation management,” which was cut by $101 million in the governor’s 2024-2025 budget for the current fiscal year.
The request included $9.9 billion in “community development block grants” for “disaster recovery” from the U.S. Department of Housing and Urban Development, which after Hurricane Katrina often went to NGOs via local governments.
Newsom requested $432 million specifically for water infrastructure. State voters approved a $7.5 billion water infrastructure bond in 2014 that has yet to yield a single completed project.
He also requested $240 million for childcare funding to repair 42 facilities, rebuild 33 and serve 1,458 kids, averaging $3.2 million per facility.
Newsom’s letter also asked for $130 million for substance abuse and mental health treatment, noting “natural disasters can have long lasting mental health impacts on survivors in the short and long term.”
This article was originally published at www.thecentersquare.com
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