American Rescue Plan Act Funding

On March 11, 2021, President Biden signed the American Rescue Plan Act (ARPA) into law, a $1.9 trillion package to deliver immediate and direct relief to individuals, families, states, and local governments impacted by the COVID-19 pandemic. This law will help lay the foundation for an equitable economic recovery in Los Angeles as it includes funding for various categories including education and childcare, direct financial assistance for individuals and families, transportation, vaccine distribution, and state and local fiscal recovery funds. 

The ARPA provides a total of over $45 billion of fiscal recovery funds for metropolitan cities and distributes it based on share of U.S. population. As such, the City of Los Angeles will receive approximately $1.28 billion in direct, one-time fiscal recovery funds. The Department of Treasury will distribute these funds in two equal portions. The first portion was received by the City in May 2021; the second is expected in May 2022. 

The legislation defines eligible use of the fiscal recovery funds as follows:

There is no doubt that the COVID-19 pandemic changed the lives of Angelenos – many lost loved ones, neighbors, jobs and paychecks. The entire city has made difficult decisions and sacrifices in the name of the greater good: saving lives, slowing the spread of the virus, and defeating the pandemic. 

Our City government has had to make difficult decisions as well in the face of the fiscal emergency caused by the COVID-19 public health emergency, furthered by the need to ramp up testing, contact tracing, and provide vital economic support to the city’s most vulnerable communities. The majority of the City budget is dependent on economically sensitive revenues that are based on all the things that were significantly impacted by the pandemic – namely,  travel and tourism, and business. In FY 19-20, with just 2-3 months of impact from the pandemic, the City had to borrow from the Reserve Fund to make up the revenue shortfall and close the year. In FY 20-21, the City faced a deficit as large as $750 million and again had to implement difficult cost-saving measures such as implementation of a hiring freeze, evaluating the possibility of layoffs, and reducing departmental spending and services by over $100 million. 

The City began the development of the FY 21-22 budget, fully expecting to continue difficult cuts in spending and services and faced a deficit of over $400 million. The first portion of ARPA funding received in May focused on closing the deficit. The second portion of ARPA funding – expected to be received next year – was allocated through the FY 21-22 budget cycle. The allocation of the second tranche has been programmed with four priorities in mind: COVID Recovery, Restoration of City Services, Equity and Justice, and Housing and Homelessness. You can see a high-level breakdown of each of these priority categories below:

The four priority categories for the City's ARPA funding include: COVID Recovery, Restoration of City Services, Equity and Justice, and Housing and Homelessness. Figures are in millions.

Thanks to the passage of the ARPA, the City is able to preserve critical services, protect jobs jeopardized by the pandemic, restore fiscal strength to our reserves, and place us on steadier financial footing. With a renewed foundation in place, the FY 21-22 Adopted Budget was also able to invest in rebuilding our neighborhoods and in reimagining a fairer, more just city for generations ahead. Some of the key allocations under each category are below.

To ensure our recovery uplifts the communities most impacted by the pandemic, the proposed budget invests over $300 million in continuing and enhancing existing programs and launching bolder initiatives to build a more equitable city. To learn more about these initiatives, click here. Explore the full proposed budget below.