Future of Governor’s Proposed $450 million Local Government Sustainability Fund Remains Unclear Ahead of May Revise
May 12, 2022
The Governor’s January Budget proposed $450 million over three budget years to create a new Local Government Sustainability Fund. The Fund, which would be administered by the Governor’s Office of Business and Economic Development (GO-Biz), is intended to provide grants to counties facing high unemployment and poverty levels in order to advance economic diversification and climate-resilient economies. This funding is intended to complement last year’s $600 million investment to create the Community Economic Resilience Fund.
According to the trailer bill language released in February, counties with poverty or unemployment rates of at least 150 percent of the California statewide rates would be eligible to apply. GO-Biz estimates ten counties currently meet this definition. Eligible projects for the grant include process improvement, economic diversification and stability, and workforce development projects. Counties would need to demonstrate the current challenges to local revenue sustainability and how the projects are attributive to climate resilience.
During recent Assembly and Senate budget subcommittee hearings, the proposed fund received scrutiny from the Legislative Analyst’s Office and the subcommittee chairs for the broad discretion given to GO-Biz to administer the Fund and the lack of metrics to measure the success of funded projects. The LAO has recommended the Legislature reject the proposal and reconsider it next year, as funding for the program would not begin until the 2023-24 fiscal year. Both budget subcommittees voted to “hold open” the proposal, meaning it will require further discussion at a later hearing.
CSAC will continue to monitor discussions on the Local Government Sustainability Fund, which may or may not be included in the Governor’s May Budget Revision scheduled to be released Friday, May 13.