The City of San Antonio put the finishing touches on its nearly $4 billion fiscal year 2025 budget on Thursday — and with that, pledged the last scraps of its federal coronavirus pandemic recovery fund.
The city allocated its remaining $5.8 million in American Rescue Plan Act (ARPA) funding on one-time expenses, including expanding senior center hours, relocation assistance for downtown residents and seed funding for a South Side health equity initiative.
Meanwhile, Bexar County adopted a $2.8 billion budget one week earlier that sets the county on course toward a so-called “ARPA cliff” unless serious cuts are made or revenue is generated. The county used its last remaining ARPA funds to plug an $18.8 million hole in its general fund budget — rather than using it for new one-time expenses, as commissioners had previously discussed.
Between the newly established public health department, expanded mental health law enforcement program and other initiatives that require reoccurring expenses, the county has bitten off more than its budget can afford in future years without ARPA support.
“How many of those ARPA-funded programs continue in the future” will come down to policy decisions made by the Bexar County Commissioners Court, County Manager David Smith said. “As soon as next budget, we’re going to have to start examining some of those potential impacts.”
The city was careful not to over-extend itself, City Manager Erik Walsh said. It ramped up existing programs that it could wind down once funding ran out. The budget deficit that the city had to deal with this year, for the first time since 2010, was due to slowing revenue growth from both property and sales taxes — not as a result of its dwindling ARPA funds.
“We’ve planned appropriately for ARPA over the last couple of years and we’ll continue to plan for the next year and a half,” Walsh said.
“Some cities added firefighters or police officers,” he added. “I don’t know what the heck they’re going to do when that money dries out.”
Not an outlier
Texas received a total of $16.3 billion in ARPA funding in 2021, which came after the Coronavirus Aid, Relief, and Economic Security (CARES) Act of 2020. While CARES was intended for more emergent needs including personal protective equipment, hospital supplies and rental assistance, ARPA also allowed the use of CARES funding to recover from impacts from the outbreak.
Bexar County received $389 million and the city received $564.8 million
Local governments have until the end of this year to obligate ARPA funding and until the end of 2025 to spend it.
Bexar County is not an outlier in having to make some tough budget decisions in coming years, said Adam Haynes, policy director for the Texas Conference of Urban Counties. The nonprofit advocacy organization that represents 34 urban counties.
Bexar County, like most urban counties, spent a lot of cash on physical “stuff,” meaning infrastructure, capital projects and other one-time expenses, Haynes said.
“They did water [and] sewer — they did some projects on affordable housing,” he said. “Investing those dollars to build the hardware … is a good expenditure of ARPA dollars.”
Bexar County focused much its capital investments on “other agencies and gave them one-time funding to expand facilities,” Smith said, citing capital projects for University Health’s new Vida clinic and Lifetime Recovery’s expanded facility for women.
The county also added 130 beds to its Dually Diagnosed Residential Facility, which provides court-ordered treatment for probationers.
ARPA was the county’s opportunity to make real investments in public and mental health initiatives to ensure the community’s resiliency for the next pandemic or emergency, said Commissioner Justin Rodriguez (Pct. 1), who previously represented Texas House District 125 and District 7 on City Council.
“If we did not take advantage of this one-time, shot-in-the-arm … influx of dollars to make an impact in those kind of programs, then when would we ever do it?” Rodriguez said.
Mental health in schools was a top priority for ARPA dollars, Bexar County Judge Peter Sakai said. The county set aside $21 million for school-based behavioral health funding, he noted.
“That will be an interesting discussion of whether the county needs to maintain that, he said. “Can the school districts absorb it? Can we get alternative funding? Can we go to the legislature and show the success we’ve had [and] that it should perhaps [be funded] through the state of Texas?”
It will likely take a combination of funding sources, Rodriguez added, “so that we soften the blow, so to speak, on our local general fund.”
The county will take the same approach to all ARPA-funded programs, Sakai said. “We’ll look at all of them, and we’ll expect them to come in with their data, their metrics, their analytics, and determine the rate of return that we’re getting from these programs.”
If they all perform well, that’s “the best case [and] worst case scenario,” Rodriguez said. “It means that we were right in targeting those as impactful. But it also means, okay, we’ve got to pick up the slack.”
Another factor pulling on the seams of county budgets across the state is the state itself, Haynes said.
The bigger cliff that counties face “is not because of ARPA dollars running out, it’s because of the things that the state keeps asking the counties to do,” he said, which are typically unfunded mandates related to jails, the foster care system and behavioral health.
A hotel in limbo
The city largely used ARPA funding to augment programs such as utility and rental assistance and street maintenance, not create them, officials told the San Antonio Report.
“We were very deliberate on the use of ARPA funds to avoid recurring expenses,” Mayor Ron Nirenberg said. “In the case where we did spend ARPA on things that would incur [future] expenses, [Walsh] and the finance team built those into the budget forecasts.”
“We knew all along that this was one-time only,” Nirenberg said.
But there is one major city initiative that will potentially halt after ARPA funding expires in 2026: The 200-bed, low-barrier shelter for people experiencing homelessness.
The city invested $15.9 million for SAMMinistries to operate the shelter, which moved from a 45-bed shelter in a Days Inn motel to the larger Holiday Inn earlier this year.
But the city is investing budget and bond dollars into housing and other homeless prevention programs such as rental and utility assistance, said Deputy City Manager María Villagómez.
Those support systems should ultimately alleviate the need for such a large, low-barrier shelter, Villagómez said.
“This would help us, as a bridge, to be able to shelter individuals and then transition them into that permanent supportive housing,” she said.
Meanwhile Close to Home, the federally-designated Continuum of Care agency that works with governments and service agencies to coordinate homelessness mitigation strategy and funding, is looking for potential funding sources for the low-barrier shelter to continue if the need for it continues, its executive director Katie Wilson told the San Antonio Report this summer.
“We have a lot of work to do to manage shelter expansions,” Wilson said. “It’s going to be really important that next year, when we lead our community-wide homeless strategic plan, we need to talk about sustainability.”
