Still waiting for $68 million in FEMA reimbursements from the pandemic and CZU fire, Santa Cruz County has had to take out nearly $50 million in loans to cover basic operations.
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Santa Cruz County builds back, prepares for an uncertain future
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During his visit to Santa Cruz County, President Joe Biden told the storm-battered regions of California that not only would the federal government stay until the recovery was complete, but that the federal government would, for the first 60 days, foot 100% of the bill for standing up shelters and removing debris.
Whether the Federal Emergency Management Agency will actually stay through the entire recovery remains to be seen. Marcus Pimentel, Santa Cruz County’s financial officer who oversees the budget, remains skeptical of Biden’s repayment promise, and for good reason. FEMA still owes the county roughly $68 million for pandemic and CZU fire-related expenses, he says. It’s a reimbursement that has taken more than two years, with no real timeline.
Just how desperate is the county for FEMA to come through? The county depleted its budget responding to COVID and the wildfires to such an extent that it had to take out a nearly $50 million loan just to cover six months of regular payroll last year, costing nearly $2 million in interest, Pimentel says. Unless FEMA comes through in the next couple months, the county is already planning to take out another, similar loan, and spend another $2 million in interest just to function.
“I don’t disparage the individuals at FEMA, but the system has collapsed,” Pimentel said. “And in that collapse, my humble opinion is they could and should be doing a better job of prioritizing their resources.”
Among the three disasters — the pandemic, CZU fires and the recent atmospheric rivers — the county has depleted its reserves to $67.5 million, roughly 10% of its general operating revenue. Best practice says those reserves should never dip below 17%, according to Pimentel, and should ideally be at 25%.
So far, FEMA has repaid the county about 18% of its pandemic and CZU fire costs.
Pimentel says FEMA should triage the disaster reimbursements and prioritize counties with little cash flow like Santa Cruz.
“It’s a frustrating process for us. We’re not a county that can easily absorb that kind of expenditure,” Pimentel said. “With the pandemic, I get it, they are backed up. The whole world had to invent stuff on the fly. But I have no patience for the delay in repaying the wildfire expenses. That’s over two years old. Our claims are so straightforward.”
FEMA spokesperson Robert Barker disputed the county’s $68 million claim, saying that FEMA owed only roughly $46.1 million — $34.2 million from the pandemic and $11.9 million from the CZU fires.
Barker told Lookout via email that the pandemic payments are delayed because FEMA allowed counties to apply directly to the agency for pandemic reimbursements instead of having state governments vet the applications beforehand. As for CZU, Barker says more than 70% of the money is tied up in FEMA’s environmental review process.
Pimentel maintains FEMA actually owes $68 million. He says the federal agency’s estimates do not include a handful of projects Santa Cruz County has applied for, as well as millions in damages the county recently won in an appeal for repayment from the federal government.
District 5 County Supervisor Bruce McPherson says battles with FEMA are not uncommon following disasters, but it has placed the county in a difficult position.
“FEMA tells you something is eligible for repayment, so we go out and spend the money, then [there is a battle],” McPherson said. “This happens after every disaster.”
The county has already spent nearly $50 million in response to the atmospheric rivers, and that number will continue to rise as more damage is assessed and contracts for cleanup are approved. Despite the 100% commitment from Biden to cover debris removal and shelter costs, Pimentel says experience tells him to expect only between 80 and 90%.
“I don’t know what the numbers are going to be exactly but I know we’re going to still be fighting for [reimbursements] in two years,” Pimentel said. “We’re not whining for the sake of whining — this is really dramatic for us.”