The Honolulu City Council is expected to decide on a budget today, although it has not yet been finalized how the $196 million in federal funds Oahu is expected to receive from the American Rescue Plan Act will be spent.

Mayor Rick Blangiardi proposed a $2.9 billion operating budget, which the City Council has been amending for the past three months. One of the biggest variables that has affected the proposed budget is the federal funds that have yet to be released to the city from the ARPA.

However, the official federal guidance on how the funds could be spent did not come out until May 17, which has left the Council to allocate the money without knowing exactly what it could be used on.

One of the biggest differences between the ARPA funding and the original federal stimulus CARES funding is that ARPA funding can replace revenue lost due to COVID-19.

City Council Budget Committee Chairman Calvin Say requested a report from the mayor’s office determining the maximum lost revenue that could be replaced with ARPA funding. The report is expected to be submitted by today’s full City Council meeting.

“Budget shortfalls, staff cuts, and hiring freezes are particularly problematic at present,” wrote Say in his request.

“Hawai‘i has been the second-hardest hit state economically by COVID-­19, and Honolulu has not only seen a decline in operational revenue, but also multiple instances of funding reductions from the state.”

The city is anticipating lost revenue from bus fares, its share of the fuel tax, and many other smaller revenue sources such as Blaisdell rental fees and admission fees at Hanauma Bay, Honolulu Zoo and golfing fees.

The city’s revenue could face another blow after the state Legislature’s decision to no longer give counties $130 million of the state’s transient accommodation tax. Honolulu receives 44.1% of that amount. The measure has yet to be signed by Gov. David Ige.

If Ige were to sign the measure into law, it is unclear whether the ARPA funding would be able to replace that loss because in the official guidance, the federal dollars cannot be used to replace revenue lost due to laws passed after March 3.

Former state Sen. Jill Tokuda of Hawaii Data Collaborative tracks local disbursement of federal COVID-19 relief funds.

“The (transient accommodation tax) loss in revenue was a big deal for the city,” she said.

“Because that change happened after March 3, they might not be able to use that lost revenue.”

Although the Council plans to pass the budget today, it still had not received the revenue impact report from the mayor’s office as of the end of the workday Tuesday.

The new budget will go into effect July 1, which means that it will have to be passed by the City Council and signed by Blangiardi by that time. If the Council does not pass a budget before June 15, Blangiardi’s originally proposed budget will be automatically enacted. If the Council is able to pass a budget today, it will give the Council time to react if the mayor vetoes the measure, which the Council could override with a six-vote majority.