In mid-March, when Mayor Rick Blangiardi delivered his first State of the City address and unveiled a proposal for fiscal year 2022 spending, he focused on operational services and infrastructure needs within tight-budget constraints necessitated by lost revenues due to the pandemic’s economic and social impacts.

But now, thanks in large part to federal American Rescue Plan Act (ARPA) funds Oahu stands to receive, the financial pinch will be less severe. A spending plan approved by the City Council — and enthusiastically backed by Blangiardi — includes a $2.9 billion operating budget and a $1.4 billion capital budget. It’s slated to take effect July 1.

Given that the operating budget is nearly $40 million less than last year’s budget, not counting federal relief money, the Council sensibly supported Blangiardi’s proposed city hiring freeze, and an increase in the nonresident fee to get into the Hanauma Bay Nature Preserve. The capital budget, meanwhile, which is larger than both last year’s and Blangiardi’s initial proposal, includes a necessary focus on making affordable housing gains.

An avalanche of applications for participation in the city’s Rental and Utility Relief Program has made it painfully apparent that many households are still struggling to cover rent and other housing costs. During its launch in early April, the program received its maximum of 8,000 applicants in just four hours. During the second round, it hit a set maximum of 4,000 applicants in just 20 minutes.

With Hawaii’s moratorium on renter evictions set to expire at the end of this month, officials are bracing for a spike in affordable housing challenges and a rise in homelessness. To that end, it’s also encouraging that the Council was able to replace $2.6 million that the Blangiardi administration had intended to cut from homeless services.

Among other welcome Council amendments: increased funding for stream cleaning, and a software upgrade in Honolulu Hale’s permitting system.

As part of a much-needed effort to continue modernizing city services, the Department of Planning and Permitting will get a computerized overhaul of its building permit process. This overdue action is expected to speed up the overall process and enhance transparency by allowing people to track permit status online.

The latest warning that stepped-up stream-cleaning is needed arrived in the aftermath of heavy rains and flooding in March that hammered some Windward and North Shore communities. The Council rightly noted that “deferred maintenance on such public infrastructure can lead to dangerous and avoidable consequences.”

For now, the federal ARPA funds are cushioning the full blow of budgetary fallout related to COVID-19 — but that spending remains murky, partly because federal guidance on how the funds can be spent were released less than a month ago. The city is set to receive a total of $372.4 million over two years, starting with $197 million this year.

So far, the Council has allocated about $28 million, with much of that going toward an operating fund for homeless and housing services and nonprofits.

Starting in July, the city’s revenue flow could face another blow, if Gov. David Ige signs off on the Legislature’s decision to end an annual allocation of some $130 million to the counties from the state’s transient accommodations tax. Honolulu County receives 44% of that amount.

Right now, it’s unclear whether ARPA funding would be able to replace that loss. What is clear, though, is that the Blangiardi administration and the Council must continue to work in tandem to carefully size up the city’s most pressing needs — and put the federal relief dollars toward steady recovery that hedges against further pandemic setbacks.