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Sentence Correction (SC) | Re: QOTD: Faced with an estimated $2 billion budget gap

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(C) proposed to reduce, by nearly 17 percent, the amount from the previous yearthat was allocated for the maintenance of the city’s major cultural institutions and to subsidize

Could you suggest if usage of "that" here correctly modifies "the amount"? That is, is this usage (or exception to modifier touch rule) accepted where there is a prepositional phrase between noun and the modifier?

Thanks
daagh wrote:

Faced with an estimated $2 billion budget gap, the city’s mayorproposed a nearly 17 percent reduction in the amount allocated the previous year to maintain the city’s major cultural institutions and to subsidize

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