State And Local Governments Need Federal Relief Now
The economy cannot recover if states and cities go bankrupt—and the suggestion is as absurd as it is harmful.
State and local governments have exhausted their resources as they respond to the coronavirus pandemic. This crisis has left them facing rising costs and plummeting revenues. Direct federal relief for state and local governments is absolutely critical to helping them, and the communities they serve, grapple with the economic fallout from the COVID-19 pandemic.
New York’s budget office projects that the state will lose more than $240 billion over the course of the full recovery — almost 15% of the state’s GDP. President Trump’s theory that simply “reopening the economy” will bring states back ignores the reality that state and local governments across the country need federal support to weather this unprecedented storm. And no matter what Senator McConnell says, declaring bankruptcy is not an option for states and cities.
We must provide relief to states, governors, and local governments alike, as they each grapple with their own unique sets of challenges. These governments fund the services and public sector employees on the front lines of this battle, and they need reinforcements. They stepped up in this time of need, and are now in need themselves.
The Governors of all 50 states have called for $500 billion of direct federal relief to help them replace the revenue lost by closing non-essential businesses and issuing stay-at-home orders to protect public health. Those were difficult, but necessary, decisions. The federal government must recognize that, and direct the requested aid to states immediately, so states can avoid making drastic cuts to essential services at a time when they are most needed. The relief packages Congress has passed so far have provided relief to states, but not direct funding to offset the shortfalls in revenue. We must provide state governments with the relief they need to continue to function.
Governor Cuomo has warned that, without federal relief, billions of dollars of cuts will need to be made to local and state agency budgets. New York won’t be the only state having to make those impossible choices. Budgets for public health care workers, firefighters, police, sanitation workers, teachers, and other vital public servants across the country are on the line. Without federal funding, these governments will have no option but to raise taxes on already cash-strapped families and businesses or to make cuts to the people and services that citizens depend on. There could not be a worse time for any of these workers to lose their jobs. We fundamentally, and economically, cannot afford for that to happen. Every state, county, city, town, and village — regardless of size — must have the financial resources it needs to continue to provide these critical services.
This $500 billion of state relief should be supplemented with relief for local governments, to ensure that our smaller communities aren’t fighting one another for an already small piece of the pie. I joined my colleagues to introduce a bill that would provide local governments with direct fiscal relief that can be used to pay for essential services and offset lost revenues and increased costs from the COVID-19 emergency. This proposal for local relief, which has bipartisan support, is intended to be incorporated into a larger legislative package, one that will also include: fiscal relief for state and tribal governments; retroactive availability to use the Coronavirus Relief Fund in the CARES Act for lost revenues; and other important matters.
Senator McConnell’s comments on hitting the “pause button” on further federal emergency legislation and that cities and states should declare bankruptcy couldn’t be more misguided as America experiences record unemployment and food insecurity. There is broad bipartisan consensus, including from all 50 Governors across America, that a federal stabilization fund is needed now. Congress should put this funding on the floor and send the much-needed state and local relief bill to the President’s desk today.