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A fiscal tsunami is headed for states, cities, towns. Why is the Senate still not acting?

A fiscal tsunami is headed for states, cities, towns. Why is the Senate still not acting?
By Raju Chebium ·
Tags: Priorities COVID-19 Federal Budget & Taxes State & Local Budgets

States, cities and towns are in a world of hurt due to the COVID-19 pandemic and are desperately looking to Congress for help in averting fiscal catastrophe. The House has done its part by passing the HEROES Act, which includes nearly $1 trillion in state and local aid.

It’s time for the Senate to act – now.

America’s recovery from the pandemic will hinge on how well states, cities and towns are able to protect their residents and safely restart their local economies. The Centers on Budget and Policy Priorities (CBPP) found that state revenue losses will be astronomical without federal help.

In fiscal year 2020 alone, according to the think tank, states are bracing for losses ranging from 3% (Louisiana and Vermont) to 18% (Utah). Estimates for FY 2021 are even bleaker, with loss projections reaching as high as 30% (New Mexico). And in FY 2022, some of the biggest revenue losers could be Wyoming (as high as 62%) and Maryland (20%).

According to the National Governors Association, the National Association of Counties, the National Conference of State Legislatures, the U.S. Conference of Mayors and other groups, state and local governments employ nearly 15 million people – teachers, police officers, firefighters, health care workers, road crews, transportation workers, parks and library employees, etc.

“Unlike the federal government, state and local governments must balance their budgets and cannot borrow money over the long term to fund continuing operations,” the groups wrote. “Without federal assistance, states, territories and local governments will be forced to make drastic cuts to the programs Americans depend on.”

If states, cities and towns are forced to lay off some or many of these workers, our nation’s economy will take an incalculable hit.

The national unemployment rate hit 14.7% in April, the highest level since the Great Depression, with nearly 1 million public sector jobs lost. About 41 million people have filed for unemployment benefits since mid-March, when the coronavirus pandemic took hold in the U.S.

State unemployment has hit record levels, with Nevada posting the highest rate – 28% – and Michigan and Hawaii each reaching 22%.

The National Association of Counties (NACo) has spoken up about the financial devastation facing counties if the Senate fails to pass state and local aid. Counties alone employ 3.6 million people, according to this NACo report.

In a letter to Senate Majority Leader Mitch McConnell, R-Ky., and Senate Minority Leader Chuck Schumer, D-N.Y., NACo wrote, “Serving Americans every day at the local level is a non-partisan undertaking, and what America’s local governments need right now is a bipartisan solution to address the enormous economic and public health challenge that COVID-19 has presented.”

But McConnell, who has been resistant to calls for state and local aid, has even suggested states should just declare bankruptcy.

The Senate’s inaction is unconscionable.

As AFSCME President Lee Saunders put it: “Every day that the Senate delays, the road to economic recovery gets longer because millions of everyday heroes on the front lines who are essential to fighting the pandemic and reopening the economy are being thanked for their service with pink slips.”

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