Connecting state and local government leaders
As Democratic governors testified before the House Committee on Financial Services, the Senate rejected a pared-back coronavirus relief proposal.
Democratic governors warned Congress Thursday that states will require more financial assistance in order to recover economically from the coronavirus pandemic.
The governors of Kansas, Minnesota, New Mexico and Guam appeared before the House Committee on Financial Services, providing examples of the revenue losses and budget cuts they’ve had to make, as well as advocating for more federal money for state and local governments.
“This pandemic is different and the fix isn’t just as simple as tightening our belt buckle. Our federal partners must step in and help,” said Kansas Gov. Laura Kelly. “Severe budget cuts don’t create small government. They create failed governments.”
The hearing was held Thursday as Senate Democrats blocked Republicans’ effort to pass a slimmed-down coronavirus relief proposal. The measure included funding for expanded unemployment insurance, the Paycheck Protection Program for businesses, schools, and coronavirus testing and vaccine development. But unlike a much larger proposal approved by the Democrat-led House in May, it did not include any more direct funding for state or local governments.
The bill required 60 votes to advance, and while 52 of 53 Republican senators backed the measure, no Democrats voted for it.
With Democrats and Republicans unable to reach an agreement on the limited proposal, or a broader relief package, it is unclear what if any next steps congressional lawmakers will take before the November elections to address the ongoing economic crisis.
The partisan divide was on display during Thursday’s financial services hearing as well. Democratic lawmakers asked governors about budget cuts they’ve had to make, and what’s next on the chopping block if no additional federal aid is appropriated. Republicans meanwhile, questioned why the federal government should allocate more money if states have not yet spent an initial round of federal aid.
“Republicans believe that any additional support should be based on data and directly related to Covid,” said Rep. Patrick McHenry, the ranking Republican on the committee. “But to date, states have yet to identify how they are using their money and where additional money to address Covid may be needed.”
McHenry, of North Carolina, cited a Congressional Research Service report that found states had only spent about 25% of the CARES Act funding as of June.
Minnesota Gov. Tim Walz said the state legislature initially had trouble agreeing on how the money should be spent. But he said ultimately half of the money the state was allotted was sent to county governments and to date 92% of the CARES Act funding has been allocated.
The state is trying to be very thoughtful about how it uses federal funding so it can put the money to best use, Walz said.
“This is not cutting fat, this is cutting bone,” he said of the reductions that have already been made to the state budget. “It’s the very things we would have to cut that are going to spur the economy to come back.”
New Mexico Gov. Michelle Lujan Grisham said state leaders are worried about multiple factors of the fiscal impact of the pandemic. These include the direct expenses to respond to the outbreak—including purchase of personal protective equipment—indirect costs like support for schools to reopen, and revenue losses from a decline in tax collections. New Mexico has already spent $400 million on direct Covid-19 related costs alone and another $520 million to help schools reopen, she said.
“These are not static data points. The pandemic is ongoing, the storm is raging and those winds of fiscal damage are not dying down,” Grisham said.
Local government leaders are still holding out hope that Republicans and Democrats can reach a compromise on a federal bill that would provide more money to state and local governments.
Ahead of the Senate’s vote on the skinny relief proposal, the U.S. Conference of Mayors urged lawmakers to reject the bill because it did not include direct financial support for local governments.
“We call on Congress and the administration to go back to the negotiating table so that a bipartisan deal that addresses the pressing needs of the American people can be reached,” said conference CEO and Executive Director Tom Cochran.
Andrea Noble is a staff correspondent with Route Fifty.