At least a few more weeks to wait for federal aid

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State and local aid from the federal government is likely on hold for at least a few weeks until the Senate comes back from recess and begins contemplating the next coronavirus relief bill.

Municipalities were disappointed to see Congress leave for recess before agreeing on a stimulus bill a few weeks ago. Lawmakers at the time could not find middle ground on the spending for a relief package, with House Democrats willing to come down to close to $2 trillion but Senate Republicans eyeing a number closer to $1 trillion.

“We’re certainly disappointed that we’re not at the point where we had a bill come together and pass, but we’re a long ways away from giving up hope,” said Brian Egan, policy director of the National Association of State Treasurers.

The House will be back in session on Saturday to vote on a proposal to block President Donald Trump administration’s plan for overhauling the U.S. Postal Service. The Senate is not back in Washington, but could be back after Labor Day.

In an interview with PBS’s "NewsHour," Pelosi said it was not the time to pass a smaller relief bill.

Pelosi said she doesn’t want to pass a smaller relief bill to enhance unemployment benefits and wants broader future legislation to include aid for state and local governments.

House Speaker Nancy Pelosi does not want to see a smaller relief bill and instead wants a larger bill to include aid for state and local governments.

According to media reports, Senate Republicans this week began circulating text of a narrower COVID-19 relief bill that would cut the enhanced weekly unemployment benefit of $600 included in previous legislation in half, add another round of money for the Paycheck Protection Program and money for the U.S. Postal Service. It also includes money for education and coronavirus testing. It is still similar to the Senate relief bill proposed in July.

Sept. 30 marks the end of the federal government’s 2020 fiscal year and when it has to pass appropriations bills to plan out spending for the next year. Egan says it’s likely Congress will pass continuing resolutions to fund the government past the deadline.

The relief bill could be attached to a continuing resolution, though Egan thinks they should be dealt with separately. However, if a relief bill does not pass before then, NAST will pivot to work on a relief bill tied to a continuing resolution, he said.

Egan said it would be difficult for Congress to depart Washington for campaigns in October without addressing issues such as unemployment insurance.

As for state and local governments, flexible funding in the $150 billion Coronavirus Relief Fund in the next relief bill is a “low bar,” Egan said.

“I would imagine if there is a stimulus package that at a minimum that should happen,” Egan said. “We’re still optimistic that more aid will be appropriated. Where we’re less certain is how much and through what distribution method that aid will come.”

The CARES Act, enacted in March, approved that $150 billion to states as well as counties and cities with populations of over 500,000. Those funds can only be used to cover COVID-19-related expenses.

Senate Republicans introduced a $1 trillion emergency relief package in late July. House Democrats supported the much larger House-passed $3.5 trillion HEROES Act that includes $915 billion in direct aid for state and local governments. They since have been willing to bring that $3 trillion number closer to $2 trillion.

The Republican proposal doesn’t include any new funding for states or municipal governments, but it does give more flexibility to state, local and tribal governments in using the CRF.

Anything that comes forward in the next few weeks has to be veto-proof for Trump to sign, said Natalie Cohen, president of National Municipal Research. Cohen said she believes some form of a relief bill will be passed in September.

“Things are getting more dire as time goes on,” Cohen said. “It’s hard to say exactly what shape it’s going to take. I think there will be something.”

The National Association of Counties wishes Congress had a more definitive timeline, said Brian Namey, its chief public affairs officer. However, they are encouraged by recent and prolonged support from Pelosi and bipartisan lawmakers.

In April, Sens. Bill Cassidy, R-La., and Bob Menendez, D-N.J., introduced a bipartisan bill — a $500 billion State and Municipal Aid for Recovery and Transition (SMART) fund. That bill would supplement the CRF and give flexibility to state and local governments to plug revenue losses.

Cities anticipate a 13% decline in FY 2021 in general fund revenues over FY 2020, said Michael Wallace, legislative director, housing and community and economic development at the National League of Cities.

“Federal leaders need to get back to the negotiating table to help ensure state and local governments can carry out the sound operations necessary to protect public health and reopen the national economy,” Wallace said.

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