Equal funding considered for counties and municipalities

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House Appropriations Committee Chairwoman Nita Lowey, D-N.Y., said in a “dear colleague” letter Monday that lawmakers are considering creating separate and equal funds for direct aid to counties and municipal governments.

House lawmakers are working on separate and equal federal aid packages for counties and municipalities at the same time that the National League of Cities has doubled its federal aid request to $500 billion over two years.

NLC’s director of federal advocacy predicted Tuesday that some small rural communities may have to opt for dissolution because of their dire revenue shortfalls related to the pandemic.

Some assistance could be on the way through a “municipality fund” that would designate 30% of the federal aid for municipalities with populations less than 50,000.

House Appropriations Committee Chairwoman Nita Lowey, D-N.Y., disclosed those plans in a “dear colleague” letter Monday. She said lawmakers are considering creating separate funds for direct aid to states, counties and municipal governments.

Lowey pledged to “provide estimated awards for all municipalities and counties in the country, in addition to details on funds for states, the District of Columbia, territories, and tribes.”

“Unlike the initial CARES Act, I think it is vital we have separate programs for state and local governments, so there is less competition between governors, municipal leaders, and county executives,” Lowey wrote.

The county fund would go directly to all counties based on their population.

The “municipality fund” would use a modified Community Development Block Grant formula with 70% going to cities and towns with a population of over 50,000 and the remaining 30% to municipalities under 50,000 in population.

Lowey’s pledge to provide dollar figures for every community in the nation also could build widespread bipartisan support for the legislation reminiscent of how so-called earmarks did so in decades past by allowing lawmakers to take credit for funding local projects.

Lowey said the full proposal would be released “in the coming days.”

Both the National Association of Counties and National League of Cities said Tuesday they urgently need the federal aid.

State and local governments in some cases already have begun laying off and furloughing employees.

NACo estimates that county governments face a collective $144 billion in budget shortfalls because of the pandemic.

NACo Executive Director Matthew Chase said Lowey’s proposal “reflects the essential frontline responsibilities of our nation’s county governments in providing vital public health, safety and economic recovery assistance.”

The NLC and U.S. Conference of Mayors have previously requested $250 billion in federal aid.

But the NLC new request for $500 billion is part of a campaign the organization is calling “Cities are Essential” based on its findings that up to one million public sector employees are facing layoffs due to plummeting revenues and crippled local budgets.

“The federal government must act now,” said Clarence Anthony, the NLC’s CEO and executive director. “It’s been almost two months since the first bill providing Coronavirus relief was passed by Congress, and most communities haven’t received a cent in aid.”

Irma Esparza Diggs, director of federal advocacy for the NLC, said, “All local governments are facing overwhelming revenue shortfalls that will require cuts in employment and services that would have been unimaginable just a few weeks ago.”

“Even worse, without federal aid to alleviate these dire circumstances, municipal dissolution may be the only option left for many small and rural communities,” Diggs said.

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Coronavirus State and local finance NLC NACo Washington DC
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