Government shutdown threatens state and local governments

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State and local governments face a possible interruption of federal formula aid and grants later this month if Congress and the Trump administration remain deadlocked on 2020 fiscal year spending.

The current impasse is a larger scale reprise of the disagreement that led to a 35-day partial government shutdown last December and January because of the Trump administration’s demand for funding a southern border wall.

The federal government has been operating on a stopgap budget since the Oct. 1 start of the fiscal year but President Trump has declined to give any assurance he will agree to another one past Nov. 21.

"It depends on what the negotiations are,” Trump told reporters Sunday on the South Lawn of the White House. “I wouldn't commit to anything. It depends on what the negotiations are."

An agreement over the summer set the top line spending numbers for domestic and defense programs in fiscal 2020 and 2021. It also suspended the national debt ceiling for two years and reopened the trading window for State and Local Government Securities.

But that agreement failed to cover any further details such as funding levels for agencies that provide key funding to state and local governments such as the Transportation Department, Department of Education or Department of Housing and Urban Development.

The House nonetheless has passed 10 of the 12 annual spending bills.

The Senate last week voted 84 to 9 to approve spending bills for the departments of Commerce, Justice, State, Transportation, HUD, Interior and Agriculture.

Encouragingly for transportation advocates, the Senate voted 82 to 11 to prevent a $1.2 billion recission of transit grants under a bipartisan amendment offered by Sens. Martha McSally, R-Arizona, and Doug Jones, D-Ala.

McSally said that in her home state it prevents more than $15.4 million in cuts to Arizona transit agencies.

“These cuts could result in drastically reduced services, including those for low-income individuals and individuals with disabilities, and reduce funds necessary to modernize bus and rail fleets, as well as slow construction of news stations and shelters,” McSally said.

Spending levels for transportation and housing in 2020 are increased in both the Senate and House bills from 2019 levels, with the House higher than the Senate.

Mike Wallace, National League of Cities Legislative Director for Community and Economic Development, said he’s hopeful the Senate and House can at least come to an agreement on 2020 spending for transportation and housing prior to Nov. 21.

“I’m optimistic that Congress, whatever they do, it will not result in a total government shutdown,” Wallace said. “You really can’t be prepared to fully inure yourself against the consequences of a shutdown. I think for cities the most immediate impact is the most vulnerable people in your community relying on federal assistance.”

Evan Hollander, spokesman for the House Appropriations Committee, said, “The Senate and House first need to reach agreement on subcommittee allocations before we can begin work on conferencing individual bills. To do that, Senate Republicans will have to drop their insistence on funding the President’s wasteful border wall at the expense of critical domestic priorities.”

Trump has reprogrammed 2019 military construction money for upgrades at military bases to help pay for the wall.

Another continuing resolution to keep federal agencies operating through the end of the year or into early 2020 is likely because the Defense Department spending bill is among the that haven’t been finalized.

That’s better news for state and local governments.

“On the one hand, in a practical way, cities are used to continuing resolutions and missed deadlines,” Wallace of the NLC said. “Not that it doesn’t have an impact, but I think cities are more equipped to manage that impact. It’s a whole different outcome when it comes to shutdown.’’

Senate Democrats last week blocked an effort by Senate Majority Leader Mitch McConnell, R-Ky., to bring up consideration of the 2020 Defense Appropriations bill.

"A bill that is supposed to provide resources for our troops and their families actually steals money from them and puts it toward a border wall that President Trump promised Mexico would pay for," said Senate Minority Leader Chuck Schumer, D-N.Y.

Schumer said Republicans “have resorted to bogus attacks” by accusing Democrats of not supporting a pay raise for the troops and not supporting the campaign against ISIS.

“The pay raise is strongly bipartisan, and, more important, the standing law of the land dictates it will go into effect regardless of whether we pass the Defense appropriations,” Schumer said.

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