Pelosi says negotiations on state, local aid will continue

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Speaker Nancy Pelosi, D-Calif. speaks during a television interview at the Senate Russell Office Building in Washington. “You know what, we'll find our middle ground,” Pelosi said during an appearance on MSNBC. “We’re legislators. We’ll get the job done.”

A glimmer of hope for another round of direct federal aid to state and local governments continued to flicker Friday as negotiations continued between Speaker Nancy Pelosi and Treasury Secretary Steven Mnuchin.

“You know what, we'll find our middle ground,” Pelosi said during an appearance on MSNBC. “We’re legislators. We’ll get the job done.”

The chances of an agreement being reached prior to Election Day dimmed Friday as the House recessed until mid-November.

House Majority Leader Steny Hoyer, Md., told lawmakers to be prepared to return to Washington on 24 hours notice if a deal is reached.

Hoyer expressed confidence that Pelosi and Mnuchin will continue to negotiate in good faith.

Even if a deal is reached, Hoyer indicated it would take several days to put into legislative language, and said he did not expect any vote before Wednesday at the earliest.

The House Democrats approved a scaled-back $2.2 trillion HEROES Act Thursday evening without Republican support.

The revised HEROES Act has no chance of being considered by the Republican-controlled Senate, but Pelosi expressed confidence the Senate would take up a similar bill if she reaches a bipartisan deal with the White House.

“We want to vote for a bipartisan bill,” Pelosi told MSNBC. “Well, we will have a bipartisan bill.”

Senate Majority Leader Mitch McConnell, R-Ky., told Fox News on Thursday the principal negotiations are between the president and the House speaker. “If they can reach an agreement, I'll take a look at it and see whether I can sell that to Senate Republicans,” he said.

The scaled-back House bill gives Democrats political cover on the campaign trail to demonstrate they have been willing to compromise with Republicans.

Pelosi noted the revised HEROES Act has only half of the $915 billion in direct state and local aid that was in the original HEROES Act.

However, in addition to the $436 billion for state and local governments in the new bill, there’s also $225 billion for education, $32 billion for emergency transit relief, and $13.5 billion for airports.

Counties and cities would equally share $179 billion in direct aid to local governments while states would receive $257 billion.

The county aid would be apportioned based on population while the half designated for cities would be apportioned by a combination of population and the federal formula for Community Development Block Grants.

Under the legislation, states additionally would receive a 14% increase in their Federal Medical Assistance Percentage (FMAP) payments to state Medicaid programs for 12 months starting October 1.

The bill also would authorize the District of Columbia to participate in the Federal Reserve’s Municipal Liquidity Facility which it is currently unable to do under the District Home Rule Act.

Another provision involving the MLF would lower the borrowing cost to equal the federal funds rate, which is currently a range between zero and 0.25%.

The last transaction using the MLF was for the New York Metropolitan Transportation Authority at a 1.92% rate.

Marc Joffe, a senior policy analyst at the right-leaning Reason Foundation, said if that interest rate provision becomes law, it would “destroy the municipal bond market.”

Economists on Friday highlighted the release of the September employment report as further evidence of the need for another round of federal stimulus.

The report showed jobs recovery is slowing while state and local governments are continuing to lay off workers.

Although the jobless rate fell by a half percentage point to 7.9%, there were 12.6 million Americans unemployed, compared with 6.8 million in February.

Local government employment fell by 134,000 for the month. Excluding monthly job gains in local education, the local government decline was 231,100. Over the last 12 months, overall local government employment was down by 802,000 to 13.7 million from September of last year.

State government employment including education declined by 48,000 in September and was down by 303,000 over the last 12 months to 4.9 million.

Sarah Wynn contributed to this story.

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