Senate Republicans leave state, local aid out of their emergency aid plan

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Senate Minority Leader Chuck Schumer, D-N.Y., on Thursday said the Republican legislative response to COVID “is ununified, unserious, unsatisfactory.”

Senate Republicans are considering a negotiating strategy that will not provide additional aid to state and local governments in the next package of coronavirus emergency relief they will propose to House Democrats.

Senate Republican Majority Leader Mitch McConnell had planned to announce the proposal Thursday morning, but postponed it until next week because of disagreements with the Trump administration on some parts.

Meanwhile, three Senate Republicans are cosponsors with three Democratic colleagues in proposing the SMART Act which would split $500 billion among states, counties and local governments.

However, a Republican Senate/White House draft proposal that was circulating among lobbyists in Washington earlier this week indicated the major benefit for local governments would be new language providing greater flexibility for Coronavirus Relief Fund grants. That $150 billion was part of the CARES Act.

In addition, the GOP proposal would have $105 billion for education, with $29 billion of the money directed to higher education, $70 billion for K-12 schools and $5 billion for governors education funds.

In the area of health care, there would be several increases for purposes such as testing and vaccine research, a freeze in the Medicare Part B premium in 2021 and an extension of telemedicine reimbursement policies through the end of 2021.

But it does not include another increase in the Federal Medical Assistance Percentage that provides the federal share of Medicaid services to the poor which has been requested by several dozen health and government organizations in a letter to congressional leaders earlier this month.

In the meantime, counties and school systems' federal aid needs have increased since the House passed the $3.5 trillion HEROES Act.

The National Association of Counties said Tuesday its newest estimate of the impact of COVID-19 on county budgets through fiscal 2021 shows a $202 billion gap, up from an earlier $144 billion estimate.

“We realize that the federal government can’t save us alone, that it needs to be a partnership, but we do need a strong federal partnership,” said Matthew Chase, executive director of the National Association of Counties, in a call with reporters Thursday.

In New York alone, counties have already lost $1.2 billion of sales tax revenue, Chase said.

NACo is not requesting a specific amount of federal aid, but did partner with the National League of Cities recently requesting $250 billion.

In addition, the National Governors Association has joined with the NLC requesting an additional $500 billion.

The healthcare and other issuer groups signing the letter sent a few weeks ago requested another 5.8% FMAP increase on top of the earlier 6.2% hike included the American Medical Association, the National Association of State Budget Officers, National Conference of State Legislatures, National Governors Association and the National League of Cities.

The letter noted that Medicaid represents the largest state budget expense among the 50 states.

“Florida’s state Medicaid program grew by nearly 8% between February and May and it is estimated this could blow a $1 billion hole in the state’s budget for the 2020-2021 fiscal year, which began July 1,” the letter said.

“Ohio has seen an increase of 140,000 additional Ohioans enrolled in Medicaid in April alone, which now covers about 1 in 4 residents,” according to the letter. “In 2012, 46 states cut rates for some health care providers, long after the official end of the Great Recession.”

The $70 billion for K-12 schools would include $10 billion for private schools and $30 billion reserved for school districts where schools physically reopen. Only $30 billion would be immediately sent to states for distribution among public school districts.

That’s a cause for concern for the Council of the Great City Schools, which said it is waiting to see the actual provisions when the bill is released.

“The initial reports of the inadequate level of K-12 COVID assistance relief, the unworkable conditions on use of K-12 funds, and the private school subsidies, if accurate, would make this initial proposal entirely unacceptable to the Great City Schools and probably to every other major K-12 education organization,” spokeswoman Tonya Harris said in an email.

House Speaker Nancy Pelosi told reporters earlier this week the price tag for assisting schools has risen to $400 billion since passage of the HEROES Act more than two months ago.

As for the Senate Republican proposal for revising the rules of the Coronavirus Relief Fund, it would require states to transfer at least 15% to local governments, building on a Treasury Department suggestion that 45% go to local governments.

In addition, no funds could be used for pensions, retirement benefits or to replenish a state or local rainy day fund.

States would not be allowed to impose any restrictions on the use of CARES Act money by their local governments other than those set by the federal government.

Senate Democratic Minority Leader Chuck Schumer on Thursday said the Republican legislative response to COVID “is ununified, unserious, unsatisfactory.”

“They have been so divided, so disorganized, so unprepared, they have struggled to even draft a partisan proposal within their own conference,” Schumer said.

Schumer said the GOP division involves “a partisan bill that will never become law just so they can muster up the courage to negotiate."

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Coronavirus State and local finance Washington DC
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