State, local groups plead for federal aid as Senate bill fails to advance

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“Should we at least vote to move forward and have this debate out in the open, or do our Democratic colleagues prefer to hide behind closed doors and refuse to help families before the election?” asked Senate Majority Leader Mitch McConnell, R-Ky.

State and local government groups reminded Congress Thursday of their dire for additional federal aid to cope with the effects of the COVID-19 pandemic after Senate Republicans failed to advance a scaled-back relief package.

The so-called “skinny bill” proposed by Senate Republicans failed to advance Thursday in a 52 to 47 vote that fell short of the 60-vote supermajority needed to break a filibuster.

One Republican senator, Rand Paul of Kentucky, joined all Democrats in opposition.

Democrats blocked consideration of the bill because of what they described as its piecemeal approach that left out, among other things, any direct aid to state and local governments.

Senate Majority Leader Mitch McConnell, R-Ky., characterized the vote as an opportunity to debate. “Should we at least vote to move forward and have this debate out in the open, or do our Democratic colleagues prefer to hide behind closed doors and refuse to help families before the election?” McConnell asked.

The U.S. Conference of Mayors was among the groups urging senators to block the bill.

“We call on Congress and the administration to go back to the negotiating table so that a bipartisan deal that addresses the pressing needs of the American people can be reached,” said Tom Cochran, CEO and executive director of the mayors group.

Senate Republicans who are up for re-election in November, however, could use Thursday’s vote as political cover with voters if there is no short-term agreement on additional COVID-19 federal aid.

Although Congress and the administration face a Sept. 30 deadline for agreeing to a continuing resolution to keep the federal government operating in the new fiscal year, Speaker Nancy Pelosi said Thursday Democrats won’t use those negotiations as leverage for COVID relief.

The California Democrat said both sides have agreed that the stopgap budget will be “clean” and including COVID-19 “would not meet that definition.”

Pelosi described the disagreement over COVID spending as “a big fight because it's about the role of government to protect the American people.”

The National League of Cities is among the state and local groups pressing for additional federal aid.

“It is abundantly clear to people everywhere outside the U.S. Senate that federal aid for state and local governments is necessary, non-partisan, and non-controversial,” Michael Wallace, the NLC’s legislative director for community and economic development, wrote in a Thursday blog post. “Congressional negotiators should not give up their efforts to deliver emergency aid that the country urgently needs.”

During the congressional August recess, mayors continued to face “unprecedented budget crunches due to revenue shortfalls and increased costs caused by the ongoing pandemic,” according to Wallace. “While some local leaders have indicated they will have to furlough or lay off essential municipal employees, others are being forced to delay or cancel infrastructure projects that create jobs and support local economic activity.”

A new academic study being published in the September issue of the National Tax Journal found 150 of the nation’s largest cities are facing fiscal 2021 budget shortfalls averaging 5.5% or 9% under two different economic scenarios.

Under the more severe scenario, cities facing the biggest shortfalls include Orlando, Fla. at 13.1%, Jacksonville, Fla. at 12.6%, Detroit at 14.2%, New York City at 13.9%, Las Vegas at 11.5%, Chicago at 11.5%, and Los Angeles at 8.5%.

In Texas, the hardest-hit city is predicted to be Fort Worth at 7.2%.

In New York, the upstate city of Rochester could face a 19.9% shortfall because of its heavy reliance on state aid and local sales tax revenue, according to Andrew Reschovsky, a professor emeritus at the University of Wisconsin-Madison who was one of the authors of the study.

Reschovsky said the cities with the smallest shortfalls, such as Boston, are more reliant on property taxes for their revenue. Boston’s shortfall is projected to be 2% to 4% under the two scenarios.

“Rough scaling up of these estimates to all local governments in the entire United States suggests revenue shortfall, this fiscal year ‘21 of $150 (billion) to $165 billion dollars,” Reschovsky said during a virtual meeting sponsored by the Volker Alliance.

“Despite comments by President Trump, there's no clear partisan divide,” he said. “Cities facing above-average revenue shortfalls can be found in both red and blue states.”

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Coronavirus State and local finance Washington DC
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