Support builds for direct federal aid to counties, municipalities

Bloomberg News

Support is building in the House and Senate for direct federal aid to counties and municipalities in addition to separate funding for states to address their revenue shortfalls.

A bipartisan group of New York lawmakers announced Wednesday plans to introduce the Direct Support for Communities Act that would evenly split federal emergency aid between counties and municipalities.

The bill authored by freshman Democratic Rep. Antonio Delgado of New York’s Hudson Valley would create a new federal aid formula for counties and municipalities.

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, towns and villages with a population of over 50,000 and the remaining 30% to municipalities under 50,000 in population.

That’s identical to the plan announced Monday by House Appropriations Committee Chairwoman Nita Lowey, D-N.Y., for a new round of federal emergency aid.

The Delgado bill would authorize the new federal aid formula that would be utilized by Lowey’s committee to appropriate the money.

The sole Republican co-sponsor listed in the announcement is Rep. Lee Zeldin whose eastern Long Island district that covers most of Suffolk County has been one of the hot spots for coronavirus deaths.

“In light of historic, enhanced budgetary shortfalls caused by this ongoing outbreak, we must ensure our local governments have the direct funding they need to recover fiscally,” Zeldin said in a press statement. “This bipartisan proposal helps deliver vital funding to counties, towns, cities and villages of all sizes so that we can ensure our communities emerge on the other side of this outbreak stronger than ever.”

National Association of Counties Executive Director Matthew Chase welcomed the proposals, citing an estimated $144 billion shortfall in county budgets over the next 18 months that “reflect counties’ essential frontline responsibilities to deliver public health and safety services and our role in fostering economic recovery.”

Democratic Sen. Kirsten Gillibrand of New York announced Thursday that the original co-sponsors of the Senate version of the bill, S. 3632, are Democratic Sens. Chuck Schumer of New York, Doug Jones of Alabama, Joe Manchin of West Virginia, Sherrod Brown of Ohio, Michael Bennet of Colorado, and Gary Peters of Michigan.

Gillibrand said in a press statement she “will do everything in my power to ensure this proposal is included in the next economic relief package.”

There are no Republican cosponsors in the Senate as yet, but there is a separate bill with three Republican sponsors, S.3638, “to allow Coronavirus Relief Fund payments to be used to replace revenue shortfalls resulting from COVID-19.”

The bill proposed by Republican Sen. Dan Sullivan of Alaska includes Republican cosponsors Lisa Murkowski of Alaska, Kevin Cramer of North Dakota and Shelley Moore Capito of West Virginia. Sens. Sheldon Whitehouse, D-R.I., and Angus King, Ind-Maine, also are cosponsors.

The $150 billion Coronavirus Relief Fund has already been enacted into law.

In addition, Republican Sen. Bill Cassidy of Louisiana has joined with Democratic Sen. Robert Menendez of New Jersey to propose a $500 billion State and Municipal Aid for Recovery and Transition (SMART) Fund for states that would be divided equally into thirds of $166.6 billion each based on population, COVID-19 cases and revenue losses at the state level.

Some Republicans in the Senate and House, including Senate Majority Leader Mitch McConnell of Kentucky, have balked at approving any new federal emergency aid in the near term.

House Republican Minority Leader Kevin McCarthy of California said Thursday the best approach would be to have congressional hearings before another package of emergency aid is approved.

“Let's get states open back up, to have a real, real knowledge of what's needed in this process and then deal with any legislation in the future by committees, with hearings with markups and with knowledge,” McCarthy said.

McCarthy, however, said he supports direct federal grants to local and county governments rather than passing the money through state governments.

“What I have found in history before, it doesn't matter whether it's Republican or Democratic governor,” McCarthy said. “If the money goes directly to them, they take a big portion of that.”

McCarthy said he supports letting cities and counties being able to apply directly to the federal government for grants.

“Let's make sure funding is only there for things that are dealt with when it comes to COVID, there's a great deal of money already sent to the states, let's make sure it's getting there,” McCarthy said, adding that he’s also open to providing more flexibility in how the money already appropriated by Congress can be spent.

Republican Sen. Marco Rubio of Florida said in a radio interview with host Hugh Hewitt that he supports providing federal aid to help states and local governments provide “basic services.”

“There’s a difference between funding those basic services, which they may need some help on, and extra money to help them service the debt they took on because they mismanaged their pension fund,” Rubio said.

Rubio said there’s “a baseline of operational revenue that local and state governments need to provide essential services, and that we cannot allow to collapse.”