Northwest Arkansas Democrat-Gazette
With no help in sight, states brace for cuts
Calls for relief bill mount ahead of Senate’s return
With Congress deadlocked for months on a new coronavirus relief package, many states haven’t had the luxury of waiting to see whether more money is on the way. Some that have delayed budget decisions are growing frustrated by the uncertainty.
As the U.S. Senate returns to session Tuesday, some governors and state lawmakers are again urging action on proposals that could provide hundreds of billions of additional dollars to states and local governments.
“There is a lot at stake in the next federal stimulus package and, if it’s done wrong, I think it could be catastrophic for California,” said Assemblyman Phil Ting, a Democrat and chairman of the Assembly Budget Committee.
The budget that Democratic Gov. Gavin Newsom signed in June includes $11.1 billion in automatic spending cuts and deferrals that will kick in Oct. 15, unless Congress sends the state $14 billion in additional aid. California’s public schools, colleges and universities, and state workers’ salaries all stand to be hit.
In Michigan, schools are grappling with uncertainty as they begin classes because the state lacks a budget for the fiscal year that starts Oct. 1.
Ryan McLeod, superintendent of the Eastpointe school district near Detroit, said it is trying to reopen with in-person instruction, “but the costs are tremendous” to provide a safe environment for students.
“The only answer, really, is to have federal assistance,” McLeod said.
Congress approved $150 billion for states and local governments in March. That money was targeted to cover coronavirus-related costs, not to offset declining revenue resulting from the recession.
Some state officials, such as Republican Gov. Eric Holcomb of Indiana, are pushing for greater flexibility in spending the money they already received. Others, such as Republican Gov. Mike DeWine of Ohio, say more federal aid is needed, especially to help small businesses as well as emergency responders working for municipalities with strained budgets.
In mid-May, the Democratic-led U.S. House voted to provide nearly $1 trillion of additional aid to states and local governments as part of a broad relief bill. But the legislation has stalled amid disagreements among President Donald Trump’s administration, Republican Senate leaders and Democrats over the size, scope and necessity of another relief package. In general, Republicans want a smaller, less-costly version.
Although the president “couldn’t be more pleased” with how the nation’s economic recovery is progressing, he wants more stimulus to move ahead, Treasury Secretary Steven Mnuchin said.
Speaking on “Fox News Sunday,” Mnuchin again called on Democrats, led by House Speaker Nancy Pelosi of California, to work with the administration on what some have called a “skinny” relief measure.
“I’d like to call it a ‘more targeted bill.’ But yes, our expectation is we’ll move forward with that next week,” he said.
BUDGET CUTS
Despite Mnuchin’s comments, the prospects for a preelection relief measure are in doubt, with aid to states and local governments one of the key areas of conflict.
The bipartisan National Governors Association and Moody’s Analytics have cited a need for about $500 billion in additional aid to states and local governments to avoid major damage to the economy. At least three-quarters of the states have lowered their 2021 revenue projections, according to the National Conference of State Legislatures.
While the administration and members of Congress have been at loggerheads, many states have pressed forward with budget cuts.
Wyoming Gov. Mark Gordon, a Republican, recently announced $250 million of “agonizing” cuts that he described as “just the tip of the iceberg” in addressing a $1 billion budget shortfall caused by the coronavirus and declining revenue from coal and other natural resources. The cuts will reduce funding for childhood vaccinations and eliminate a program to help adults learn new job skills, among other things.
“It is not likely that these trends are going to turn around rapidly or as significantly as we would like,” Gordon said.
In August, Rhode Island Management and Budget Director Jonathan Womer sent a memo to state agencies instructing them to plan for a 15% cut in the fiscal year that starts next July.
In some states, however, the financial outlook is not as dire as some had feared.
In Vermont, a deficit that some had thought could reach $400 million now is pegged at around $55 million. A predicted $518 million shortfall in Arizona for the current fiscal year has been revised to $62 million.
Local governments in New Mexico said revenue has been propped up by surprisingly strong intake from sales taxes. But “that sugar high from the federal stimulus will fall off, and our communities will be affected,” said A.J. Forte, executive director of the New Mexico Municipal League.
New Mexico Gov. Michelle Lujan Grisham, a Democrat, is urging the Legislature to legalize and tax recreational marijuana as a way to shore up state revenue. Democratic Pennsylvania Gov. Tom Wolf also wants the Legislature to legalize marijuana, with the tax revenue going toward grants for small businesses and criminal justice changes.
Experts warn that states might experience the lagging effects of the recession well into their 2021 and 2022 budget years.
“The worst is still yet to come,” said Brian Sigritz, director of state fiscal studies at the National Association of State Budget Officers.
In New York, Democratic Gov. Andrew Cuomo’s administration estimates the state will receive about $8 billion less in tax revenue than once expected this fiscal year. He wants Congress to provide an additional $30 billion to New York to plug budget holes that he warns will compound in coming years.
“There is no combination of savings, efficiencies, tax increases that could ever come near covering the deficit,” Cuomo said, “and we need the federal government to assist in doing that. Period.”
VACCINE EFFICACY
Meanwhile, Democratic vice presidential nominee Kamala Harris told CNN on Sunday that she wouldn’t take the president’s word alone on the efficacy of a coronavirus vaccine.
“I would not trust Donald Trump, and it would have to be a credible source of information that talks about the efficacy and the reliability of whatever he’s talking about,” Harris said on “State of the Union.” “I will not take his word for it.”
Harris voiced concern that public health experts and scientists may be ignored by the administration.
“If past is prologue, they will not [be listened to], they’ll be muzzled, they’ll be suppressed, they will be sidelined,” she said. “Because he’s looking at an election coming up in less than 60 days, and he’s grasping for whatever he can get to pretend that he has been a leader on this issue when he’s not.”
Sen. John Barrasso, R-Wyo., called Harris’ comment “her most irresponsible statement of all” in an appearance on Fox News Channel’s “Sunday Morning Futures.”
STUDENTS DISMISSED
In another development, Northeastern University said it has dismissed 11 students who gathered in a hotel room in violation of the school’s coronavirus policies and will not refund their tuition, marking one of the most severe punishments that college students have faced for breaking pandemic rules.
University staff members found the first-year students hanging out last week in a room at the Westin Hotel in downtown Boston, which Northeastern is using as a temporary dorm for about 800 students, according to the school. Officials instructed them to take coronavirus tests, then leave campus within 24 hours.
The students, who were part of a study abroad program that had to be held in Boston this semester, will not be reimbursed for their $36,500 tuition payments, according to the university. They will be allowed back on campus in the spring. In the meantime, the school said, they can appeal the punishment in an expedited hearing.
Commenting on the restrictions implemented across the country during the pandemic, former Food and Drug Administration Commissioner Scott Gottlieb said that “People are exhausted.”
“I think that people’s willingness to comply with the simple things that we know can reduce spread is going to start to fray as we start to head into the fall and the winter,” he said Sunday on CBS News’ “Face the Nation.” “And that’s another challenge, trying to keep up our vigilance at a time when we know that this could spread more aggressively.”
The rolling average for daily new cases in the United States dipped by 2.7% from the past week, according to The Washington Post’s analysis of state health data. Southern states hit hard by a summer surge in infections continued to report progress in controlling their outbreaks, but the virus was on the rise in several Midwestern states.
Local officials and health experts cautioned that Labor Day weekend festivities could fuel a spike in cases.
Information for this article was contributed by David A. Lieb, Adam Beam, Mike Catalini, Bob Christie, Tom Davies, David Eggert, Mead Gruver, Morgan Lee, Marc Levy, Wilson Ring, Andrew Taylor, Andrew Welsh-Huggins and Marina Villeneuve of The Associated Press; by Craig Torres, Tony Czuczka, Jordan Yadoo and Sydney Maki of Bloomberg News; and by Derek Hawkins of The Washington Post.