More relief:
House Democrats’ new bill could bring back state tax deductions.
WASHINGTON — Facing dire budget shortfalls because of the coronavirus pandemic, California and the Bay Area could get more than $50 billion from the federal government to help — if House Democrats have their way.
The House is scheduled to vote on its latest coronavirus relief bill Friday, and with Democrats in the majority, the measure is expected to pass. But a showdown is expected with the Republicancontrolled Senate and President Trump, who say any further coronavirus relief should wait for a clearer picture of how previous measures have affected the economy.
And when the time comes to pass something, Republicans say they will resist giving money to states and localities if they do not use it directly for coronavirus needs. They are also insisting on liability protections for businesses, which Democrats oppose.
“Not acting is the most expensive course,” House Speaker Nancy Pelosi, DSan Francisco, said as she introduced the bill Tuesday. “We are presenting a plan to do what is necessary to deal with the corona crisis and make sure we can get the country back to work and school safely.”
The bill includes $3 trillion in coronavirus relief, with nearly $1 trillion of that going to state and local governments.
That money is divvied up based on formulas factoring in need and population size, and would be released over two years. According to an estimate done by the Congressional Research Service, which was provided to The Chronicle by the House Appropriations Committee, California and the Bay Area would receive a large chunk of change.
The state would directly receive an estimated nearly $21.5 billion this year and $26 billion next year. Cities and counties in the state would directly receive a cumulative $30.5 billion this year and $15 billion next year.
Another windfall to California residents would be the repeal of the cap on state and local tax deductions on federal taxes. The bill would eliminate the cap for 2020 and 2021, repealing the $10,000 limit for joint filers that Republicans passed in their 2017 tax bill. The GOP has rejected the idea in the past. An analysis by California’s tax board in 2018 estimated that loss of the full deduction cost state taxpayers $12 billion.
San Francisco would get more than $1.2 billion in federal relief this year and $600 million next year under the Democrats’ bill. San Jose would get $428 million this year and $214 million next year, and Oakland would get $368 million this year and $184 million next year.
Smaller cities would not be left out. Walnut Creek, for example, would get a total of $24.5 million over the two years. San Rafael would get almost $30 million. And Burlingame would get $15 million.
The state is facing a budget deficit of $54 billion, the state Department of Finance projects, amid mounting demand for social services and plummeting tax revenue. San Francisco’s shortfall alone could near $2 billion.
Actual allocations could vary not only based on what Congress ultimately passes, but also changing circumstances.
One of the variables is the local unemployment level, which could remain stubbornly high in the state.
Governors and local officials of both parties have called on Congress to allocate money for their hurting budgets. The combination of revenue decimated by stayathome orders and expenses related to the pandemic have put enormous pressure on state and local governments, most of which are required to balance their budgets.
While Senate Majority Leader Mitch McConnell, RKy., has backtracked from rhetoric suggesting states could be allowed to go bankrupt, he and other Republicans have said they do not want any federal money being used to supplement states that have mismanaged their budgets. Republicans resisted money for state and local governments in an interim bill, but Congress’ first relief package included $150 billion for states and localities.
The Democrats say the need is now, and have labeled the legislation the “Heroes Act” to evoke the local workers and first responders whose jobs could be saved with the stimulus money.
“There are those who said, ‘Let’s just pause,’ ” Pelosi said. “Well, the families who are suffering know that hunger doesn’t take a pause, the rent doesn’t take a pause, bills don’t take a pause, the hardship of losing a job or tragically losing a loved one doesn’t take a pause.”