States plan for cuts with virus aid
Spending cuts to schools, childhood vaccinations and job-training programs. New taxes on millionaires, cigarettes and legalized marijuana. Borrowing, drawing from rainy day funds and reducing government workers’ pay.
These are some actions states are considering to shore up their finances amid a sharp drop in tax revenue caused by the economic fallout from the COVID-19 pandemic.
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 from San Francisco 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, 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 envi
ronment 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 and emergency responders working for municipalities with strained budgets.