Ease COVID-19’s impact on state, local governments
The coronavirus pandemic is creating massive budget deficits for California cities and counties at a level exceeding that of the Great Recession.
It’s imperative that majority Republicans in the U.S. Senate negotiate with House Speaker Nancy Pelosi on a deal that provides a lifeline to the nation’s state and local governments. Congress has an obligation to support them in emergency situations. States, counties and cities are required by law to have balanced budgets. Their only alternative is massive cuts that will have devastating impacts on people and the economy.
“If you’re going to do a cut to the bone, you’re going to destroy services and eliminate a whole bunch of jobs,” said Santa Clara County Executive Jeff Smith.
The size of the projected deficits is staggering. Gov. Gavin Newsom said last week that California is facing a $54 billion hit. Closer to home, Santa Clara County is projecting a $285 million budget deficit. Alameda County is forecasting a 10% drop in sales tax revenues from its $3.1 billion budget. The city of Oakland is projecting an $80 million budget hole. San Jose announced in April that it is forecasting a $71.6 million deficit, but Mayor Sam Liccardo said that he expects it to hit $100 million and wouldn’t be surprised if it was even worse. The Bay Area’s smaller cities are faring no better. Richmond, for example, is forecasting a $27 million deficit, and Palo Alto’s anticipated shortfall is approaching $40 million.
The House narrowly passed a $3 trillion pandemic relief package on Friday designed to send $1 trillion in aid to struggling state and local governments. The legislation would also provide another round of direct $1,200 payments to taxpayers and include $100 billion for rental assistance and $75 billion in mortgage relief.
Republicans in the House, including Minority Leader Kevin McCarthy, D-Bakersfield, opposed the package.
“Instead of going big,” said McCarthy, “you went crazy.”
And Senate Majority Leader Mitch McConnell, R-Ky., is in no hurry to consider the House bill. Three weeks ago he said giving aid to states to help ease the pain from the pandemic would be a “blue state bailout” and that he would prefer to see them go bankrupt. But it isn’t just blue states feeling the pinch. In McConnell’s home state of Kentucky, Gov. Andy Beshear’s state budget director projected a shortfall of $318.7 million to $495.7 million that would force cuts to education and basic public safety. And Kentucky’s largest city, Louisville, with a population slightly bigger than Oakland’s, is facing a $115 million budget deficit.
McConnell and Republicans are objecting to Democrats’ request for $3.6 billion to bolster election security. The Trump administration is threatening a veto if the package includes a $25 billion bailout for the U.S. Postal Service. Republicans have also said that any new stimulus package should offer more liability protections for businesses, nonprofits, and for government agencies and health care workers in the event of medical malpractice lawsuits.
Tough negotiations between Republicans and Democrats are to be expected. Both sides should be willing to compromise. But doing nothing to keep state and local governments from cutting essential services is unacceptable. Congress should pass a fourth stimulus package that helps offset the impact of the coronavirus crisis.