The Impact of Covid-19 on State And Local Governments

Brian Skinner Local Government, State Fiscal & Economic Policy

WV Capitol

By Brian Skinner, Esq.

News on Sunday revealed that the White House has again pivoted in its approach to stimulus negotiations, with the president’s aides pushing for immediate action on a narrow measure after the administration’s $1.8 trillion proposal was rebuffed by members of both parties.

This comes after months of negotiations between Treasury Secretary Steven Mnuchin and House Speaker Nancy Pelosi (D-Calif.) over a new pandemic relief package.

Of the White House’s most recent proposal Pelosi said the president’s offer did not contain enough spending for unemployment insurance, state and local aid, child care, or other Democratic priorities. She said it also includes “reckless” language on liability protections for businesses and others. House Democrats have been pushing legislation with a $2.2 trillion price tag.

Congress passed four bipartisan bills totaling an unprecedented $3 trillion in new spending in March and April, but since then lawmakers have failed to reach any new agreement and many of the programs approved in the spring have expired. Talks have been revived only to fall apart again several times.

Of the $2.6 trillion the government has spent on economic relief, $291 billion has gone to state, local, and tribal governments. But is that enough?

The federal government has provided useful interactive data visualizations and maps to find out where pandemic response program dollars are being spent, who’s spending it, and what they’re spending it on.

In August, the U.S. House of Representative Committee on the Budget reported that plunging tax revenues and increasing demand for services is creating budget gaps for state, local, and tribal governments that may exceed the largest on record.

Brookings reports on the impact Covid-19 has had on state and local revenues.

States are grappling with evaporating funds for unemployment benefits that could force cuts to those payments or hikes in business taxes.

The National Governors Association has repeatedly asked the federal government for an additional $500 billion.

As a result of the lack of federal relief, state and local governments have been fighting over available funds, which has complicated talks at the federal level.

The administration’s most recent offer includes $300 billion in state and local aid, an increase from $250 billion in an earlier proposal. But it still falls short of what Democrats want — while at the same time it’s too much for many Republicans to swallow. Consequently, it is unlikely that state and local governments will receive a much needed infusion of cash anytime soon.

Brian is the former counsel to the West Virginia House of Delegates Judiciary Committee and counsel to the West Virginia Senate Minority Caucus. He was also general counsel to the West Virginia State Health Officer and Commissioner for the Bureau for Public Health. He has almost two-decades of experience as a strategic advisor and chief legal counsel to both executive and legislative branch public officials.

 

 

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