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7.9.20

Tillis & McConnell Hit “Pause” On More Relief Even As COVID-19 “Wreaks Havoc” On State & Local Budgets

With the start of the new fiscal year kicking off on July 1 for many communities across the country, the economic gravity of the coronavirus pandemic is hitting state and local governments hard, and without action from Senator Tillis, Mitch McConnell, and the Republican Senate, those municipalities are being forced to cut jobs, essential services, and funding for schools and universities. 

While “[t]he National Governors Association says states need another $500 billion in federal aid to make up for lost revenue” and “[t]he U.S. Conference of Mayors says cities need $250 billion,” “Republican senators have paused discussion on another fiscal package until later this month.”

Inaction from the Senate is “forcing officials to make agonizing choices in budgets,” which in Georgia has already led to a “$950 million cut to the main state education fund,” which disproportionately impacts poorer school districts that “rely on the state to cover 70% of operating expenses.” North Carolina municipalities are in a similar “budget bind,” impacting small towns that “have less room in their budgets to make up for shortfalls” even harder.

Instead of calling on Mitch McConnell to stay in session and get the job done, Thom Tillis first said he’s “more or less aligned” with McConnell’s suggestions that municipalities “take the bankruptcy route,” and then packed up for a two-week summer break. This public health and economic crisis demands action now. 

Cal Cunningham has repeatedly called for relief to alleviate budget shortfalls for towns and cities across North Carolina. This aid means making sure teachers, first responders, and public safety officials are kept on the payroll — workers who serve critical roles in our communities, especially during a pandemic.

Read more below


Wall Street Journal: Recession Forces Spending Cuts on States, Cities Hit by Coronavirus

By David Harrison – July 8, 2020

  • State and local governments from Georgia to California are cutting money for schools, universities and other services as the coronavirus-induced recession wreaks havoc on their finances.
  • Widespread job losses and closed businesses have reduced revenue from sales and income taxes, forcing officials to make agonizing choices in budgets for the new fiscal year, which started July 1 in much of the country.
  • Governments have cut 1.5 million jobs since March, mostly in education, and more reductions are likely barring a quick economic recovery. In Washington state, some state workers will take unpaid furloughs. In Idaho, Boise State University cut its baseball and swim teams in an effort to save $3 million.
  • Dayton, Ohio, Mayor Nan Whaley says the city may have to cut up to 8% of its general fund budget, which pays for fire, police, roads, trash collection and other services.
  • “I’m concerned we’ll have to lay folks off before the end of the year,” Ms. Whaley said.
  • Across the country, the weeks before July 1 were marked by a scramble to complete spending plans. The task has been complicated by uncertainty over the economic outlook, which depends largely on unknowns such as the course of the virus and how quickly a vaccine can be developed. As a result, budgets may have to be rewritten in the coming months.
  • “I don’t think you can overstate the amount of uncertainty that states are dealing with,” said Tracy Gordon, an expert on state and local budgets at the Urban Institute in Washington. “You’re asking revenue estimators basically to consult epidemiological models and public health experts and take account of all kinds of variables that are normally not part of their forecasts.”
  • Adding to the uncertainty: Many states pushed back the income-tax-filing deadline to July 15 from April 15, following the U.S. Treasury’s lead. While that should bring a short-term revenue boost, officials don’t know how much revenue to expect in the months ahead.
  • It is also unclear whether states will get more help from Congress, which in March provided $150 billion but limited its use for pandemic response. Dayton got about $8 million and will use it to buy face masks for residents, Ms. Whaley said.
  • The National Governors Association says states need another $500 billion in federal aid to make up for lost revenue. The U.S. Conference of Mayors says cities need $250 billion.
  • The Democratic-led House in May passed a bill that included $1 trillion to help state and local governments.
  • But Republican senators have paused discussion on another fiscal package until later this month.
  • Almost all states and local governments require balanced budgets. For now, they have largely avoided raising taxes to plug budget holes, opting instead to cut spending or dip into reserves.
  • In Georgia, Gov. Brian Kemp signed a budget bill that reduces spending by about 10%, including a $950 million cut to the main state education fund. Some poorer school districts rely on the state to cover 70% of operating expenses, said Margaret Ciccarelli, director of legislative services for Page Inc., the state’s teachers’ association.
  • “These are challenging times and the budget reflects that reality,” Mr. Kemp, a Republican, said in a signing ceremony on June 30.
  • Maryland imposed $412 million in cuts, of which $136 million will come from higher education, an 8% reduction. Funding was also reduced for Washington, D.C.-area transit system, neighborhood revitalization and drug treatment.
  • With an uncertain outlook, officials are trying to maintain reserves in anticipation of more lean years.
  • “You may need to use it in 2022 and beyond,” said Brian Sigritz, director of state fiscal studies at the budget officers’ association. “They’re not expecting this decline to be a one-year or two-year thing.”