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As State Governments Hold on to Coronavirus Funds, Speaker Pelosi Wants Another $1.5 Trillion for State Bailouts

May 15, 2020

Congress has provided major support for state and local governments with over $760 billion in aid and the Federal Reserve’s $500 billion lending facility. Yet before this aid has been completely distributed—or evaluated—Speaker Pelosi and House Democrats want to throw more than $1.5 trillion more at state governments.

Americans Support Coronavirus Relief, Not Bailouts for State Budgets and Pensions

  • Many states faced massive shortfalls before the coronavirus ever became an issue.
  • Taxpayers in more responsibly managed states shouldn’t have to foot the bill for services and pensions hundreds of miles away.
  • Providing more funding won’t allow states to “start fresh,” but to simply kick the can down the road.
  • As the Tax Foundation notes, Speaker Pelosi’s bill offers more than state and local governments are expected to lose:
    • “Moody’s projects that state and local governments would lose a combined $482 billion across FYs 2020 and FY 2021. If the HEROES Act were enacted, state and local governments would be eligible for up to $1.09 trillion in flexible aid by the close of FY 2021, more than twice their anticipated revenue losses.”
  • In other words, this approach is big, but not very smart.

Congress Acted Quickly to Provide Funding for States and Municipalities…

  • To help with COVID-19 expenditures, Congress allocated $150 billion in the CARES Act to all 50 states, U.S. territories, tribal governments, and local government entities with populations greater than 500,000.
  • The program was designed for the larger entities receiving the money to then allocate that money down to smaller counties, cities, and towns.
  • Many states are in the process of allocating the funds to local governments.

…But Many States Aren’t Distributing the Funding They’ve Received

  • Some states have taken no action to allocate funds to local communities, been slow to act, or have failed to treat local governments equally–a significant problem and contrary to congressional intent. Examples of such states include Connecticut, West Virginia, New York, and Pennsylvania.
  • Congress needs to ensure money already allocated is being spent wisely and effectively.
  • Congress must then soberly and thoughtfully evaluate whether more aid is necessary to provide relief for losses related to COVID-19.

Find out how much your state or locality received here.

Guidance for state and local governments can be found here and here.

Additional Treasury Department Resources can be found here.

Want to read more on the fight against Coronavirus? Read our Coronavirus Bulletin here which contains our extensive FAQ about recent federal actions.

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