May 12, 2020
Gov. Inslee, House Speaker Laurie Jinkins, and Senate Majority Leader Andy Billig have signed onto a letter asking Congress to provide “$1 trillion in direct and flexible relief to states and local governments.” The letter continues, “Though even this amount will not replace the decline in revenue that we forecast, it will make a meaningful difference in our ability to make-up for COVID-19 revenue losses.” (The letter is also signed by the governors and legislative leaders of California, Colorado, Oregon, and Nevada.)
Such requests would be on top of the $150 billion provided to states and local governments (with populations over 500,000) in the CARES Act. That funding is meant for new spending related to COVID-19 and cannot be used to cover revenue shortfalls. Washington’s state and local governments received $2.953 billion.
There are conflicting reports about the amount of relief for state and local governments that is in the current draft of the next federal aid bill. The Wall Street Journal reports that it includes $750 billion for states and local governments, which could be used to address revenue shortfalls. According to Politico, the draft includes “more than $1 trillion” for state and local governments. Either way, the bill doesn’t appear to be moving very fast.
When the federal bill is made public, it will be interesting to see how much flexibility states would have in using the funds and how the funds would be distributed. (In the CARES Act, funds were only provided to local governments with populations over 500,000. Apparently the threshold was included because of “the administrative complexity and potentially substantial delays caused by directly issuing payments to every jurisdiction in the United States.”)
Jared Walczak of the Tax Foundation has some ideas about how a new round of relief could be structured. He also notes a reason why Congress may choose to retroactively make the CARES Act relief funds more flexible: “Many states may find it difficult to spend their full allocation on direct responses to the pandemic, which could lead to poorly targeted spending or unutilized funds at the same time that states struggle to balance their budgets.”Categories: Budget.
Tags: COVID-19 , other federal action on COVID-19