States, local governments would get $1 trillion in Democrats’ aid package

Democrats say inclusion of more fiscal relief is a must in negotiations; Republicans say 'enough already'

House Appropriations Chairwoman Nita M. Lowey, D-N.Y., has plenty to smile about in Democrats' latest coronavirus aid package. (Bill Clark/CQ Roll Call file photo)
House Appropriations Chairwoman Nita M. Lowey, D-N.Y., has plenty to smile about in Democrats' latest coronavirus aid package. (Bill Clark/CQ Roll Call file photo)
Posted May 12, 2020 at 7:16pm

House Democrats would provide almost $1 trillion in pandemic-related relief for states, cities and counties, at least a six-fold increase over what Congress spread around in a previous round of aid.

The assistance includes $500 billion for states, $375 billion split equally between municipalities and counties, $20 billion for territories and $20 billion for tribes, which adds up to $915 billion. They'd also tack on $755 million for the District of Columbia, which backers say got shortchanged in the March aid package.

And when other state and local related aid is included, such as money for Medicaid, education, housing and highways, the total easily tops $1 trillion.

Local officials praised the bill. Matthew Chase, executive director of the National Association of Counties, said in a statement it is “a significant step in addressing the urgent needs of our nation’s county governments as we continue to provide essential services to more than 300 million residents.” Chase said the pandemic is “having unprecedented fiscal effects on America’s local governments, as our costs skyrocket and our revenues plummet.”

Clarence Anthony, CEO and executive director of the National League of Cities, said the money will pay to keep firefighters, sanitation workers and police officers on the job. “Local governments are doing everything and more to keep essential workers on the job and residents ready for the reopening of our economy,” he said in a statement. “As a result, local budgets are stretched thin and at the breaking point.”

In a key difference from the March relief law, funds could be used to replace state and local revenue that has plunged since the pandemic hit, in addition to the costs of fighting the pandemic.

The previous package provided $150 billion for states and local government. That money can be used for health care, first responder and other pandemic related costs but not to replace lost revenue.

State and local officials and Democratic lawmakers have pushed for more flexibility in use of the funds, an approach that was initially blocked by GOP lawmakers who were wary of states using the money to patch fiscal shortfalls that preceded the pandemic. Since then, a growing number of GOP senators have come out in favor of providing more flexibility for the funds that have already been allocated.

John Kennedy, R-La., said Tuesday he and several other Republican senators met with President Donald Trump and discussed Kennedy’s bill to let state and local governments use $150 billion in aid that already has been approved for operating expenses beyond pandemic costs.

“I certainly can’t speak for the White House, but I thought our meeting today was very positive as we discussed how we could give state and local governments crucial flexibility to help their communities using money they already have,” he said in a statement. Kennedy said every state has received at least $1.25 billion under the allocation. The bill also would allow the funds to be spent beyond the current expiration date of Dec. 30, 2020. The bill bars states from using the money to shore up pension funds.

Republican conservatives remain philosophically opposed to more aid to states and localities, however. They say it will mask poor fiscal policy decisions in past years, prior to the pandemic, as well as relieve pressure on state and local officials to reopen shuttered businesses.

"Another trillion-dollar boondoggle will only dig us deeper into this economic crisis and further erode our chances of a quick economic recovery," said Brent Gardner, chief government affairs officer at Americans for Prosperity. The conservative advocacy group was founded by billionaire brothers David and Charles Koch. David Koch died last year.

Democrats say inclusion of more aid to states and localities is a top priority in the next round of legislation, however. House Majority Leader Steny H. Hoyer, D-Md., told reporters Tuesday that was a "red line" for his party in the upcoming talks.

In another key difference from the previous bill, the funds for states and local governments would be distributed in two tranches, with the first going out within 30 days of enactment of the legislation and the second tranche next year.

The states would get $250 billion after the bill passed, and another $250 billion by May 3 of next year. Local governments would get $250 billion early on, and $125 billion next year.

Rather than expiring at the end of the year, the state and local funds would be available until spent, which Democrats say would provide flexibility over the next several years.

Some of the aid to the 50 states and District of Columbia would be divided equally, while other assistance would be divvied up according to population, number of COVID-19 cases and number of unemployed.

Funds would be distributed to counties based on population, and to cities based on a modified block grant formula as well as population.

Of the aid to cities, cities with 50,000 or more residents would get 70 percent of the municipal aid, while those with less than 50,000 would get 30 percent of the aid. The funds for these smaller cities would go first to states, which would distribute the money based solely on population.

House Appropriations Chairwoman Nita M. Lowey, D-N.Y., one of the bill's lead authors, said Tuesday it would provide $67 billion for her state. For her district north of Manhattan, the measure would provide $1.3 billion, Lowey said.

The $20 billion for territories would be distributed with half equally divided among the five territories and half based on each territory’s population.

Tribes would get $20 billion, with the amount for each tribe based on the tribal government’s share of increased spending.

Lindsey McPherson and Niels Lesniewski contributed to this report.