Do state and local governments need billions in aid? Biden says yes, GOP still wary

President Joe Biden’s administration is warning that cities and states may have to lay off essential workers, including those who administer COVID-19 vaccines, unless local governments receive additional federal funding.

It has turned to Republican mayors to help push Biden’s first major legislative initiative across the finish line.

White House officials say efforts by local communities to battle the coronavirus could be hampered if Congress refuses to provide additional assistance, countering a key criticism from congressional Republicans that Biden’s proposal to send state and local governments billions of dollars with few strings attached is too generous.

“They need the money so they don’t have to make these hard choices between laying off a firefighter, laying off a first responder, laying off people who are helping to administer the vaccine,” White House communications director Kate Bedingfield told McClatchy.

Those efforts will be tested this week when the House votes on a $1.9 trillion package that includes $350 billion for state and local aid. The Senate is likely to vote on it by mid-March.

The House legislation would send money to areas experiencing higher-than-anticipated revenues, as well as those that are hurting financially. Local governments would not necessarily be required to use those funds on pandemic-related expenses.

The White House says its proposed funding for cities and states is based on projected budget shortfalls around the nation.

It pointed to a study from the Center for Budget and Policy Priorities, a liberal policy group, that said states, localities, tribal nations and territories faced collective shortfalls of $300 billion, not including additional COVID-19 costs.

Many Republicans in Washington oppose Biden’s proposal to send unrestricted aid to cities and states, however, saying it should be up to local governments to balance their own budgets.

Rep. Byron Donalds, a Republican who represents Southwest Florida and is a member of the House Oversight and Reform Committee, said he would like to see a comprehensive study of whether the financial problems state and local governments say they’re having were caused by the pandemic.

“The best solution overall is for the states to comport themselves in a manner where they can cure their own budget shortfalls without having to come to the federal government,” Donalds said in an interview.

A plan approved by the Oversight committee that is part of the House bill would send every state at least $500 million, for a total of $25.5 billion. Another $169 billion would be distributed based on a state’s share of unemployed workers.

The money can either be used for the COVID–19 public health emergency or its negative economic impacts, the House Democrats’ proposed legislation says, including replacing revenue that was lost, delayed or decreased because of the pandemic.

Cities and counties would also get $130 billion, half of which would be allocated based on population. The other half would go to governments based on unemployment levels in larger cities and counties and the population size of smaller towns.

In California, which would receive the most money, the unemployment rate was 9% in December. It would receive about $41 billion for a population of 39.5 million people.

The state of Florida had a lower 6.3% jobless rate in December and an estimated population that is almost half the size of California’s at 21.7 million people, so it would receive a significantly smaller amount of money, $16.3 billion dollars, under the House Democrats’ plan.

Recruiting Republicans

The White House has been seeking support from Republican mayors for the local aid provision in Biden’s proposal.

Biden recently hosted a bipartisan group of mayors and governors at the White House to discuss the package, including Francis Suarez, the Republican mayor of Miami.

In November, Miami expected to lay off 63 police officers and eliminate 17 fire rescue jobs as a result of grim budget projections. Better-than-expected revenues prevented the cuts, but the city is bracing for a shortfall in the next budget.

“We want to make sure money is not an impediment to us taking care of our residents,” Suarez told the Miami Herald after his meeting with Biden.

The White House said it had heard similar concerns from local officials from both parties. “These are urgent needs that mayors all over the country are raising,” Bedingfield said, calling the aid “critical.”

“We are definitely concerned that unless we address the real shortfalls that we see at the state and local level that first responders jobs could be on the line and that efforts to respond to COVID could be on the line,” David Kamin, deputy director of the National Economic Council, said in an interview.

Donalds, the Florida congressman who does not support the unrestricted aid, said he could be supportive of using the federal dollars to pay people to administer the vaccine, which he said is a top issue that the stimulus bill should be addressing.

“Getting vaccinated is the number one way we get our economy open. So, all points should point to that,” the Republican congressman said. “But in this bill that’s not what we’re seeing.”

Who Should Get The Most Money?

Some fiscal watchdog groups are questioning whether states like California need an infusion of cash from the federal government at all. California’s revenues are exceeding projections in the first seven months of the fiscal year.

“While some state and local governments are still hurting, others are doing quite well and hardly any are doing as badly as feared,” said a report last week from the nonpartisan Committee for a Responsible Federal Budget, citing estimates of state finances last year.

States that rely heavily on tourism, for instance, have been harder hit. Florida, where the top industry is tourism, said in December that it was facing a $2.75 billion revenue shortfall over two fiscal years.

The White House says it did not tell Congress how to distribute state and local aid. It requested a flat amount and left it to lawmakers to determine the allocation.

“It’s something we want to continue to work with Congress on and trying to come up with the best way to make sure that the funds get to the states and localities with the greatest need,” Kamin said.

Michael Wallace, legislative director of community and economic development at the National League of Cities, said many cities are in a different situation than cash-flush states, which depend on income tax and other sources of wealth. Cities have to look to sales taxes, fees on services and other revenue that is more dependent on the consumer economy.

The National League of Cities in November surveyed 901 city governments, and 69% said their revenues had been “negatively impacted” by COVID-19.

Teachers, bus drivers, sanitation workers, law enforcement personnel and emergency responders are at risk of being laid off because local governments do not have the revenue to continue providing the level of service that they did before the pandemic, Lee Saunders, president of the American Federation of State, County and Municipal Employees union, said in an interview.

“For the most part, we have not gotten the kind of aid that is necessary to continue those essential public services,” he said.

The Miami Herald’s Joey Flechas contributed reporting.