Yahoo Finance’s Akiko Fujita and Zack Guzman speak with Wisconsin State Treasurer Sarah Godlewski about how the state has is tackling COVID-19 relief.

Video Transcript

AKIKO FUJITA: The state of Wisconsin is facing the largest budget shortfall since 2011, with estimates from at least one nonprofit group, Wisconsin Policy Forum, estimating a $2 billion hole. That has largely been accelerated by slowing tax revenue, as well as increased spending to lift the state's economy out of its pandemic lows.

Let's bring in Sarah Godlewski. She is a Wisconsin state treasurer. It's good to have you on today. You know, we're having this discussion as lawmakers over in Washington are debating that $1.9 trillion package, which also includes federal aid to states. How much of that $2 billion can you chip away at without help from the federal government?

SARAH GODLEWSKI: I mean, first, thanks for having me. And being here in Wisconsin, one thing that is very clear is that Wisconsinites are still hurting, whether it is the unemployed and underemployed who are trying to figure out how to pay their bills. I mean, here in the state of Wisconsin, we are seeing 1.2 million Wisconsinites that are facing that every single day. We are a small business economy and the small businesses have run through their PPP funds. And they're not sure how much longer they can keep their doors open and when our small businesses decline, so does our economy.

And I think, to your point, with exactly our local government, I talked to county treasurers across our state, and they are doing everything they can to tighten their budgets, dip into rainy day funds. And it's just not enough. They are having to furlough their essential workers and cut back on essential services, whether it's EMS, firefighters, or even teachers. And so more aid is needed, and the sooner we can get that aid, the better.

ZACK GUZMAN: Yeah, when you look at the next round of aid, I mean, we talk a lot about stimulus checks, we talk a lot about unemployment insurance. But when you look beyond that and kind of state and local aid here, I mean, what's the biggest piece? When you look at Wisconsin's budget, you're going to be looking to kind of tap into, and it's going to change with this new package. Because I mean, earlier, you guys had to get pretty creative in trying to pull money from spots to give money to students in schools that needed to have Chromebooks and other things like that to continue learning. So talk to me about what the biggest impact is going to be.

SARAH GODLEWSKI: I mean, I think the biggest impact is twofold. One is the state and local aid I think will allow us to provide flexibility in how we use this aid. The CARES Act was helpful, but it was so targeted specifically on only directed towards fighting COVID that many mayors, for example, that I were talking to, they were making decisions about do they fire a mental or lay off a mental health nurse because she didn't fit the COVID package specifically? I mean, it was so specific that essential services like garbage didn't-- wasn't covered under that, or utilities. And so, flexibility, I think, is going to be a big game changer.

But the other piece that I look at every single day and when I reflect back on the Great Recession, is, how this recovery package is focused on people. I mean, the greatest part of it is providing direct payments and extending unemployment benefits. And that's what we need to make sure that folks here in Wisconsin can buy their groceries and can pay their rent and can help us keep our economy going.

AKIKO FUJITA: So we're talking about what is in the bill that's being debated in the Senate right now. But your governor, Tony Evers, recently unveiled your own state budget, $91 billion, which increases overall spending by 10%. How do you pay for all of that if you don't get help on the federal level?

SARAH GODLEWSKI: So what I really appreciate about Governor Evers's budget is he looks at the entire balance sheet. And as a former business owner, it's not just about the assets and the expenditures. It's also about the revenue streams. And what Governor Evers has proposed is, for example, giving state and local government control to increase the sales tax to help fight this. It's also we are looking at passing marijuana legislation that would provide over $100 million back to our state budget.

So it's not just an expenditure package. It's pretty inclusive on how we would also bring in new streams of revenue, which we have to start thinking about, knowing that we are getting out of a devastating recession.

ZACK GUZMAN: When we think about how this plays out state by state, it's interesting because we had a congressman on this show from California kind of saying that his constituents shouldn't get help from other states that didn't lock down or see that big of a fall-off pointing to South Dakota. It was strange. I'm still trying to really process.

When you look at maybe how Wisconsin's been able to weather the storm and how it's different state by state, I mean, what's your takeaway in terms of how you guys have had to face the pressure in cutting costs? You're talking about mayors on a local level, but kind of, what's been the hardest pill to swallow when it comes to not seeing as much federal aid as you could have earlier on?

SARAH GODLEWSKI: I think the hardest thing has been just the lack of consistency. When they pass the CARES Act, yes, that did help Wisconsinites. It helped small business, and then it helped local government specifically fight the virus. But we never knew when we were going to get assistance again. And when we saw small businesses running through their PPP funds, when we saw state government-- or local governments that were running through their COVID aid, as they were kind of thinking through how they can increase and even digitize, for example, their contact tracing efforts.

And so, the lack of just clarity and political games that were going on in Washington was really frustrating. Because constituents would call us and say, I don't know how I'm going to pay my bills. It's been unclear about how these unemployment benefits are going to be paid. One day, I hear one thing, and another day, I hear something else. And small businesses were the same. And so consistency, I think, is something that was really important.

And with the American Rescue package, we know exactly what we are going to be getting. With benefits being extended now, we're looking at to August to September with unemployment. PPP funds now being extended and looking at even aid for restaurants and bars, all that and flexibility for local governments and how they're going to use that aid. So I think collectively, that's going to help us better weather this storm.

AKIKO FUJITA: As ambitious as a state budget is, inevitably, we're talking about sort of unprecedented times when you think about just how everything shut down as a result of the pandemic and limited revenue significantly. Where are the concessions going to come from? What are some cuts in services that you think are especially going to take a hit that the state is considering right now?

SARAH GODLEWSKI: I mean, just a few weeks ago, I heard from my hometown area in Western Wisconsin about teacher cuts that they are making, which is absolutely mind boggling because we need our teachers back in the classroom. That is something that's actually really been-- stymied our economic recovery as kids are at home. Moms and a lot of parents have had to figure out who is going to be taking care of kids and being their teachers at the same time.

And so, whether it's with teachers that were seeing cuts, we've also been-- I just talked to an EMS director recently in our state. And he's looking at how he might have to cut his EMS services. So I think it's really hard to pinpoint an exact area. Because all these services are essential at the end of the day. They all play a unique role and how we build a stronger community and we are able to get out of this recovery.

ZACK GUZMAN: Sarah Godlewski, Wisconsin state treasurer, appreciate you joining us to break down all of that. Be well. Have a great weekend.