Governor Larry Hogan and Governor Andrew Cuomo of New York today issued a bipartisan call for an additional $500 billion in federal aid for U.S. states and territories to address budgetary shortfalls resulting from the unprecedented COVID-19 public health crisis. Governor Hogan is the chairman of the National Governor’s Association (NGA), Governor Cuomo is the vice-chair.
As previously reported on Conduit Street, Comptroller Peter Franchot on Friday revealed that Maryland’s general operating revenues are projected to fall by $2.8 billion in the current fiscal year, which ends on June 30.
According to the NGA letter:
Governors across the country are leading the on-the-ground response to the national COVID-19 pandemic, implementing a variety of stay at home orders and other aggressive measures that are successfully flattening the curve of the spread of the virus. While these public health strategies are working to protect the American people, they result in catastrophic damage to state economies.
Despite this grave challenge, the recently passed federal CARES Act contained zero funding to offset these drastic state revenue shortfalls. To stabilize state budgets and to make sure states have the resources to battle the virus and provide the services the American people rely on, Congress must provide immediate fiscal assistance directly to all states.
We must be allowed to use any state stabilization funds for replacement of lost revenue, and these funds should not be tied to only COVID-19 related expenses. Congress must amend the CARES Act to allow this flexibility for existing federal funding.
Moreover, Congress must appropriate an additional $500 billion specifically for all states and territories to meet the states’ budgetary shortfalls that have resulted from this unprecedented public health crisis. This critical stabilization funding for states must be separate from much needed fiscal stabilization for local governments.
In the absence of unrestricted fiscal support of at least $500 billion from the federal government, states will have to confront the prospect of significant reductions to critically important services all across this country, hampering public health, the economic recovery, and—in turn—our collective effort to get people back to work.
As previously reported on Conduit Street, the National Association of Counties (NACo) sent a letter to congressional leadership emphasizing county priorities in coronavirus response efforts and urging direct and flexible funding and resources for all counties as Congress considers a fourth coronavirus response package.
From the NACo letter:
As Congress considers a fourth COVID-19 response package, we urge you to provide direct and flexible funding and resources to counties of all sizes. As we work to protect our citizens, local businesses and economies, we are making significant financial investments to address immediate public health and safety needs. At the same time, we are experiencing massive and unprecedented declines in revenue as a result of the economic downturn and are working to quickly reprogram resources and staff to respond to the crisis.
Counties are required to operate with balance budgets, and due to the extremely steep and sudden unforeseen expenses for COVID-19 response efforts, some are already cutting services and laying off employees. In fact, the Government Finance Officers Association (GFOA) just released a report detailing how local governments have projected an unanticipated $23 billion budget impact in the first two weeks of the pandemic alone.
Stay tuned to Conduit Street for more information.