Waiting on the feds to provide the funds needed to address a multibillion dollar budget shortfall seems like an increasingly risky gamble. Yet, the governor and legislative leaders have said that the prospects of federal aid and a relatively healthy rainy day fund mean there’s no need for a special legislative session.
The Associated Press reports federal action remains a long way off.
Hopes that talks on a huge COVID-19 relief deal would generate an agreement soon are fizzling, with both the Trump administration negotiating team and top congressional Democrats adopting hard lines and testy attitudes.
Now that President Donald Trump has issued a series of executive edicts and the national political conventions are set to begin, consuming the attention of both Trump and top Democrats, the talks seem to be on an indefinite pause. The urgency has evaporated now that rank-and-file lawmakers have been set free for the August recess, and while both sides still want an agreement — and pressure is likely to remain high — it’s looking more like a September legislating effort than an August one.
The article points out the lack of agreement on aid to state and local governments.
Governors in both parties and a slew of local officials are the driving force behind a massive Pelosi-driven aid plan for state and local governments, which have been starved of tax revenues as the economy slumps. They are pleading for help and have panned Trump’s recent executive moves as confusing and inadequate.
But the distance between negotiators on state and local aid is vast. The two sides are hundreds of billions of dollars apart…
It’s clear that Pelosi recognizes she’ll have to go far lower than the $900-plus billion aid package that she built into the Democrats’ bill. It’s equally clear that Republicans know some level of funding will have to be included. So long as the issue is unresolved, an agreement will be out of reach.
Governing magazine also reports on the challenges of getting federal aid to state and local governments, even though the arguments for the assistance are persuasive.
Estimates vary, but states and localities may end up collectively falling about $500 billion short of revenue projections over the next couple of fiscal years. A half-trillion dollars – the midpoint between the Democrats’ $1 trillion and the GOP’s zero – would stave off major economic damage, says Dan White, director of government consulting at Moody’s Analytics, an economic research group.
“$500 billion is not a bad place,” White says. “Quite frankly, I would be shocked if we don’t end up somewhere around this point.”
Economists almost universally agree that direct aid to states and localities is one of the best tools the federal government has at its disposal to avoid a weak recovery or a dip back into recession.
With the state budget projected to fall into a cash deficit this month – a situation that statutorily triggers across-the-board budget cuts – it’s time for that special session.