State and local budgets are an emergency as the coronavirus economy hits them hard, reducing revenues and straining resources. The new fiscal year started July 1 in most places, with state and local governments waiting to hear from Congress, which is on recess for two weeks. The House passed $1 trillion in help for state and local governments back in May, but Sen. Mitch McConnell’s Senate has done nothing.
“I don’t think you can overstate the amount of uncertainty that states are dealing with,” Urban Institute budget expert Tracy Gordon told The Wall Street Journal. “You’re asking revenue estimators basically to consult epidemiological models and public health experts and take account of all kinds of variables that are normally not part of their forecasts.” But the uncertainty is about how bad it will be, not whether it will be bad.
New Jersey has passed a three-month budget that cuts $1.2 billion. Maryland has cut $412 million. Georgia cut $2.2 billion. Ohio has cut $775 million and expects to spend its entire $2.7 billion rainy day fund.
Education—and especially higher education—is being hit hard. Georgia cut $950 million in education. Maryland cut $136 million from higher education, or 8% of its higher education budget. Public colleges and universities in California are taking a $602 million hit.
That’s just the tip of the iceberg. The National Governors Association says states need $500 billion in federal aid, while the U.S. Conference of Mayors says cities need $250 billion.
The Economic Policy Institute has estimated 5.3 million lost jobs by the end of 2021 if the federal government does nothing. The jobs gap would be 2.6 million if $500 billion of federal aid passed—that $1 trillion in the House HEROES bill is necessary to avert significant job losses.
Women will be hit hard since a majority of state and local government employees are women, and—as we see from the education cuts already happening—kids and college students will be hammered, just as the debate over how to reopen schools safely is calling for major new expenditures. Already, 63% of the 1.5 million state and local government layoffs have been women.
This is an emergency, and the Republican-controlled Senate refuses to act.
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