View All Posts

May 28

Local Budgets Await Federal Lifeline

Posted on May 28, 2020 at 12:34 PM by Legislative Staff

On February 24, the President asked Congress to authorize $2.5 Billion to fund the Federal response to COVID-19. Half of that total was to be new funding, with the balance to be made available from existing revenue sources. Congress responded by passing the $8.3 Billion Coronavirus Preparedness and Response Supplemental Appropriation Act on March 5. It was signed into law the following day. That bill included no assistance for state or local governments.

On March 18, Congress passed the $192 billion Families First Coronavirus Response Act on March 18. It was signed into law that night.  That bill included no assistance for state or local governments.

On March 27, Congress passed the $1.7 trillion Coronavirus Aid, Relief, and Economic Security Act (CARES). It was signed into law that evening. That Act included a $150 Billion Coronavirus Relief Fund, which provided some assistance to cover some COVID related costs for the 50 states, and to any local government with a population of at least 500,000 souls. That limitation denied aid to all 565 New Jersey municipalities and to twelve of the State’s 21 counties.

On April 23, Congress passed the $321 billion Payroll Protection Plan and Healthcare Enhancement Act. It was signed into law the next day. Up until the day it was passed, Congressional negotiators, and our federal partners at the National League of Cities (NLC), were working to include in the bill funding for small and mid-sized local governments, and additional, flexible funding for the States. But the final compromise included no assistance for state or local governments.

All of those bills addressed important priorities. But none of them prioritized the impact of the pandemic on municipalities.

Since then, New Jersey’s Congressional Delegation has played a leading role in ongoing efforts to send a lifeline to New Jersey municipalities. On April 7, Congressman Tom Malinowski joined others to introduce the Coronavirus Community Relief Act. Over the next few weeks, the bill gained 150 cosponsors, including New Jersey Representatives Mikie Sherrill, Josh Gottheimer, Albio Sires, Jeff Van Drew, Bonnie Watson Coleman, Andy Kim, and Donald Payne.

On May 12, the multi-faceted Heroes Act was introduced. Thanks to the efforts of Congressman Frank Pallone, it includes a healthy $375 billion Coronavirus Local Relief Fund (in addition to a $544 Billion State Relief Fund). On the following Friday, that bill narrowly passed the House, due to partisan voting. It was then declared ‘dead on arrival’ in the Senate.

On May 18, Senator Bob Menendez, joined by Senator Cory Booker and others, introduced the bipartisan State and Municipal Aid for Recovery and Transition Act (SMART). The following day, a bipartisan House companion bill was introduced by Congresswoman Sherrill, joined by Congressman Gottheimer and others.

Two other bills await action in the Senate: the Direct Support for Communities Act, which embodies only the Coronavirus Local Relief Fund section of the Heroes Act; and the State and Local Emergency Stabilization Fund Act, which included flexible funding for states, municipalities, and counties.

Last week, Federal Reserve Chairman Jerome Powell told the U.S. Senate Banking Committee that failing to provide relief to state and local governments could put a drag on the economy for years. “We have the evidence of the global financial crisis and the years afterward, where state and local government layoffs and lack of hiring did weigh on economic growth,” he said.

"Something like 13% of the work force is in state and local government. A lot of the critical services that people rely on day to day are you know, provided at the state and local level. With ... balanced budget provisions … revenue goes down sharply, it can mean job cuts or service cuts. So, those are all important things to consider in going forward," the Chairman stated.

All local governments, regardless of population, urgently need direct federal funding to continue to fight COVID-19 and protect their residents through the summer and beyond. The citizens of small towns matter just as much as the citizens of big counties, and New Jersey municipal employees contribute at least as much to society as private sector workers.

The NLC, our partner in Washington, has launched a national campaign to focus attention on what municipalities are doing in response to the pandemic, on what they need from Washington to continue to do it, and on what they will need to restore local economies and the social fabric of their communities, severely weakened by the stress of COVID-19. The Cities Are Essential campaign calls for substantial direct federal aid and economic relief over the next two years to support all communities who support America’s people. More than 170 business and community organizations have already endorsed this effort, aiming to achieve one clear goal: Direct federal support for cities, towns, townships, boroughs, and villages, regardless of size.

Please thank Senators Menendez and Booker and your District’s Representative in the House for their efforts on our behalf. And please reach out to your business community and to your non-profit service providers. They need to add their voices to yours.