Washington, D.C. — A new column from the Center for American Progress outlines the steps that Congress should take to support state and local governments through the coronavirus crisis. State, municipal, territorial, and tribal governments are facing unprecedented challenges as they are being forced to both cover additional public health costs and absorb a precipitous decline in their revenues due to the economic shock caused by COVID-19.
In the aftermath of the Great Recession, state and local government austerity was a driving force in delaying economic recovery for years. In fact, state and local government payrolls only recovered to prerecession levels six months ago. To avoid repeating the mistakes of the past and to help state and local governments meet the current crisis, CAP is calling on Congress to enact aid at least three times the magnitude of the $250 billion allocated in Congress’ first three packages, along with automatic extensions for the duration of the crisis.
CAP is also recommending that the funding be allocated in three broad ways:
- Increasing federal Medicaid funding. This would offset the higher health care costs states are incurring, while shoring up state budgets. Increasing the share of federal spending provides a much-needed boost of resources to ensure that states and their health systems can adequately provide care for those who need it as a result of COVID-19.
- Flexible funding to states and localities. This would allow funds to be used to cover budget shortfalls, allocating aid toward the localities experiencing the most severe crisis and appropriately providing support for Washington, D.C.. Because the economic recovery is likely to be uneven, aid should also be automatically extended based on local economic conditions.
- Funding to support vital programs including education, child care, infrastructure, and housing and human needs.
“The absence of presidential leadership has put an added burden on state and local governments to manage a simultaneous public health and economic crisis. But just as we are asking states to do more, they are being faced with devastating choices as their budgets face immediate stress,” said Jacob Leibenluft, senior fellow at CAP and co-author of the column. “Absent federal action, states and localities will struggle to mount the public health response we need to keep people safe—and will be forced to lay off thousands of teachers, first responders, and other employees, deepening the economic downturn. In order to avoid an even more catastrophic recession, Congress needs to learn from the mistakes of the past and immediately provide robust and durable aid to state and local governments.”
Read: “A Coronavirus Recovery Demands Substantial, Durable Aid for State and Local Governments” by Michael Madowitz and Jacob Leibenluft
For more information on this topic or to speak to an expert, contact Julia Cusick at [email protected].
To find the latest CAP resources on the coronavirus, visit our coronavirus resource page.