State and local governments would receive $160 billion in new direct federal aid while education would receive $82 billion, transit agencies $15 billion, and airports $4 billion under a bipartisan congressional proposal that could be folded into a year-end spending bill covering all government operations.
But the overall $908 billion compromise proposal unveiled Tuesday by Senate and House lawmakers is not being embraced by Republican and Democratic leaders who also have offered their own new proposals.
Democratic leaders made a private offer Monday evening to Senate Republican Majority Leader Mitch McConnell who is simultaneously circulating his own plan among Senate Republicans.
Congress meanwhile faces a Dec. 11 deadline for renewing a stopgap 2021 government budget which lawmakers are hoping will be replaced with a fully updated package of 2021 appropriations covering all government departments.
“I think it will likely come in one package,” McConnell told reporters Tuesday.
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Democratic Sen. Joe Manchin of West Virginia, one of the authors of the bipartisan plan, told CNN Tuesday night he thinks $908 billion isn't enough but it's as high as his Republican colleagues will go, and Biden can take a crack at another stimulus package after he takes office.
“It can be passed,” Manchin said Wednesday during a separate appearance on Fox News. “We just need our leadership to get on board. Both sides of our leadership are not happy with it, some want less, some want more. But the bottom line is, this is an emergency relief package. It's not a do-all, end-all.”
Transit and airport money would come from a larger pot of $45 billion for transportation that would include $8 billion for school bus companies and other private bus operators, $1 billion for Amtrak’s passenger rail service and $17 billion for airlines to be used for temporary payroll support.
The four Republican senators who have signed onto the plan are Susan Collins of Maine, Bill Cassidy of Louisiana, Lisa Murkowski of Alaska and Mitt Romney of Utah.
The Republican House sponsors are members of the bipartisan Problem Solvers Caucus which in September released a $1.5 trillion bipartisan plan sponsored by only House lawmakers.
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Some Republican senators such as Rick Scott of Florida have vowed to oppose any new aid to state governments.
Scott said Tuesday the latest bipartisan plan would “bail out wasteful states when we don’t even know how much is still unspent from the previous coronavirus response packages that Congress passed earlier this year.”
Since the May introduction of the Senate’s bipartisan SMART Act that would provide $500 billion in direct aid to states, counties and local governments only three Republican senators have signed as sponsors -- Cassidy, Collins and Cindy Hyde-Smith of Mississippi.
National League of Cities Executive Director and CEO Clarence Anthony said his organization is encouraged by the new bipartisan, bicameral proposal.
“With COVID-19 cases rising across the country, local resources strained, and key assistance programs expiring at the end of this month, it is more critical than ever for congressional leadership to work together in a constructive, bipartisan manner to swiftly deliver the aid that cities, towns, and villages need to keep our hometowns safe and support our nation’s economic recovery, Anthony said in a press statement.
Mark Ritacco, director of government affairs for the National Association of Counties, said counties were also encouraged by the proposal but noted there’s no legislative text indicating whether it would include direct aid to counties of all sizes.
Moody’s Investors Service on Tuesday released its 2021 outlook for state governments, saying that it remains negative based on a continued weak revenue and budget picture amid the coronavirus crisis.
“Fiscal positions will vary from state to state, but the overall environment remains challenging,” Moody’s said. “Many states will not recover revenue lost in the fiscal year 2020 (mostly ending June 30, 2020) until the latter part of calendar 2021 and some will face challenges into calendar 2022.’’
Moody’s expects state revenues to decline by 5% on average in fiscal 2021 after declining 5.5% in fiscal 2020.
“Hawaii and New Jersey recently issued $750 million and $3.7 billion, respectively, to close projected budget gaps for the remainder of fiscal 2021,” Moody’s said. “Illinois included up to $5 billion in borrowing from the Federal Reserve's Municipal Liquidity Fund in its fiscal 2021 budget.”
In Washington, Senate Democratic Minority Leader Chuck Schumer and Speaker Nancy Pelosi have declined to publicly discuss their latest private offer to McConnell.
McConnell’s latest proposal, which is being circulated with the title of Senate GOP Targeted Relief Package, does not provide any direct aid to state and local governments. It does include $105 billion for an Education Stabilization Fund “to help students get back to school.”
McConnell’s proposal would rescind $429 billion in unused money from Federal Reserve lending facilities and repurpose $140 billion from the CARES Act that had been designated for funding small business.
The Republican majority leader’s tax proposal includes a 100% deduction for business meals, a $300 above-the-line deduction for charitable contributions in 2020 and two years of tax credits for donations to scholarship granting organizations. But there are no public finance-related tax provisions.
