As a new fiscal year begins for most state and local governments, a nationwide coalition of state and local organizations, business groups, labor unions and others made a unified appeal to the U.S. Senate to immediately act on aid for state and municipal governments as public services and jobs are threatened by the COVID-19 pandemic.

In a letter delivered yesterday to Senate Majority Leader Mitch McConnell and Minority Leader Chuck Schumer, the coalition noted that nearly 15 million Americans are employed by state and local governments, whose purchases account for 11% of the gross domestic product. The pandemic has decimated major revenue sources and threatens jobs and services in education, public safety, health care, transportation and other vital functions of state and local governments.

“Previous federal bills responding to COVID-19 provided important support … yet none allow for the replacement of billions of [dollars in] lost revenue due to COVID-19,” the letter states. “More robust and direct stimulus is needed for state and local governments to both rebuild the economy and maintain essential services.

“Leaders in Washington have expressed support for flexible fiscal aid to states and localities of all sizes. Yet months have gone by and our communities continue to suffer. Americans have a history of standing together in times of crisis and must do so now.”

This latest round of advocacy is being led by the “Big Seven” nonpartisan associations that represent state and local officials across the country: the National League of Cities, the National Governors Association, the Council of State Governments, the National Conference of State Legislatures, the National Association of Counties, the U.S. Conference of Mayors, and the International City/County Management Association. The coalition’s letter and call for action has been signed by dozens of state municipal associations throughout the U.S., including the MMA, as well as trade associations, major corporations, labor unions and other stakeholders. In all, more than 170 businesses and organizations signed.

“Now is the time for action by the federal government,” said MMA Executive Director & CEO Geoff Beckwith, “and the MMA is joining with hundreds of key organizations to emphasize that there is no time to waste. We need the majority party in the Senate to understand that direct aid to cities, towns and states is necessary to rebuild our economy, protect our citizens, and fight the pandemic. Further delays will harm our nation and undermine the quality of life for every resident.”

Forty-five state governments and thousands of local governments had a June 30 deadline to adopt budgets, the coalition notes. Unlike the federal government, which can borrow at exceptionally low interest rates and operate in a deficit, state and local governments must begin their fiscal years on time and end each year with balanced budgets.

Text of letter to Senate leaders:
June 29, 2020
Dear Majority Leader McConnell and Minority Leader Schumer:
We write today to advocate on behalf of states, territories, counties, cities and towns, all of which are experiencing historic budget shortfalls as they continue to respond to the pandemic. In less than two days, the budget years for 45 states and thousands of local governments will begin. Unlike the federal government, these state and local governments must begin their fiscal years on time and with a balanced budget. If the Senate fails to act immediately to support state and local governments, our nation’s recovery from the pandemic-induced recession will suffer and millions of Americans will needlessly be harmed.

Previous federal bills responding to COVID-19 provided important support, many through well-established grant programs, yet none allow for the replacement of billions of lost revenue due to COVID-19. More robust and direct stimulus is needed for state and local governments to both rebuild the economy and maintain essential services in education, health care, emergency operations, public safety and more.

As we move closer to the end of the budget year, furloughs and job cuts are on the table for many states and localities. These jobs losses not only affect the provision of government services, but also add to state unemployment. The damage will get far worse without federal assistance, forcing drastic cuts that will further delay and cancel infrastructure projects, as at least 26 states have announced construction delays for transportation projects. The loss of such projects will ripple through states’ construction industry, delaying recovery further.

State and local governments also purchase goods and services which add to the nation’s output, and in 2019, state and local governments’ purchases accounted for 11% of GDP. When these activities slow down, there is an effect on the nation’s economy. Alarmingly, CBO’s June letter on its forecast of Gross Domestic Product for 2020 and 2021 found that “state and local governments’ purchases of goods and services fell by $350 billion, making up 9% of the total decline in GDP.

Nearly 15 million Americans are employed by state and local governments. Teachers, first responders and emergency medical service workers are on the front lines of this crisis doing the essential work of the country. Government employment continues to suffer substantial losses, with over 1.6 million state and local government jobs lost since March.

Leaders in Washington have expressed support for flexible fiscal aid to states and localities of all sizes. Yet months have gone by and our communities continue to suffer. Americans have a history of standing together in times of crisis and must do so now.