Over 180 organizations across the United States, including the Economic Policy Institute, signed a letter to U.S. House and Senate leadership urging them to quickly pass $500 billion in unrestricted aid to states, territories, and local governments. While the first three federal bills included vital resources for the important work of state, territorial, and local governments, the amount of aid allocated to date falls far short of what is needed to hold state, territorial, and local budgets harmless against the enormity of the crisis.
As economic activity has collapsed, it has triggered a dramatic downturn in state, territorial, and local revenues—even apart from new spending demands imposed by the coronavirus. Unlike the federal government, most state governments are required by statute or constitution to balance their budgets. As revenues decline because of lower incomes and reduced spending, state, territorial, and local governments face serious fiscal constraints, often leading to budget cuts that further depress demand in the economy.
“Already, states, territories, and localities have announced austerity measures and severe budget shortfalls exactly when public spending is most critical—both for protecting workers and priming the economy for a rapid bounceback when the shutdown ends,” said Naomi Walker, Director of the Economic Analysis and Research Network, a national network of more than 60 state-level policy research and advocacy organizations coordinated by EPI. “We need Congress to step up for working people across the country to make sure that governments are prepared to handle the current economic and health crisis.”
In addition, the letter urges Congress to:
- Adopt the payroll guarantee model nations like Denmark and the United Kingdom have implemented to “deep freeze” local economies and protect workers and businesses during an economic shutdown.
- Make additional investments in unemployment insurance (UI) by including triggers that allow both the $600 per week in Pandemic Unemployment Compensation and expanded eligibility to phase out only when economic conditions warrant rather than on an arbitrary timeline, as well as expanded eligibility for Pandemic Unemployment Assistance to immigrant workers left out of UI and new labor market entrants.
- Disburse another direct cash payment and make it available to all households regardless of tax filing or immigration status.
- Provide full funding for testing, treatment, and front-line workers’ personal protective equipment.
- Include strong worker protections.