US local government warns of funding crisis as Trump announces $484bn support for businesses

By on 28/04/2020
Los Angeles is estimated to lose US$600m in revenue in the next fiscal year due to coronavirus, forcing mayor Eric Garcetti to announce staff cuts. (Photo by Pedro Szekely via flickr).

On Friday, president Trump signed a US$484bn relief bill that aims to alleviate the pressure on small businesses and hospitals under strain as a result of the coronavirus pandemic. However, the latest bill does not include additional funding for state or local governments in the frontline of the crisis, prompting warnings of further layoffs and pay cuts across the country.

According to a survey by the National Association of Counties, at least 5,000 county government workers have so far been laid off or furloughed, while a survey by the National League of Cities and the US Conference of Mayors found that nearly half of cities are planning to slimline their workforces and salary overheads. Los Angeles, for example, is to force city workers to spend 26 days on unpaid leave; Detroit has proposed laying off 200 workers and furloughing thousands more; and county workers in Ohio’s Hamilton County are to take a 10% pay cut.  

The latest relief bill follows the US$2.2 trillion ‘CARES Act’ economic stimulus package approved in March, which included US$150bn for state and local governments. Democrats had initially pushed to include another US$150bn in the latest aid package, but yielded to Republicans who sought to keep the bill narrowly focused on support for small businesses.

“With respect to our federal leaders, local governments were the first to respond with extraordinary measures to the COVID-19 pandemic by reallocating funds to support first responders,” said Irma Esparza Diggs, director of federal advocacy for the National League of Cities, as reported by CNBC. “But as a result of historic losses of revenue at the local level, most local governments will not be able to sustain these efforts, or maintain uninterrupted operation of core functions, without dedicated emergency funding for state and local aid.”

Senate minority leader Chuck Schumer vowed to revisit the issue in the coming round of negotiations over what could be an even bigger relief package. “The people who are on the front lines, they should get extra money, and at the top of the list is a robust state and local plan,” he said. “We’re going to fight for that and many more things” in the next aid bill. It “will soon be upon us because the nation will demand it”.

The American Federation of State, County and Municipal Employees is pushing for at least US$700bn in the next relief package to protect state and local government workers, of which there are an estimated 20 million in the US.

Pandemic response scrutiny

As part of the latest bill, Congress also passed a contentious Democratic-proposed resolution to establish a new Select Committee on the Coronavirus Crisis. The panel will have the authority to oversee the government’s pandemic response and assess the Trump administration’s preparedness and ongoing actions.

The bill also establishes a new comprehensive national testing programme that the president – who has said that coronavirus testing is the responsibility of individual states – had resisted.

Of the latest relief package, US$310bn is earmarked for a programme to assist small businesses hit by the coronavirus pandemic. This is expected to create challenges for the Small Business Administration: Government Executive reports that the agency has been widely criticised for poorly communicating the parameters of the Payroll Protection Program passed by Congress last month, and has had trouble allocating the initial US$349bn in a “prompt and fair manner”.  

About Mia Hunt

Mia is a journalist and editor with a background in covering commercial property, having been market reports and supplements editor at trade title Property Week and deputy editor of Shopping Centre magazine, now known as Retail Destination. She has also undertaken freelance work for several publications including the preview magazine of international trade show, MAPIC, and TES Global (formerly the Times Educational Supplement) and has produced a white paper on energy efficiency in business for E.ON. Between 2014 and 2016, she was a member of the Revo Customer Experience Committee and an ACE Awards judge. Mia graduated from Kingston University with a first-class degree in journalism and was part of the team that produced The River newspaper, which won Publication of the Year at the Guardian Student Media Awards in 2010.

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