These Blue States Are Screwed—Even Under Biden

These Blue States Are Screwed—Even Under Biden
Spencer Platt/Getty
Spencer Platt/Getty

As election day approached, the prospect of a Joe Biden presidency stirred hopes in some of the cities, counties, and states that have been fiscally wrecked by the pandemic that help, finally, would be on the way.

New York City Mayor Bill de Blasio, who has been dealing with the specter of what his office has described as “a $9 billion toll on City revenue,” said during an appearance with Inside City Hall on the eve of the election “if Joe Biden and Kamala Harris go to the White House, we get a major stimulus that helps put New York City back on its feet.”

“That’s going to turn things around,” de Blasio proclaimed.

On Saturday, Biden and Harris were declared the winners of the presidential election. One of the key promises of their administration has been a sweeping federal COVID recovery program, which would include hundreds of billions of dollars in relief for struggling local and state governments.

But barring big Democratic runoff victories in Georgia, the Senate will remain in the hands of Senate Majority Leader Mitch McConnell (R-KY) and the GOP—who have for months rejected additional funds for state and local governments, derisively calling them “blue state bailouts.”

It’s possible Biden and Senate Republicans could agree on many aspects of COVID relief. But more money for the jurisdictions facing the most crushing shortfalls—from New York City to California—is anathema to many vocal members of McConnell’s conference, seriously complicating the long-term fiscal outlook for local governments.

Despite it all, some Democrats on the local level have grown optimistic that this dynamic—which has already gridlocked McConnell and Speaker Nancy Pelosi (D-CA) for months— will change when Biden is sworn in.

“I can throw some big numbers at you, but the point is New York City and cities across the country are in desperate need of direct federal aid,” Bill Neidhardt, a spokesman for de Blasio said in an email. “We need a stimulus to fend off the threat of austerity at exactly the worst moment to cut services. We’re confident Joe Biden can deliver on a stimulus for us, working with a House majority and a tight Senate.”

They won’t have much time. The fiscal vice grip that is afflicting these governments is only tightening and they are running out of budgetary tricks to stave off serious ruin. Income has cratered as tax revenue has dried up; meanwhile, state and county governments have stood up sweeping new public health operations to test and trace for the virus—and eventually distribute a vaccine. Compared to the federal government, states’ capacity to borrow money is far more limited, making federal aid that much more crucial.

The state of California, for example, had a projected $5.6 billion budget surplus in January, before COVID hit. It now faces a $54 billion budget deficit. The legislature in Illinois, whose public health expenses increased by 144 percent, approved a plan this summer to borrow $5 billion from the Federal Reserve bank. Marin County, in northern California, faces a $16 million budget shortfall, budget manager Bret Uppendahl said in an email. Without federal funds, he said, Marin would have to choose between “maintaining core county services and providing a proactive pandemic response.”

In some places, the cost of inaction now could reverberate for years. The nation’s largest transit system, New York’s Metropolitan Transportation Authority, faces a historic $16 billion budget deficit. The agency has projected an apocalyptic scenario if there’s no help: cutting service in half, laying off thousands of workers, and potentially torpedoing a service that forms the backbone of the region’s economy.

“The moral of the story is there’s no way local governments like ours will be able to continue normal operations without, at some point, federal assistance, or economic recovery, or a combination thereof,” said Jack Schnirman, the Democratic comptroller of Nassau County, on New York’s Long Island.

Small Biz Owners Have No Hope Washington Will Help Them

Schnirman told The Daily Beast that they’ve used every possible tool in the toolkit to buy themselves time and stave off a damaging fiscal crunch for the county. Soon, they will run out of time. “We need federal assistance along the way, and I think that’s what everyone is hoping and expecting will be a top priority in a Biden administration,” he said.

The continued pleas for aid come as the nation is facing another surge in coronavirus infections and the grim death toll climbs further. Combined with the onset of flu season—a combination that has long worried officials—warnings from top figures, including Biden, about a “dark winter” for the country could prove frighteningly true.

And President Trump’s insistence that the country is rounding the corner on the pandemic, alongside his ranting against bailing out “blue states,” could make the final few months of his presidency all the more difficult for the communities needing help most across the country.

The Biden campaign did not provide a comment when asked by The Daily Beast. But during the campaign, the president-elect drew a stark contrast with Trump when it came to how he would handle the pandemic. The Biden campaign’s “seven-point plan to beat COVID-19” includes a pledge to “establish a renewable fund for state and local governments to help prevent budget shortfalls, which may cause states to face steep cuts to teachers and first responders.”

And during a speech about his plans last month, Biden emphasized that he’d “reach out to every governor in every state, red and blue, as well as mayors and local officials, during transition, to find out what support they need and how much of it they need.”

“I’ll ask the new Congress to put a bill on my desk by the end of January with all the resources necessary to see how both our public health and our economic response can be seen through the end, what is needed,” Biden said.

The COVID-era budget crunch has hammered governments nationwide, from populous Democratic-run states and cities to suburban and rural counties and cities run by Republicans. An August study from the National Association of Counties found that 88 percent of counties reported that COVID had impacted their budgets; in total, they are projected to face a $144 billion hit by the end of the 2021 fiscal year, between lost revenue and increased expenses.

Many GOP controlled jurisdictions have already slashed budgets and are tapping into rainy day funds. Oklahoma, for example, has seen plummeting revenue, and will face a near $1 billion budget deficit next year. The state approved budget cuts of 5 percent across government.

New York Gov. Andrew Cuomo, who serves as chair of the National Governors Association, said in a radio appearance Thursday that the issue isn’t as simple as red state versus blue state as the wait for more help continues.

“I talk to the Republican governors all day long,” Cuomo said. “They need a stimulus package. They spent money on COVID. Their revenues are down.”

In Coconino County, a largely rural swath of northern Arizona, the need is great—and officials there say they don’t care which president approves the stimulus, so long as one comes as soon as possible. Eric Peterson, a spokesperson for the county, called additional aid a “necessity.” The county government, which handles public health issues, has already spent millions on COVID testing, blowing through their rainy day fund, Peterson said. The outlook, without any help, would look grim as the winter sets in and flu season arrives.

“Sooner or later, we will not have the financial capacity to conduct testing, manage vaccine distribution, and manage other parts of the pandemic if there’s not federal funding,” said Peterson. “We will push from today until the bill passes, no matter if it’s this Congress or the next.”

But there’s a major fight brewing over what, exactly, will be in that relief package. And the price tag for state and local government aid, or whether it will be in the package at all, is perhaps the biggest sticking point.

In May, House Democrats passed the Heroes Act, a follow-up stimulus bill that set aside nearly $1 trillion in relief for state and local governments—a sum that officials pushed for as sufficient to meet their pressing needs. Biden has not proposed a specific dollar amount for government aid, but has indicated he’d want to go even bigger than the Heroes Act.

McConnell, meanwhile, has touted the $150 billion already sent to state and local government through the CARES Act, which passed in March, as sufficient. In July, the GOP’s answer to the Heroes Act included not a single dollar for state and local governments.

The GOP leader has begun to prop the door open, ever so slightly. During a press conference the day after the election, McConnell said “it’s a possibility that we will do more for state and local government” and broadly reiterated “we need another rescue package.”

That comment didn’t come without qualifiers, however, with the Kentucky Republican saying “we need to look at the formula to make sure there’s a real need there, and also we need to make sure we’re not basically allowing state and local governments to cover up or cover over pre-existing problems, like pension problems and other problems that they’ve created for themselves.”

Members of the GOP conference have been far more forceful in opposing additional aid, with ambitious senators racing to get out ahead of each other on the issue. Some, like Sen. Rick Scott (R-FL), have basically opposed any additional funds, saying they amounted to a bailout for allegedly “poorly-run” blue states. That partisan dynamic would only intensify, in all likelihood, under a President Biden, and key Republicans have already sent signals that the deficit-hawk politics they set aside for Trump’s budget-busting proposals would swing right back into play if a Democrat returns to office.

Some of the key players are holding out hope that a stimulus deal could be reached in the lame-duck session of Congress, which begins Monday. Republicans may be more eager to get a package done while Trump remains in office, and a government funding cut-off date of Dec. 11 could provide a must-pass vehicle for badly needed stimulus funds.

“As Washington returns for its lame-duck session, Governor Whitmer is hopeful to see a bipartisan bill passed that will provide more relief for states, including Michigan,” a spokesperson for the Michigan Democrat said in an email.

“President Trump claims that he wants a relief package—it might be the only thing that Governor Whitmer and the president agree upon,” the spokesperson said.

To officials in hurting local governments nationwide, it doesn’t matter who gets the credit—they’re just tired of inaction. “At the end of the day, whatever they do, we still have to protect residents,” said Kevin Boyce, executive director of Ohio’s Franklin County, home to the capital city of Columbus. “Whether they help or not.”

—With additional reporting from Harry Siegel

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