Tags: Coronavirus | Trump Administration | US | California Budget | Federal Help

California Appeals to DC for Pandemic Bailout, But Congress Still Isn't Sure How Much Help States Should Get

California Appeals to DC for Pandemic Bailout, But Congress Still Isn't Sure How Much Help States Should Get
California Gov. Gavin Newsom (Getty)

Friday, 15 May 2020 08:37 PM

Though Gov. Gavin Newsom may sometimes call California a nation state, he's hanging his hopes for avoiding drastic state budget cuts arising from the pandemic squarely on the federal government.

The money may not come easily in a divided Congress, however, even with two Californians in the top roles in the U.S. House.

Outlining his budget proposal Thursday, Newsom laid out in stark terms the problems California faces as it reacts to falling revenues and increased spending from the coronavirus and resulting lockdown measures. Without an infusion of at least $14 billion from Congress, Newsom said the state would have to cut billions to public schools, not to mention hundreds of millions for preschool, child care and higher education programs. It'll also need to eat into health benefits for the poor, among other things.

His budget is a draft, and he now enters negotiations with state lawmakers ahead of a June 30 deadline.

“The enormity of the task at hand cannot just be borne by a state,” he said. "The federal government has a moral and ethical and economic obligation to help support the states.”

Whether the federal government feels the same depends who you ask.

California has a powerful ally in House Speaker Nancy Pelosi of San Francisco, whose bill for a $1 trillion infusion for local and state governments was up for a vote in the Democratic-controlled chamber Friday. But House Minority Leader Kevin McCarthy, who hails from Bakersfield and is the chamber's top Republican, was quick to dismiss the package as “a liberal wish list that will not become law.” President Donald Trump threatened to veto it, on the off chance it ever made it to his desk.

The package proposed divvying up the money to state and local governments through formulas that consider a state's population, its share of coronavirus cases and its share of unemployed people. Each state would get a minimum amount.

In the Republican-dominated Senate, where the package has also been viewed by many as DOA, Majority Leader Mitch McConnell has said he doesn't want to bail out what he deems poorly run states.

Coronavirus has “blown a hole” through state budgets nationwide, said Jeff Chapman, director of state fiscal health at the Pew Charitable Trusts. He noted that California has built up its reserves in recent years, but even that is not enough to withstand the current economic pain. Failing to help the states could exacerbate the recession, something Trump, intent on restarting the sputtering economy, doesn't want to see as he seeks reelection.

McCarthy criticized California's spending decisions on personal protective gear. But he also said “serious discussions around federal aid must still be had” and noted there are billions of dollars in existing money yet to be handed out.

“We would be remiss not to make sure that these funds are distributed appropriately so that we can continue providing assistance in the most efficient way possible,” he said in a statement.

McCarthy will join Trump this weekend at Camp David, where upcoming political races and how to reopen the nation's economy will be up for discussion, he told reporters.

Newsom speaks regularly to Pelosi, but his spokesman couldn't say Friday whether he'd recently talked one-on-one with McCarthy. On April 29 and again on Thursday the governor held a call with California's entire congressional delegation. He has also organized leaders from labor, nonprofits, local governments and health care to write to their members of Congress pushing for aid.

Newsom signed a letter seeking $1 trillion in aid for state and local governments with fellow Democratic Govs. Kate Brown of Oregon, Jay Inslee of Washington, Steve Sisolak of Nevada and Jared Polis of Colorado.

California already expects to receive $186 billion through four approved congressional bills, according to budget documents. Money from Congress has helped assist small businesses, expand coronavirus testing and tracing and more. Not all of it went to the state: some went directly to individuals, businesses and other places.

But Newsom said that isn't enough to solve California's budget woes. Democrats in the state Legislature largely support his approach of pressuring Congress for more money.

But minority Republican lawmakers, echoing the views of their counterparts in D.C., say it's an irresponsible way to budget.

Republican legislators in Missouri wrote to that state's members of Congress Wednesday urging them to reject further spending for states, calling out New York, California and Illinois for irresponsible spending. All three states are led by Democrats.

“During these times of economic hardship, Missouri cannot afford to take on the budgetary blunders of other states,” they wrote.

McConnell, of Kentucky, had previously said states should consider bankruptcy instead. Newsom called those comments offensive, and he has broadly rejected criticisms that California's coronavirus related problems are the state's fault.

Sanjay Varshney, professor of finance at California State University-Sacramento, said as states line up for federal help, there may not be enough to go around.

“I'm not sure if they can keep putting unlimited amounts of money on the table to keep bailing out every part the economy,” he said. “There's just not enough dollars.”

© Copyright 2020 The Associated Press. All rights reserved. This material may not be published, broadcast, rewritten or redistributed.


   
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Though Gov. Gavin Newsom may sometimes call California a nation state, he's hanging his hopes for avoiding drastic state budget cuts arising from the pandemic squarely on the federal government. The money may not come easily in a divided Congress, however, even with two...
US, California Budget, Federal Help
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2020-37-15
Friday, 15 May 2020 08:37 PM
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