Apr 19, 2020 - Politics & Policy

Bipartisan senators propose $500 billion for states in next coronavirus bill

Bill Cassidy

Sen. Bill Cassidy. Photo: Zach Gibson/Getty Images

Sens. Bob Menendez (D-N.J.) and Bill Cassidy (R-La.) on Sunday proposed a $500 billion fund for state and local governments to be included in Congress' next coronavirus rescue package.

Why it matters: The $2 trillion stimulus bill passed by Congress last month provided direct payments to Americans and relief for small businesses, but did not include funds specifically intended to kickstart state economies that have been wiped out by the pandemic.

  • Maryland Gov. Larry Hogan (R) and New York Gov. Andrew Cuomo (D), the respective chairman and vice chairman of the National Governors' Association, have been vocal in demanding that Congress allocate money for states.
  • Cuomo last week accused lawmakers of engaging in "pork-barrel politics" and failing to address state budget shortfalls.

How it works: The senators' proposal would divide the funds into three tranches, according to Bloomberg.

  • The first tranche would be allocated proportionally based on states' percentage of the total U.S. population, with all states and D.C. set to receive at least $1.25 billion. Cities and counties with populations above 50,000 would also be eligible for specific aid.
  • The second tranche would be allocated based on the state's share of the total number of U.S. infections.
  • The third would be based on the state's loss of revenue resulting from shutdowns and stay-at-home orders.

What they're saying: Menendez said in a statement, "The proverbial house is on fire and we need to focus the water on the hot spots, because if we don’t put the flames out, they will only jump until the entire block is up in smoke."

  • Cassidy said: "Senator Menendez’s state and mine were hit hard by the Covid-19 epidemic ... We worked hard to make sure state and local governments can maintain essential services necessary for employees and employers to survive. We must protect Americans’ financial future."

Worth noting: Democrats have sought to include funds for state and local governments in a supplemental bill that would add money to the Paycheck Protection Program. Negotiations are still ongoing, but comments from Treasury Secretary Steven Mnuchin on Sunday signal that the money for states will not be in the final bill.

Go deeper: The next economic crisis will hit states and cities

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