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Illustration: Aïda Amer/Axios

House Democrats on Tuesday released a $3 trillion phase 4 coronavirus relief proposal that would provide $500 billion to state governments and $375 to local governments — welcome news to local leaders who've been pushing hard for funds as city coffers run dry.

Where it stands: The fate of the package is uncertain, as it hasn't been negotiated with House Republicans and the Trump administration.

  • The White House is in "wait and see mode," said White House economic adviser Kevin Hassett during a Brookings Institution briefing this week. He argued that some of the biggest expenditures in the House's Heroes Act could be "putting the cart before the horse," per Axios' Dion Rabouin.
  • Sens. Bob Menendez (D-N.J.) and Bill Cassidy (R-La.) are still working on legislation to create a $500 billion fund to help state and city budgets.
  • Some Republicans support aid, but they want to ensure the money actually reaches local governments and is spent on COVID-specific shortfalls rather than to address budget problems that existed before the pandemic.
  • For example, Rep. Tom Reed (R-N.Y.) said this week he’s working on such provisions with Menendez and Cassidy to avoid “budget shenanigans.”

The big picture: Emergency federal aid provided by Congress so far is for expenses directly related to coronavirus response. As of now, funds aren't yet allocated to replace lost revenue, which is what city leaders say they need to avoid large-scale layoffs and cuts to services.

  • The current $150 billion set aside for states and cities is only available for jurisdictions of 500,000 or more residents.
  • The Center on Budget and Policy Priorities increased its forecast of U.S. state budget shortfalls from $500 billion to $650 billion.
  • This month, Moody's lowered its U.S. state sector outlook to "negative" (down from "stable"). The last time Moody's gave the sector a "negative" outlook was in early 2008 due to the financial crisis.
  • 84% of voters favor a $1 trillion federal aid package to states, cities and towns, per a new Hart Research Associates poll on behalf of the American Federation of State, County and Municipal Employees and American Federation of Teachers.

What to watch: Senior living (60%), mass transit (45%) and higher education (43%) are the municipal sectors at highest risk for credit deterioration as a result of the coronavirus, per an April survey of municipal bond analysts by Hilltop Securities.

  • A third of credit analysts think $600 billion of additional relief is needed to have a neutral impact on state and local government credit, per the survey.

Go deeper

GOP Sen. Bill Cassidy tests positive for coronavirus

Sen. Bill Cassidy. Photo: Toni L. Sandys-Pool/Getty Images

Sen. Bill Cassidy (R-La.) said Thursday that he tested positive for the coronavirus, and is "strictly following the direction of our medical experts" by quarantining, local ABC affiliate WBRZ reports.

The big picture: Cassidy is the second senator to test positive, following Rand Paul (R-Ky.) in March. Cassidy said after being notified Wednesday night that he was exposed to someone with the virus, he was tested and plans to notify all those he came in contact with since.

National Guard chief says it took 3 hours for Pentagon to grant Jan. 6 request

Photo: Stefani Reynolds/Bloomberg via Getty Images

William Walker, commanding general of the D.C. National Guard, will testify Wednesday that it took three hours and 19 minutes for Pentagon leadership to approve a request for National Guard assistance during the Jan. 6 Capitol attack, according to his prepared remarks.

Why it matters: The timeline over when National Guard requests were made and granted has been a key point of contention in congressional hearings examining the security failures surrounding the Capitol riots.

34 mins ago - World

International Criminal Court opens Israel-Palestine war crimes probe

Israeli Prime Minister Benjamin Netnayahu has strongly objected to the investigation. Photo: Lior Mizrahi/Getty Images

International Criminal Court (ICC) prosecutor Fatou Bensouda on Wednesday announced her intention to open an investigation into crimes allegedly committed in the Palestinian territories since 2014.

Why it matters: The investigation is expected to consider possible war crimes by Israel and Hamas during the 2014 war in Gaza, as well as the construction of West Bank settlements by Israel. It could sharply increase tensions between Israel, which fiercely opposes the probe, and Palestinian leaders, who requested it.