Speaker Nancy Pelosi said states and local governments could need nearly $1 trillion in additional aid to cope with the COVID-19 pandemic.
That rough estimate, which projects needs over the next three to four years, suggests a rapidly mounting price tag for the next coronavirus relief package that lawmakers are beginning to negotiate. It would easily dwarf the $150 billion that states and localities received last month.
“We’re not going to be able to cover all of it,” the California Democrat said at her weekly news conference Thursday. “But to the extent that we can keep the states and localities sustainable, that’s our goal.”
State and local officials have been clamoring for relief from the economic shutdown as they watch their tax revenue run dry. The National Governors Association has called for $500 billion in federal aid to make up for lost revenue at the state government level.
At the local level, the U.S. Conference of Mayors joined with the National Association of Counties and the National League of Cities earlier this month in calling for at least $250 billion in relief for localities, separate from direct aid to states. Counties alone face a $144 billion funding crunch through fiscal 2021 because of lost revenues and some added expenses incurred from the pandemic, according to a NACo study.
And some of the early estimates could understate the need. State governments could be short $650 billion over the next three years — well above what governors are currently seeking — according to a study by the Center on Budget and Policy Priorities, a left-leaning think tank.
Pelosi said lawmakers were still assessing state and local needs and would await updated estimates. But based on preliminary forecasts over three to four years, she said, “I’ve talked about almost a trillion dollars right there.”
Senate Majority Leader Mitch McConnell has expressed reservations about allocating more federal money to state and local governments. He has suggested states should consider declaring bankruptcy instead of seeking federal help.
McConnell also said he was concerned that states could end up tapping federal money to address longstanding state fiscal problems such as underfunded pension plans, instead of using the money strictly for the pandemic.
Pelosi sought to assuage that concern in a CNN interview Thursday. “We’re looking at what are your outlays for the coronavirus and what is your revenue lost because of the coronavirus,” she said of state and local governments. “It has nothing to do with anything that went before.”
McConnell has also sought to use additional state and local aid as leverage to win liability protection for employers who reopen their businesses during the pandemic.
“There’s no question that all governors regardless of party would like to have more money, and I’m open to discussing that,” McConnell said Wednesday on Fox News Radio. “But what she’s ignoring is the second pandemic, which is going to be lawsuits.”
Democrats have dismissed liability protection for employers, saying workers deserve to be protected from unsafe conditions. “We would not be inclined to be supporting any immunity from liability,” Pelosi said at an earlier news conference this week.
The earlier round of state and local aid was targeted only to states and localities with a population of at least 500,000 residents. Pelosi has talked about providing three separate pots of money in a new package so that some of the future aid would be allotted to smaller cities and towns.
“With municipalities and counties, we’re going to have a separate account for them because many of them don’t really get what they need from the state,” she told CNN. “So we’re going to have separate direct support for townships even as low as 50,000 and below and this is a very big change.”
And Pelosi also made clear Thursday that the $1 trillion estimate doesn’t count additional money for Medicaid and other expenses that states may have. “We want to expand Medicaid and other things that help the states, and over and above this,” she said at her press conference.
Lindsey McPherson and Doug Sword contributed to this report.