WASHINGTON – The issue of federal aid for state and local governments continues to be a topic of discussion in New York State and around the country. In the past few weeks, state and local leaders from both sides of the aisle have said local governments will need the help of Washington if they are to weather the novel coronavirus COVID-19 financial storm.
But if Senate majority leader Mitch McConnell (R-Kentucky) gets his way, there isn’t likely going to be any aid to help address growing budget deficits caused by the coronavirus and related shutdown. McConnell announced Wednesday that his Republican caucus won’t support federal bailouts for New York and other states.
“I would certainly be in favor of allowing states to use the bankruptcy route,” he said Wednesday in response to a question on the syndicated Hugh Hewitt radio show. “It’s saved some cities, and there’s no good reason for it not to be available.”
In defending his position, McConnell said he’s not in favor of the federal government borrowing more money from future generations to have to deal with. Instead, McConnell suggested Congress could adjust Chapter 9 laws so states can restructure their mounting debts by declaring bankruptcy — an option that’s currently only available to cities and local governments.
The comments by McConnell run counter to what President Donald Trump had suggested just a day earlier, following a meeting with New York Gov. Andrew Cuomo. The president said that states will need assistance “and I think most Republicans agree too, and Democrats,” Trump said. “And that’s part of phase four.”
The president was referring to a fourth phase of federal COVID-19 funding to help the country deal with the economic fallout of the novel coronavirus pandemic.
But McConnell said he blocked additional state and local aid in the latest relief package, which passed the Senate Tuesday and is set for a vote Thursday in the House.
“I said yesterday we’re going to push the pause button here, because I think this whole business of additional assistance for state and local governments needs to be thoroughly evaluated,” McConnell added.
Gov. Cuomo has pleaded for a federal bailout for weeks and says New York could suffer a $15 billion revenue shortfall because of the pandemic, with businesses shuttered and hundreds of thousands of residents forced into unemployment.
In response to McConnell’s position, Cuomo did mix words.
“That is one of the saddest, really dumb comments of all time,” the governor said. “OK, let’s have all the states declare bankruptcy … That’s how you want to reopen by bankrupting the states? I mean, it’s just a really dumb statement.”
Sen. Kirsten Gillibrand (D-New York) also criticized McConnell for his remarks.
“Senator McConnell’s comments today on hitting the ‘pause button’ on further federal emergency legislation, and that cities and states should declare bankruptcy, are utterly reprehensible,” Gillibrand said in a statement sent out Wednesday night. “McConnell eagerly passed billions in tax breaks for wealthy companies and made sure to take care of big companies and the airlines last month, but now he is telling struggling Americans to take their $1200 check and keep quiet. It is utterly infuriating that McConnell is telling American cities and states to go bankrupt, as millions fall behind on their rent and mortgages and face food insecurity.”
Gillibrand added that she plans to work in a bipartisan manner to craft another emergency relief bill in the coming weeks to address the “multitude of crises” the country will face. She also encouraged every American to “raise their voice at this outrage” from McConnell.