Michigan, for example, has sought to extend another round of enhanced payments to its unemployed residents. Minnesota has eyed one-time stimulus checks to locals under financial duress. And Colorado has mounted a wide-ranging effort to help its cash-starved workers and businesses, working on legislative proposals that could help cover rent payments, utility bills and other critical costs.
The states’ redoubled stimulus efforts may offer a critical economic lifeline for millions of Americans at a time when many governors are instituting a new round of shutdown orders nationwide. But local leaders say their aid is likely to be short-lived, illustrating their financial constraints — and the urgent need for Congress to adopt a more robust relief package after considerable delay.
“States like Colorado are trying to provide a bridge of help until the federal government steps up,” Gov. Jared Polis (D) said in an interview. “I don’t think it’s in the ability of any state to take it on their shoulders.”
In November, Polis tightened coronavirus restrictions in Colorado’s hardest-hit counties, shuttering indoor dining, limiting gym capacity and prohibiting large gatherings, even in private. By the end of month, the governor himself tested positive for the coronavirus, prompting Polis, who is asymptomatic, to quarantine at home.
In the meantime, Polis has labored alongside the state’s lawmakers on a slew of bills that could authorize more than $300 million in local stimulus support before the end of the year. The proposals are teed up for a special session of the Colorado legislature, which convened starting on Monday to consider direct aid for hard-hit restaurants and new rental assistance for families struggling to pay for their housing.
Carol Hedges, the executive director of the Colorado Fiscal Institute, said the stimulus spending would make a significant difference for local residents at a time when unemployment threatens to creep higher and businesses again face the risk of permanent closure. The state this month also has started to send $375 checks to families in greatest need.
But Hedges described state lawmakers’ latest effort as a “down payment,” stressing that only Congress can allocate the sky-high sums required to stave off the worst economic crisis in a generation.
“The magnitude of the numbers is too big for any individual state to pursue these kinds of options,” she said.
The flurry of activity in Colorado and across the country this week stands in stark contrast to Washington, where federal lawmakers revived their long-stalled efforts to adopt a new coronavirus relief package — again with few guarantees of success.
On Tuesday, a group of centrist Senate Democrats and Republicans unveiled a $908 billion stimulus blueprint just hours before House Speaker Nancy Pelosi (D-Calif.) resumed her negotiations with Treasury Secretary Steven Mnuchin. Immediately, though, skeptics in both political parties privately conceded the odds of adopting a massive recovery package in the waning hours of 2020 remain low.
Democrats for months have sought trillions of dollars in new coronavirus aid as a successor to the $2 trillion Cares Act, which Congress adopted in March. But Republicans, led by President Trump, have balked at the price tag — and warred over the need for specific programs, including enhanced unemployment assistance — leaving the two parties at an intractable political stalemate.
In the meantime, the coronavirus has swept the nation, contributing to record caseloads and a swift reversal in some recent economic gains. New unemployment claims rose for the second week in a row last Thursday, and another uptick is expected this week, as states shutter restaurants and other high-risk businesses amid record caseloads of covid-19, the disease caused by the coronavirus. The crisis is expected to worsen in the weeks after Americans traveled in droves during Thanksgiving. And the economic carnage left in its wake may last well into 2021, despite recent, speedy progress on a vaccine, which experts agree will take months to allocate and administer nationwide.
The prospects of another economic dip have prompted some state governors and lawmakers to consider authorizing their own stimulus aid. On Tuesday, Michigan Gov. Gretchen Whitmer (D) issued a renewed call for $100 million in new economic stimulus to help her state’s struggling residents. She also called on the legislature to authorize additional unemployment benefits for thousands of local workers, who are set to lose their weekly support at the end of the year.
In delivering her plea, Whitmer directed some of her ire at Washington. “The nation’s governors on both sides of the aisle have been urging Congress and the White House to pass a bipartisan, and sign a bipartisan, relief bill,” she said at a news conference. “But leaders at the federal level still have not been able to agree on a plan. And that’s why we need to take action at the state level.”
Wisconsin Gov. Tony Evers (D) recently has put forward a $541 million package that includes additional assistance for unemployed workers and other struggling families, though his efforts have met early resistance from Republicans in the state. And Minnesota Gov. Tim Walz (D) last week unveiled his own legislative package that includes a one-time $500 payment to some state residents, an idea that mimics the $1,200 stimulus checks that federal lawmakers authorized nationwide earlier this year. Walz expressed optimism about reaching a deal with GOP policymakers as the legislature prepares to wind down for the year.
“I don’t think it’ll be enough, but I do hope it’ll be a bridge to a federal package,” Walz said in an interview. The governor said he supported House Democrats’ earlier stimulus proposal but said Congress should consider taking the bipartisan compromise introduced in the Senate this week.
Emboldening Minnesota is the state’s latest revenue forecast, which estimates a roughly $640 million surplus by the end of June — a sharp reversal from the dire $2.4 billion shortfall that was initially anticipated. Other states, however, have faced significantly greater, immediate financial hardships, as the coronavirus continues to cut into commercial activity and tax revenue at a time when they’re facing massive new public health costs.
Unlike the federal government, however, states cannot run yearly deficits. Their resulting massive gaps — and urgent need to cut spending or raise revenue by other means — “undoubtedly serves as a barrier for authorizing any state stimulus packages,” said Lucy Dadayan, who leads the State Tax and Economic Review project at the Urban-Brookings Tax Policy Center.
For many, the real test begins in January, when state policymakers start to return to their capitals — and President-elect Joe Biden enters the White House. In the meantime, some states have sought to reprogram federal dollars they received as part of the Cares Act earlier this year, hoping to give their local economies an added jolt.
In New Mexico, for example, Gov. Michelle Lujan Grisham (D) worked with the legislature in November to devote $330 million in federal funds to a wide array of economic relief efforts, including millions of dollars to help residents afford housing and pay for food. The money largely came from the Coronavirus Relief Fund, a $150 billion pot of money that Congress set aside so that local governments could cover the costs of the pandemic.
Other cities and states that received the federal dollars similarly have sought to implement new stimulus programs to aid workers and businesses in recent weeks. Harris County in Texas, for example, recently started offering one-time emergency aid payments to its residents. In New Mexico, local leaders opted to spend their allotment on economic recovery after its revenue came in at a higher level than anticipated, freeing up the federal aid for other purposes, according to Victor Reyes, the governor’s legislative director.
Lujan Grisham said the state’s efforts would “make a meaningful difference for hundreds of thousands of New Mexicans.” But she echoed other governors’ concerns that the aid is unlikely to be enough on its own as the pandemic worsens, threatening prolonged economic carnage.
“No doubt, a congressional aid package is still urgently needed, even after the expeditious and bipartisan aid package we delivered last week here,” she said in a statement. “That money will make a meaningful difference for hundreds of thousands of New Mexicans, but workers and families in our state are still hurting.”