When Gov. Andrew Cuomo and the state Legislature approved a $177 billion state budget on April 3 they counted on help from Washington to cover a $10 billion hole.
Since then, that massive hole has grown even larger as the state responds to the coronavirus pandemic and revenues plummet.
A report released by Cuomo’s budget department predicts a decline of nearly 20 percent in revenues from the sales tax, 21 percent from the lottery and 34 percent from gaming. Never mind income.
That was the reason behind the state’s request to the federal government last week for an additional $60 billion in direct funding over three years along with millions of dollars more from Medicaid.
New York is not alone in its financial pain. New York’s request was part of the National Governors Association bid for $500 billion for all states and territories. Unlike previous aid, the money sought by the governors would be unrestricted and could be used for revenue shortfalls.
Cuomo previously said that without additional federal funding he might need to cut aid to schools, hospitals and local government by 20 percent. This is a frightening thought for every government and school district in Nassau County as they struggle with next year’s budget.
A cut in state aid would result in the loss of jobs for many front-line employees, including police, firefighters and teachers.
This at a time when 20.5 million jobs lost in the United States in April pushed the unemployment level to 14.7 percent – the worst since the Great Depression – and probably well below the actual number.
Treasury Secretary Steven Mnuchin acknowledged Sunday that the real unemployment could actually be worse, a lot worse, closing in on 25 percent.
So the money will be approved, right? Not necessarily.
Both Senate Majority Leader Mitch McConnell and President Donald Trump have been cool if not frigid to the request.
The Kentucky Republican said he would rather see states declare bankruptcy than give them federal aid.
There are two problems with McConnell’s bankruptcy suggestion. The first is that while cities can declare bankruptcy, states cannot under current federal law.
The second problem is that officials and analysts said this would be a recipe for turning a potentially short recession into a prolonged depression.
Cuomo was perhaps generous when he called McConnell’s proposal a “really dumb” idea.
But McConnell was not done. He later issued a statement referring to local government assistance as “blue state bailouts” – even though governors of both parties have lobbied for the funding.
Trump then picked up on the blue-state theme to say “It’s interesting that the states that are in trouble happen to be blue,” he said, adding that New York and New Jersey were in trouble before the “plague” arrived. Again, untrue.
One would think that a pandemic that has sickened more than 1.2 million people, killed more than 80,000, crashed the economy and caused more than 33 million people to file unemployment claims would be enough to get Trump and McConnell to set aside partisanship.
But, sadly, no.
Maryland Gov. Larry Hogan, the chairman of the National Governors Association and a Republican, called the claim that only poorly run states whose governors were Democrats needed assistance “complete nonsense.”
“There are just as many Republicans as Democrats that strongly support this,” he said.
Rep. Peter King (R-Seaford) tweeted that he thought McConnell’s remarks were “shameful and indefensible” and called McConnell the “Marie Antoinette of the Senate.”
Cuomo helpfully pointed out that New York and other Democratic-led states paid more in federal taxes than they received.
He said New York pays $29 billion more in taxes to the federal government than it receives every year and California pays nearly $6 billion more than it gets back.
Meanwhile, Republican-led states Kentucky and Florida receive $37 billion more and $30 million in federal funding than they send to the federal government.
In other words, McConnell’s resistance risked killing the golden goose.
This seems to be a theme of Trump and most Republicans in Congress.
In addition to giving large corporations and the wealthy an unwarranted windfall, the $2 trillion tax cut approved in 2018 placed a $10,000 cap on deductions for state and local taxes that was aimed at New York and other states that provide relatively generous social services.
In the first coronavirus relief packages, New York was repeatedly shortchanged with states with few cases receiving outsized relief and New York at the epicenter of the pandemic with nearly one-third the cases, up till now, receiving a disproportionately small share.
The first package also included $500 billion in aid to corporations, the same amount that all 50 governors are seeking for their states.
“They bailed out corporate America, that’s what they did,” Cuomo said at his daily news conference on Sunday. “You look at the past legislation, they bailed out corporate America. This legislation, this week, going forward, let them fund working Americans because that’s the need. You look at the past legislation, they funded hotels, restaurants, airlines, big corporations, public companies.”
Some Republicans in Congress recently joined Democrats in calling for more federal aid to states, pointing out that red states also face dire fiscal challenges caused by the pandemic.
Sen. Mitt Romney (R-Utah) walked into a Republican lunch last week with an oversized chart headlined: “Blue states aren’t the only ones who are getting screwed,” according to the Hill.
The graphic illustrated how states with Republican governors, places like Missouri and Florida, are facing severe revenue shortfalls.
McConnell responded by saying he would not rule out additional legislation. But both he and Trump said they were in no rush to approve further economic aid to the country.
We’d like to think Trump and McConnell will come to their senses and provide the funding needed by every government below the federal level.
But in case you haven’t noticed good sense has been in very short supply for the president and McConnell during this pandemic. We hope that is about to change.
