ICYMI: Why some state and local governments are desperate for more stimulus aid

It’s clear that states and local governments are in dire need of additional COVID-19 relief. State and local governments make up 13% of total employment in the U.S. – employing teachers, firefighters and law enforcement personnel, medical professionals – and declining revenues will force municipalities to significantly cut spending for years to come.

And while Senator McConnell may believe it’s ok for states to go bankrupt, those of us living in the real world understand the severe impact bankruptcy would have on families throughout the country. The American Rescue Plan will take critical steps to invest in our local communities and get our economy back on track.

The numbers don’t lie – take a look at this analysis from the Washington Post that spells out why state and local governments desperately need additional relief:

“Facing deep budget shortfalls, state and local governments have shed 1.3 million jobs since the pandemic began last year — a loss of more than 1 in 20 government jobs, according to a Washington Post analysis of government data.”

“While tax revenue grew in some states last year, the majority — at least 26 states — were hit with declines. Revenue fell by 10 percent or more in five states, including a 43 percent drop in Alaska and a 10 percent decline in Florida. The toll was felt in both Republican-led states such as Texas, which saw a 10 percent shortfall, and Democratic-led ones, such as Oregon, which weathered a 13 percent drop.


As a global pandemic seized the U.S. economy, the city of Dayton, Ohio, offered its 1,800 city employees voluntary separation plans. More than 100 took the offer. To get through this budget cycle, Dayton’s police and fire departments aren’t recruiting new classes in 2021. Funding for capital projects — from roads to new dump trucks — has been slashed. Making matters worse, said Dayton Mayor Nan Whaley (D), the region was still healing from the 2008-2009 financial crisis when the pandemic hit.

Democrats also point to local governments that have already cut services, laid off employees or searched for other cost-saving measures as the pandemic persists. And they say that the longer it takes state and local governments to recover, the longer the overall economy will take to fully heal.

State and local governments are large employers, accounting for about 13 percent of non-farm jobs in February 2020. The public-sector jobs also historically take longer to rebound from a recession than private-sector ones, even when there isn’t a public health crisis, economists warn.

“During the Great Recession, local governments tightened their belts in ways that took much longer to undo, even years after the private sector had fully bounced back. By March 2014, the private sector had regained and surpassed the number of jobs it had in March 2008, according to the Census Bureau. It took four more years for state and local governments to return to near-2008 employment levels, slowing down the pace of the overall recovery.”

Across all states, cuts to education spending make up almost all of the job losses. On the local level, public education accounted for just over half of job losses.

“Still some cities, such as Arlington, Tex., say they are at the precipice. The pandemic has devastated tourism tied to major sports events and venues, such as Dallas Cowboys football games or the hosting of the 2020 World Series. The city cut department budgets across the board by 2 to 8 percent, stopped all new hiring, left vacant positions unfilled and leaned on $21 million in Cares Act funding until it ran out in December. The city hasn’t had to lay off any local government employees — yet. But Arlington could still face a $20 million to $30 million drop in property tax revenue later this year, said Mayor Jeff Williams. ‘We’re hopeful we’ll get the assistance, because it’s the right thing to do,’ Williams said. ‘This isn’t a red or blue issue. This is an American issue.’”