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McConnell under mounting GOP pressure to boost state aid

Senate Majority Leader Mitch McConnellAddison (Mitch) Mitchell McConnellThe Memo: The GOP's war is already over — Trump won Biden: GOP in the midst of a 'mini-revolution' Ernst defends Cheney, calls for GOP unity MORE (R-Ky.) is facing growing calls within his own conference to increase financial assistance to state and local governments, something the GOP leader shut down during recent coronavirus relief talks with Democrats.

Support for more state aid is coming from Republican Sens. Mitt RomneyWillard (Mitt) Mitt RomneyThe Memo: The GOP's war is already over — Trump won Budowsky: Liz Cheney vs. conservatives in name only The Hill's Morning Report - Presented by Emergent BioSolutions - House GOP drama intensifies; BIden sets new vax goal MORE (Utah), Susan CollinsSusan Margaret CollinsMcConnell sidesteps Cheney-Trump drama Romney defends Cheney: She 'refuses to lie' The Memo: Trump's critics face wrath of GOP base MORE (Maine), Bill CassidyBill CassidyThe Hill's Morning Report - Presented by Emergent BioSolutions - Biden sales pitch heads to Virginia and Louisiana Republicans hammer Biden on infrastructure while administration defends plan Sunday shows - Biden economic agenda dominates MORE (La.), John KennedyJohn Neely KennedyMORE (La.), Lisa MurkowskiLisa Ann MurkowskiTrump muddles Republican messaging on Afghanistan Trump drama divides GOP, muddling message Moderate Republicans leery of Biden's renewed call for unity MORE (Alaska), Dan SullivanDaniel Scott SullivanKerry denies allegations from leaked Iran tapes OVERNIGHT ENERGY: Supreme Court considers whether US should pay for Guam hazardous waste cleanup | EPA eyes reversal of Trump revocation of California vehicle emissions waiver | Kerry faces calls to step down over leaked Iran tapes Kerry faces calls to step down over leaked Iran tapes  MORE (Alaska) and Shelley Moore CapitoShelley Wellons Moore CapitoBiden says he's open to compromise on corporate tax rate Business groups target moderate Democrats on Biden tax plans The Hill's Morning Report - Presented by Emergent BioSolutions - Can Cheney defy the odds and survive again? MORE (W.Va.). 

The boldest push has come from Cassidy, who teamed up with Sen. Bob MenendezRobert (Bob) MenendezJuan Williams: A breakthrough on immigration? Biden rebuffs Democrats, keeps refugee admissions at 15,000 Bottom line MORE (D-N.J.) to propose a $500 billion fund that would “make sure state and local governments can maintain essential services.”

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Sullivan and Kennedy are pushing more modest plans giving states greater flexibility to spend money already provided by the federal government to cover general revenue shortfalls.

Those proposals are running up against McConnell’s opposition to more funding. 

The Kentucky Republican last month said “this whole business of additional assistance for state and local governments needs to be thoroughly evaluated,” which his office later characterized as “stopping blue state bailouts” for states such as California, Illinois and New York. 

But his GOP colleagues are now joining calls for more federal aid to states, arguing their red states also face dire fiscal challenges caused by the deadly pandemic.

Romney walked into a Republican lunch on Tuesday with an oversized chart headlined: “Blue states aren’t the only ones who are getting screwed.”

The graphic illustrated how states with Republican governors, places like Missouri and Florida, are grappling with severe revenue shortfalls. 

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Emerging from a GOP lunch meeting Wednesday, Romney told reporters, “We’re discussing state circumstances.” 

“Different states are in different positions, and we’re looking at those realities,” he added.

McConnell has responded to colleagues by pointing out that a Treasury–Federal Reserve lending facility with more than $4 trillion in loan-backstopping power has broadened its focus to include municipalities, according to a senator familiar with the internal debate.

But critics like Collins say smaller local governments aren’t being helped by the Treasury-Fed loan program.

On Wednesday, Collins said she is talking to Cassidy about legislation to increase aid to states and is fighting for a provision to ensure rural states are treated fairly.

“I have made suggestions that we avoid the [Senate Democratic Leader Charles] Schumer-type provision that was included in the first tranche of state aid that discriminated against rural states,” she said, arguing the $2.2 trillion CARES Act “created a Treasury loan facility that was only available to entities, communities, or counties or boroughs with populations of 500,000 or more.”

Collins faces a competitive reelection bid this year in a state that’s projected to lose $200 million in revenue by the end of June and as much as $1 billion by the middle of 2021, according to Moody’s Analytics.

McConnell, responding to calls for “additional legislation” on Tuesday, said “we are not ruling that out.”

“But we think we’re going to take a pause here, do a good job of evaluating what we’ve already done,” he said, speaking for Republican colleagues.

He noted that guidance from the Treasury Department “provides some flexibility on the state and local front where we’ve already allocated $150 billion.”

The GOP proposals with the most momentum would give state and local governments flexibility to use $150 billion in stabilization funding passed by Congress in March to cover budget shortfalls.

Sullivan introduced the Coronavirus Relief Fund Flexibility Act that would allow federal funds to replace state and local revenue shortfalls sustained between March 1 and Dec. 31.

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That measure is co-sponsored by Capito, Murkowski, Sen. Kevin CramerKevin John CramerSenate passes bipartisan B water infrastructure bill Biden administration faces big decision on whether to wade into Dakota Access fight OVERNIGHT ENERGY: Supreme Court declines to hear challenge to Obama marine monument designation | Interior reverses course on tribal ownership of portion of Missouri river | White House climate adviser meets with oil and gas companies MORE (R-N.D.), Sen. Angus KingAngus KingDC mayor admitted to Democratic governors group amid statehood fight Democrats fret over Biden spending Schumer works to balance a divided caucus's demands MORE (I-Maine) and Sen. Sheldon WhitehouseSheldon WhitehouseOn The Money: Incomes, consumer spending soared in March | Harris, senators work behind scenes on jobs package | Biden cancels some border wall construction Harris, senators work behind scenes on jobs package OVERNIGHT ENERGY: Senate nixes Trump rule limiting methane regulation | Senate confirms EPA chief: Biden's climate goals are 'an opportunity to lead' | Fine-particle pollution disproportionately hurts people of color: research MORE (D-R.I.).

The CARES Act, which was signed into law March 27, limits federal help to state and local governments to cover expenditures incurred due to the public health emergency and were not accounted for in budgets approved before the end of March.

Murkowski said her state has seen a significant shortfall in revenue because of a major drop-off in tourism.

Cruise line operators, who were hit early on this year with fast-spreading infections, have halted their popular tours of the Alaska coastline. Murkowski noted that 58 percent of tourists visit Alaska via cruise ships. 

“We all recognize that extraordinary resources have been directed to the states but in many cases — mine is a perfect example — it’s going to be difficult to spend that all on COVID-related [priorities] if there isn’t some way to allow communities to have some level of offset for lost revenue,” she said.

Murkowski pointed to Denali Borough, home to Denali National Park and Preserve, where she said tourism dollars have dried up.

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“Their economy is tourism. During the summertime that’s when they make all their money and they make it from bed tax,” she said. “That borough that gets 80 percent of its revenues from bed tax doesn’t have the means to increase taxes on 1,800 people.” 

Senate Republican Whip John ThuneJohn Randolph ThuneTrump muddles Republican messaging on Afghanistan The Memo: Trump's critics face wrath of GOP base GOP wrestles with role of culture wars in party's future MORE (S.D.) said Wednesday there is a vocal group of Republican senators advocating for more state assistance but noted that a large number of GOP lawmakers remain opposed.

“There’s some sympathy for the plight of state and local governments,” Thune said.

“Most of our members, I think, would prefer allowing some additional flexibilities for the dollars that have already been appropriated versus a big new infusion of cash,” he said. “We’re batting it around. There’s some really strong views on the other side of that.” 

“We’ll continue to discuss it and see where we come down,” he added. 

Cramer said that while he supports Sullivan’s bill to give state and local governments more flexibility to spend federal assistance, he doesn’t yet support sending out another tranche of aid. 

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“What we’ve done to this point is a lot when you consider the Medicaid expansion, the education dollars, the $150 billion [state stabilization fund]. That represents over a quarter of all of the states’ entire revenue that they collect in a year,” he said.

A Senate Republican aide said President TrumpDonald TrumpCaitlyn Jenner on Hannity touts Trump: 'He was a disruptor' Ivanka Trump doubles down on vaccine push with post celebrating second shot Conservative Club for Growth PAC comes out against Stefanik to replace Cheney MORE could determine whether a critical number of Republicans line up behind another tranche for federal relief for state and local budgets.

"I get the sense there are probably a number of other members willing to go along with that," the aide said. "The wildcard is obviously Trump. He's shown no interest in being tight-fisted on spending matters. If you give him whatever wants, he'll write the check and then all those Republicans will go along with it because Trump supports it."

Sen. Rand PaulRandal (Rand) Howard PaulSherrod Brown calls Rand Paul 'kind of a lunatic' for not wearing mask Overnight Health Care: WHO-backed Covax gets a boost from Moderna Vaccine hesitancy among lawmakers slows return to normalcy on Capitol Hill MORE (R-Ky.), an outspoken fiscal conservative, said the federal deficit has grown too big to give any more money to states.

“There really isn't any money to send anyone. I mean, there is no rainy-day fund, there is no savings, we'd have to borrow it,” he said. “A lot of the money we currently borrow is from China, so we'd have to be more indebted to China in order to send more money to states.”