McConnell under mounting GOP pressure to boost state aid

Senate Majority Leader Mitch McConnellAddison (Mitch) Mitchell McConnellThe Hill's Morning Report - Presented by Facebook - Americans debate life under COVID-19 risks The 10 Senate seats most likely to flip Democratic leaders say Trump testing strategy is 'to deny the truth' about lack of supplies 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 RomneyTrump, GOP go all-in on anti-China strategy Senate panel approves Trump nominee under investigation Pelosi, Democrats press case for mail-in voting amid Trump attacks MORE (Utah), Susan CollinsSusan Margaret CollinsBottom line The Hill's Morning Report - Presented by Facebook - Americans debate life under COVID-19 risks This week: Surveillance fight sets early test for House's proxy voting MORE (Maine), Bill CassidyWilliam (Bill) Morgan CassidyStakes high for Collins in coronavirus relief standoff Pass the Primary Care Enhancement Act Mental health crisis puts everyone on the front lines MORE (La.), John KennedyJohn Neely KennedyMORE (La.), Lisa MurkowskiLisa Ann MurkowskiRepublicans push for help for renewable energy, fossil fuel industries The Hill's Morning Report - Presented by Facebook - Mnuchin: More COVID-19 congressional action ahead Senators weigh traveling amid coronavirus ahead of Memorial Day MORE (Alaska), Dan SullivanDaniel Scott SullivanEnergy secretary accuses banks of 'redlining' oil and gas industry Postal Service to review package fee policy: report Republicans say Trump should act against financial institutions that are unwilling to fund certain fossil fuel projects MORE (Alaska) and Shelley Moore CapitoShelley Wellons Moore CapitoTrump tries to soothe anxious GOP senators The Hill's Morning Report - Presented by Facebook - In reversal, Trump says he won't disband coronavirus task force McConnell under mounting GOP pressure to boost state aid MORE (W.Va.). 

The boldest push has come from Cassidy, who teamed up with Sen. Bob MenendezRobert (Bob) MenendezSenate panel approves Trump nominee under investigation Hillicon Valley: Trump threatens Michigan, Nevada over mail-in voting | Officials call for broadband expansion during pandemic | Democrats call for investigation into Uber-Grubhub deal Senate chairman schedules vote on Trump nominee under investigation 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 CramerTrump tries to soothe anxious GOP senators Trump cites 'Obamagate' in urging GOP to get 'tough' on Democrats Obama tweets 'vote' after Trump promotes 'Obamagate' MORE (R-N.D.), Sen. Angus KingAngus KingMemorial Day weekend deals latest economic blow to travel industry Bipartisan senators introduce bill to make changes to the Paycheck Protection Program Senators weigh traveling amid coronavirus ahead of Memorial Day MORE (I-Maine) and Sen. Sheldon WhitehouseSheldon WhitehouseSenate Judiciary Committee calls for national safety guidelines amid liability hearing Democrats ask for investigation of DOJ decision to drop Flynn case McConnell under mounting GOP pressure to boost state aid 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 ThuneThe Hill's Morning Report - Presented by Facebook - US death toll nears 100,000 as country grapples with reopening GOP faces internal conflicts on fifth coronavirus bill On The Money: Jobless rate exceeds 20 percent in three states | Senate goes on break without passing small business loan fix | Biden pledges to not raise taxes on those making under 0K 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 John TrumpMulvaney: 'We've overreacted a little bit' to coronavirus Former CBS News president: Most major cable news outlets 'unrelentingly liberal' in 'fear and loathing' of Trump An old man like me should be made more vulnerable to death by COVID-19 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 PaulSunday shows preview: States begin to reopen even as some areas in US see case counts increase Congress headed toward unemployment showdown Doctors push Trump to quickly reopen country in letter organized by conservatives 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.”