McConnell under mounting GOP pressure to boost state aid

Senate Majority Leader Mitch McConnellAddison (Mitch) Mitchell McConnellTrump second-term plans remain a mystery to GOP Eighty-eight years of debt pieties Ernst says Trump should sign defense policy bill with military base renaming provision 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 RomneyRussian bounties revive Trump-GOP foreign policy divide Gianforte halts in-person campaigning after wife, running mate attend event with Guilfoyle QAnon scores wins, creating GOP problem MORE (Utah), Susan CollinsSusan Margaret CollinsTrump sealed his own fate Congress eyes tighter restrictions on next round of small business help The Hill's Coronavirus Report: Stagwell President Mark Penn says Trump is losing on fighting the virus; Fauci says U.S. 'going in the wrong direction' in fight against virus MORE (Maine), Bill CassidyWilliam (Bill) Morgan CassidyWhy drug costs for older Americans should be capped in pandemic's wake Ready Responders CEO Justin Dangel stresses importance of Medicaid population; Fauci says he won't attend Trump rally this weekend Senate advances public lands bill in late-night vote MORE (La.), John KennedyJohn Neely KennedyMORE (La.), Lisa MurkowskiLisa Ann MurkowskiSenators will have access to intelligence on Russian bounties on US troops Overnight Defense: Lawmakers demand answers on reported Russian bounties for US troops deaths in Afghanistan | Defense bill amendments target Germany withdrawal, Pentagon program giving weapons to police Senators push to limit transfer of military-grade equipment to police MORE (Alaska), Dan SullivanDaniel Scott SullivanUS security starts in the Arctic Senate confirms nation's first African American service chief GOP senators urge Trump not to restrict guest worker visas MORE (Alaska) and Shelley Moore CapitoShelley Wellons Moore CapitoRepublicans fear backlash over Trump's threatened veto on Confederate names McConnell makes strong call for masks, saying there should be no stigma Ernst sinks vote on Trump EPA nominee MORE (W.Va.). 

The boldest push has come from Cassidy, who teamed up with Sen. Bob MenendezRobert (Bob) MenendezSenate Dems request briefing on Russian bounty wire transfers Democratic senator proposes sanctions against Putin over bounties GOP lawmakers voice support for Israeli plan to annex areas in West Bank 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 CramerGOP skeptical of polling on Trump Senate passes sanctions bill targeting China over Hong Kong law Cruz urges Trump to support Israeli annexation MORE (R-N.D.), Sen. Angus KingAngus KingMcConnell on filibuster talk: Democrats want to 'vandalize' Senate rules Manchin draws line against repealing legislative filibuster Filibuster reform gains steam with Democrats MORE (I-Maine) and Sen. Sheldon WhitehouseSheldon WhitehouseDemocrat asks Barr to preserve any records tied to environmental hacking probe Democrats warn Biden against releasing SCOTUS list Key Democrat accuses Labor head of 'misleading' testimony on jobless benefits 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 second-term plans remain a mystery to GOP Republicans fear backlash over Trump's threatened veto on Confederate names McConnell: Trump shouldn't veto defense bill over renaming Confederate bases 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 TrumpTrump second-term plans remain a mystery to GOP Trump to hold outdoor rally in New Hampshire on Saturday Eighty-eight years of debt pieties 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 PaulGianforte halts in-person campaigning after wife, running mate attend event with Guilfoyle Rand Paul's exchange with Fauci was exactly what America needed GOP Arizona lawmaker says Fauci and Birx 'undermine' Trump's coronavirus response 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.”