Pelosi Raises Possibility of Local Funding On Top of $500 Billion for States

Many of the nation’s governors in recent weeks called for Congress to allot another $500 billion in federal aid for state governments to help them deal with the unplanned costs and tax revenue losses brought on by the coronavirus pandemic.

House Speaker Nancy Pelosi on Tuesday indicated that Democrats may be supportive of additional funding for local governments that goes beyond that amount.

"In terms of the funding, we may have two packages. We may have one that is state and one that is local,” Pelosi said during a call with reporters organized by the American Federation of State, County and Municipal Employees, the nation’s largest public sector labor union. 

"It looks like we're going to need 500 for the states,” she added, referring to the $500 billion figure. “And we may need a very big figure also for the counties and municipalities."

Pelosi’s comments come amid tensions between Democrats and Republicans over providing additional aid to states and localities in an anticipated next round of federal coronavirus relief legislation. This debate has become increasingly partisan, with some conservatives criticizing the requests for additional funding as a prospective “bailout” for Democratic-leaning states.

"I think it's a big difference with a state that lost money because of Covid and a state that's been run very badly for 25 years," President Trump said on Tuesday, referring to Covid-19, the respiratory illness that the coronavirus causes.

"We're not looking to do a bailout," he added.

Trump also suggested that, as part of talks about further state and local aid, his administration may make demands regarding so-called "sanctuary cities"—a term that generally refers to places that limit cooperation with federal immigration authorities. Trump has chafed over these jurisdictions throughout his time in the White House.

"I think sanctuary cities is something that has to be brought up," the president said.

Senate Majority Leader Mitch McConnell and other Republicans have voiced reluctance about moving quickly to provide huge sums of additional, flexible funding for states and local governments—particularly if there is a possibility that these funds could go towards troubled public pension programs or addressing other budget pressures that predated the virus outbreak. 

U.S. Sen. Rick Scott, of Florida, during an interview with conservative radio host Hugh Hewitt on Tuesday, said that, as with a natural disaster like a hurricane, he thought it was important for the federal government to help the states with coronavirus costs.

“We’ve already done that,” said the former Florida governor. “What I'm not interested in doing is bailing out pension plans from these liberal states that don't want to live within their budget.”

“Let's look at the federal budget. I mean, we're going to run at least a $3 trillion budget deficit this year,” added Scott, responding to a question about whether the federal government should help states with lost tax revenues. "The states should live within their means and figure this out."

Meanwhile, Democrats, along with the bipartisan National Governors Association, groups that advocate on behalf cities and counties and labor unions, contend that federal aid to states and localities is so far inadequate and that billions of dollars more is needed to avoid sharp cuts to basic services and employee layoffs—which they say would hamper an economic recovery.

Senate Minority Leader Chuck Schumer was also on the AFSCME call on Tuesday and emphasized Democrats’ preference for providing not only more funding to assist state and local governments with their added costs, but also money to help them cover tax revenue declines that are occurring because of the widespread economic downturn that the virus has caused.

“We need a large increase in funding for state and local governments, big and small,” Schumer said. “And we need to make sure that they can use this money to make up for lost revenues.”

He added that Treasury Secretary Steven Mnuchin and Trump have previously expressed support for this type of aid. “Let's hope they stick with it,” Schumer said.

Pelosi described it as unlikely that any forthcoming state and local government aid will gush out of the federal coffers immediately in one shot. "Not all of this money would be put out right now,” she said. “This would be over time. Over time, maybe even a couple years."

The House speaker also mentioned the possibility of additional Medicaid funding for states."We need more FMAP, that's what we'll try to get,” she said, referring to the federal share of Medicaid costs known as the “federal medical assistance percentage.”

Schumer said that McConnell has taken the position that, in exchange for considering additional state and local aid, Republicans want to see a “liability shield” for companies seeking to protect themselves from lawsuits related to the virus. The Democratic leader called this offer “another example of the Republicans’ misplaced priorities.”

This story was updated with additional comments from President Trump.