Budget and Taxes

Coronavirus Poses Major Threat to State and Local Budgets: With the stock market in free-fall and businesses across the nation being ordered to close, cities and states are increasingly fearful the coronavirus pandemic will take a devastating bite out of their budgets.

For governments, the virus has essentially created a Sophie’s Choice: risk a lot of lives or lose a lot of jobs.

It is not an inconsequential dilemma. A model developed by doctors and researchers at Imperial College in London indicated that a failure to take drastic steps to control the virus could cost as many as 2.2 million lives in the U.S. alone.

Meanwhile, a study released last week by the UCLA Anderson School of Management predicted that a coronavirus-caused recession could cost 2 million jobs and spike the national unemployment rate to over 5 percent, up from the current 3.5 percent. Even that disturbing number pales in comparison to what U.S. treasury Secretary Steve Mnuchin reportedly told GOP lawmakers last week – that the pandemic could drive unemployment to over 20 percent. For context, the unemployment rate at the height of the Great Depression was 24.9 percent (1933). It dropped dramatically the following year with the advent of dozens of New Deal agencies, but stayed above 14 percent until 1940.

For state and local governments, the drastic reduction in tax revenues would come right at the time when they are spending massive amounts of money battling the virus.

States are also ramping up efforts to help people who lose their jobs from having their businesses forcibly shut down. By last Wednesday, for instance, Ohio had received nearly 78,000 unemployment claims — a nearly 1,500 percent increase over the 5,430 they logged for the entire previous week. Pennsylvania saw a similar spike, going from 14,000 claims the week before to over 50,000 last Monday alone.

New York Comptroller Thomas DiNapoli said the most optimistic projections show Empire State tax revenues would drop by at least $4 billion, and could easily fall by as much as $7 billion.

The National Association of State Budget Officers says states have made great strides in bolstering their rainy day funds, reaching an all-time high based on the median balance of those funds as a share of general fund spending.

But with the future so uncertain, how well any of those funds can hold up is anything but clear, even with a massive federal stimulus package on the way. (WASHINGTON POST, NEW YORK TIMES, LOS ANGELES TIMES, ROUTE FIFTY, USA TODAY, NASBO, UCLA, IMPERIAL COLLEGE)

Budgets in Brief:

CA Allocates $1 Billion to Fight Virus: California lawmakers approved a pair of bills last week that together commit up to $1 billion in state funds to battle the coronavirus pandemic. The measures appropriate $500 million for emergency response from the state’s general fund with an additional $500 million available if needed. Gov. Gavin Newsom (D) is expected to quickly sign them into law. Lawmakers then suspended the session until at least April 13. (LOS ANGELES TIMES, CALMATTERS)

Lee Unveils Scaled Down TN Budget: Tennessee Gov. Bill Lee (R) sent lawmakers a budget calling for funneling money into relief for tornado and health crises, scaling back planned teacher raises, and socking more cash away into reserves to prepare for dealing with the spread of the coronavirus. (ASSOCIATED PRESS)

KS Passes Expedited Budget: The Kansas House and Senate approved a $19.9 billion budget plan that includes $65 million for responding to the coronavirus. It moves to Gov. Laura Kelly (D) for consideration. (TOPEKA CAPITAL-JOURNAL, NPR)

FL Passes Record Budget: The Florida House and Senate unanimously endorsed a record $93.2 billion budget for next year. Gov. Ron DeSantis (R) said the ongoing coronavirus crisis is causing “economic dislocations” and that he expects to use his line-item veto power more than initially planned to help offset what are expected to be reductions in state tax revenue. (CBS12.COM [TALLAHASSEE])

- Compiled by RICH EHISEN

Politics and Leadership

Census Field Offices Close: Only a week into starting its count for 2020, the U.S. Census Bureau announced last Wednesday it was closing its field offices for two weeks while it tried to figure out a way to work around the coronavirus pandemic.

The bulk of Census workers are not scheduled to begin going door to door until May, but some are already in the field delivering paper questionnaires to the 6.2 million households with no fixed addresses. This includes many Native American reservations, as well as locations like Puerto Rico, which is still grappling with displaced populations from last winter’s hurricanes, and seasonal areas like beach towns where some households are occupied only seasonally.

Some workers are also preparing to launch counts of the roughly 500,000 homeless people living on the street or in shelters, as well as people who live in group housing like college dorms, nursing homes and prisons.

The largest portion of the count still takes place online, with approximately 11 million households having already completed forms online, and hundreds of thousands more have responded by mail and phone. But some of the most difficult surveying is left to workers called enumerators, who are tasked with finding and interviewing millions of residents who do not fill out forms or who are unable to receive them by mail.

“I don’t think I’ve ever heard of such a suspension, nationwide,” said Census historian Margo Anderson, a history professor at the University of Wisconsin-Milwaukee. “We’re in uncharted territory on the census, as well as everything else since last Friday.”

The 2020 census is being watched closely by advocates and political figures of every stripe because it will help determine, among several things, how many congressional seats and Electoral College votes each state gets, as well as how $1.5 trillion in federal spending is divvied out. As such, delays like this one are giving heartburn to those heavily invested in the census’ outcome.

“The bureau clearly hopes to resume operations as previously planned, but nobody has a crystal ball,” Terri Ann Lowenthal, a consultant on census issues for business and advocacy groups promoting an accurate count, told the New York Times. “The more the Census Bureau has to shift and modify operations and deviate from its plans, the harder it will be to have an acceptable outcome.” (NEW YORK TIMES, ASSOCIATED PRESS)

Politics in Brief:

PA GOP Resists Wolf Shutdown Order: One day after Pennsylvania Gov. Tom Wolf (D) announced a statewide shutdown of nonessential businesses, Rep. Russ Diamond (R) said he would introduce a resolution that would terminate the COVID-19 Disaster Emergency Order the governor signed on March 6. That order does not force non-essential businesses to shut down, only encourages them to do so. (LEBANON DAILY NEWS)

KS Pols Grant Gov More Emergency Powers: The Republican-controlled Kansas House and Senate voted unanimously last Thursday to allow Gov. Laura Kelly (D) to continue exercising expanded authority until at least May 1, but with the caveat that they retain the right to review and revoke some of her decisions. (WICHITA EAGLE)

-- Compiled by RICH EHISEN


States Take Lead in Battling COVID-19: For weeks, while President Trump dismissed the threat of the coronavirus first as a hoax and then as something his administration had completely under control, governors and other state and local officials across the nation have been busy implementing a wide array of policies intended to mitigate the disease’s impact. The president has since changed his tune, but those officials remain the undisputed leaders in tackling the pandemic.

“Since the coronavirus began spreading, the governors have taken a lead role in issuing strict guidelines and stern warnings, asserting themselves in ways that only highlighted the initial inaction and lack of seriousness from the White House,” wrote the New York Times on March 17.

The Washington Post reiterated that performance the next day, emphasizing the sheer enormity of the responsibilities on their plate.

“They have no choice but to make these kinds of decisions, when even not deciding is deciding. Are we going to close the schools or not? Do we prohibit large gatherings? Do we declare a state of emergency? What resources are we mobilizing to make sure the virus doesn’t spread in state prisons? Can we get more ventilators for our hospitals?” wrote opinion columnist Paul Waldman.

But even in the face of a national crisis, the president made only scant attempts at unity. He instead hurled insults at Democratic governors who criticized the administration’s slow response to the pandemic, calling Washington Gov. Jay Inslee (D) “a snake” and responding to Michigan Gov. Gretchen Whitmer (D) saying the “the federal government did not take this seriously early enough” by tweeting that the “Failing Michigan Governor” needed to “work harder.” He has also sparred with New York Gov. Andrew Cuomo (D), accusing him of politicizing the outbreak.

All the while, the virus has continued to spread, reaching the final state – West Virginia – last Tuesday. As of this writing, the U.S. was reporting over 14,000 confirmed cases, with 218 deaths. More than 254,000 cases have been confirmed globally, with over 10,400 deaths. The hardest hit countries to date have been Italy and China, which have each had more than 3,000 fatal cases, and Iran, which has suffered over 1,400 deaths since the outbreak began.

Governors took their concerns directly to Trump again last Thursday. In a call, governors gave the president a list of five things they need to fight the virus:

1) At least half of the federal government’s supplemental funding to go directly to states and quick action on waiver requests.

2) More personal protective equipment, masks, test kits and extraction kits, as well as faster production of ventilators.

3) Support for Title 32, which allows governors to call National Guardsmen to active duty, with the approval of the president.

4) Guidance on the implementation of the federal Defense Production Act, which would push U.S. manufacturers such as Tesla or General Motors to make desperately needed medical supplies and give them to the federal government to distribute to hospitals.

5) Extension of the deadline for completion of the Census and REAL ID.

Maryland Gov. Larry Hogan (R), the chair of the National Governor’s Association, also made a plea for systemwide cooperation. “We need all levels of government working together to get through this crisis,” he said. In an earlier appearance on MSNBC, Hogan said “there is no question that was a mistake” for Trump to initially downplay the virus, but the critical thing now was for both public officials and citizens to focus on solutions over blame.

Not all of the president’s interactions with governors were confrontational. Last Wednesday, Cuomo praised Trump for what he called “very creative” assistance to New York, including the deployment of the Navy hospital ship Comfort to assist the state’s efforts.

Another of Trump’s fiercest critics, California Gov. Gavin Newsom (D), has also praised the president’s recent actions, saying “I am working to solve problems, not create problems.”

On Thursday, Newsom asked Trump to deploy the “USNS Mercy Hospital Ship to the Port of Los Angeles through September 1, 2020, to help decompress the state’s health care delivery system in Los Angeles in response to COVID-19.” Later that evening, Newsom issued a directive imposing a statewide shelter-in-place order replicating those previously issued by local leaders in the six-county Bay Area and in Los Angeles. The order allows for essential businesses such as grocery stores and pharmacies to remain open, while restaurants are allowed to remain open for delivery and pickup only. (NEW YORK TIMES, WASHINGTON POST, ROLL CALL, POLITICO, NATIONAL GOVERNOR’S ASSOCIATION, MSNBC, FOX NEWS, LOS ANGELES TIMES, NEWSWEEK, CALMATTERS, LEXISNEXIS STATE NET, CALIFORNIA GOVERNOR’S OFFICE)

Governors in Brief:

This is just a brief sampling of the many, many steps governors have taken over the last week to combat COVID-19.

Ige Says Stay Away from HI: Hawaii Gov. David Ige (D) asked visitors to postpone their trip to the islands for at least 30 days. He also announced a ban on all non-essential state travel and said all disembarking cruise ship passengers will be thermal scanned for possible signs of coronavirus infections. (HONOLULU STAR ADVERTISER)

ME Gov Tackles Price Gouging: Maine Gov. Janet Mills (D) issued a Declaration of Abnormal Market Disruption, an anti-price gouging measure that prohibits certain necessities from being sold at elevated prices. Items covered under the order include food, medicine and paper products. (NEWS CENTER MAINE)

Newsom Moves to Bar CA Evictions: California Gov. Gavin Newsom issued Executive Order N-28-20, which gives local governments the authority to bar landlords from evicting residents during the virus outbreak. Los Angeles, Sacramento and San Jose immediately passed measures to place a moratorium on evictions. (LEXISNEXIS STATE NET, MARKET WATCH)

Sununu Shuts Down NH Evictions: New Hampshire Gov. Chris Sununu (R) issued executive orders placing temporary moratoriums on evictions and foreclosures and prohibiting utilities from disconnecting any homes or businesses throughout the duration of the emergency. (WMUR)

Cuomo Halts NY Debt Collection: New York Gov. Andrew Cuomo (D) announced the Empire State will temporarily halt collections on student loan and medical debts. The freeze is expected to last for at least 30 days. Cuomo also ordered businesses that rely on in-office personnel to decrease their in-office workforce by 75 percent. (CRAIN’S NEW YORK BUSINESS, NEW YORK GOVERNOR’S OFFICE)

NV Gov Shutters Casinos: Nevada Gov. Steve Sisolak (D) ordered all non-essential businesses – including casinos – to close down for the next 30 days. Businesses granted essential status under the order include pharmacies, grocery stores, drug and convenience stores, banks and financial institutions, hardware stores, and gas stations. Similar orders have been given in California, Pennsylvania, New Mexico, Kentucky, Connecticut, and Louisiana among other states. (KTVN, HARTFORD COURANT, CALIFORNIA GOVERNOR’S OFFICE, ASSOCIATED PRESS, PENNSYLVANIA GOVERNOR’S OFFICE)

Kemp Keeps GA Businesses Open: Georgia Gov. Brian Kemp (R) announced the Peach State’s 10th coronavirus death, but said he had no plans to order businesses to close during the pandemic. “I do not plan on forcing businesses to close. If the circumstances change, I will take the appropriate action,” he said. (NEWS4JAX)

AZ Gov Orders Guard to Help Stock Food: Arizona Gov. Doug Ducey (R) issued a directive that, among several things, orders Arizona National Guard troops “to assist grocery stores & food banks in the face of heightened demand” and “halts all elective surgeries in the state to free up medical resources and maintain the capacity for hospitals and providers to continue offering vital services.” (ARIZONA GOVERNOR’S OFFICE)

-- Compiled by RICH EHISEN

Hot Issues

Business: The NEW JERSEY Assembly Committee on Homeland Security and State Preparedness endorses AB 3844, a bill that would override virus exclusions in “business interruption” coverage during the coronavirus pandemic. The bill, which would spread the financial burden via a new special purpose apportionment on other, non-business interruption carriers insuring Garden State risks, is now with the full Assembly (LEXISNEXIS STATE NET, JURIST). The MICHIGAN House endorses HB 4910 and HB 4911, which together would let landlords request notarized proof from a tenant’s health care provider that a person has a legitimate need for an emotional support animal. They move to the Senate (MLIVE.COM). The WASHINGTON House rejects SB 6281, a Senate-passed bill that would have granted consumers a broad array of data privacy rights similar to those implemented by the European Union’s General Data Protection Order and the CALIFORNIA Consumer Protection Act (GEEKWIRE). The HAWAII Senate approves SB 3110, a bill that would bar foreign individuals and business interests from buying homes in the Aloha State. The measure is now in the House (HAWAII NEWS NOW).

Education: The MISSISSIPPI Senate approves HB 1647, which allows local governments and school districts to grant their employees paid leave in the coming weeks. It moves to Gov. Tate Reeves (R) for consideration (CLARION-LEDGER [JACKSON]).

Health & Science: At least eight states with state-run health benefits exchanges – CONNECTICUT, CALIFORNIA, NEVADA, WASHINGTON, MARYLAND, RHODE ISLAND, NEW YORK, and MASSACHUSETTS – announce they will open special enrollment periods to help citizens during the coronavirus pandemic. At least three more with federally-run exchanges – NEW HAMPSHIRE, MICHIGAN and NEW JERSEY – have asked the federal government for permission to extend their enrollment periods as well (SHORE NEWS NETWORK, CONNECTICUT MIRROR, ROLL CALL, NEVADA INDEPENDENT, MLIVE.COM, PROVIDENCE JOURNAL, NJ.COM, FREDERICK NEWS POST, MANCHESTER UNION LEADER, KOMO NEWS, LEXISNEXIS STATE NET).

Social Policy: Judge Beryl A. Howell, the chief of the U.S. District Court for the DISTRICT OF COLUMBIA, blocks a proposed Trump administration rule that would have forced an estimated 700,000 people off of current food stamp rolls. Howell cited the coronavirus pandemic in her decision to suspend the rule from going into effect, saying it was “essential” that state and local officials have the “flexibility” to address the needs of their residents during this time (LOS ANGELES TIMES).

Local Front: Citing the coronavirus, the SEATTLE City Council expands a moratorium on residential evictions. Mayor Jenny Durkin had issued an executive order placing a 30-day moratorium on evictions, but the Council’s measure extends the moratorium from 30 to 60 days and expands its focus from rent-related residential evictions to all residential evictions other than those related to tenant actions imminently threatening the health or safety of others (SEATTLE TIMES).

Once Around the Statehouse Lightly

While sarcasm and satire come easy to me, it feels like a very inappropriate time to practice those two bits of wordplay. So Once Around the Statehouse Lightly will take a break until the world is once again safe for my kind of wiseacre commentary.