States need more fiscal relief

States need more fiscal relief

The three federal stimulus bills approved so far have included substantial funding to help state and local governments deal with the economic fallout from the coronavirus pandemic. But Louisiana and other states will need much more federal money to help avoid deep spending cuts that would harm families, destabilize communities and deepen the recession. A new report from the Center on Budget and Policy Priorities lays out the grim math:

States appear on the brink of shortfalls that — based on historical patterns — could total more than $500 billion, mostly concentrated in a single fiscal year, the one that begins in less than three months. Even after accounting for the federal fiscal aid that’s been provided so far and states’ own rainy day funds that they can draw down, states still face shortfalls of as much as $360 billion, not including the substantial new costs they face to combat the COVID-19 virus.

As Congress debates the next round of aid, the report recommends increasing federal contributions to Medicaid, and additional fiscal relief to state and local governments. 

While every state and city will suffer pandemic-related revenue losses, the pain could be particularly acute in Louisiana. State and local budgets in the Pelican State are heavily reliant on sales tax revenue, which are expected to plunge as people stay home to avoid illness, and the state’s financial reserves were largely depleted during the last recession. Axios’ Stef W. Knight and Dan Primack explain

“There’s no playbook,” Louisiana State Treasurer John Schroder tells Axios. Past state emergencies and budget crises have been regional “and then the rest of the country comes in to the rescue. That ain’t going to be happening this time.”

This crisis will ultimately result in shortfalls for states, some of which – like Louisiana – haven’t finalized a budget for the 2021 fiscal year. 

“You can only cut so much,” explains Louisiana Lt. Gov Billy Nungesser. “I don’t think you’ll ever make up what you need to make up in the losses of oil and gas, sales tax, and those things with cuts right out the gate.”


School’s out for the summer
Louisiana 720,000 public school students will not be returning to the classroom this academic year, Gov. John Bel Edwards announced Monday, leaving major questions for families and school administrators as state authorities contemplate how and when to ease the stay-at-home order that has frozen the state’s economy. As The Advocate’s Will Sentell explains, students will end up missing two months of classroom instruction, including year-end achievement tests. 

Thirty-nine of Louisiana’s 69 school districts have been offering some form of distance learning, including videoconferencing, emails and assessments on homework. But 29 school districts offered no such plans – St. Tammany officials did not respond to the state survey – and debate continues on just what is taking place in those districts and how students will be impacted.

Similar debates are happening in states and school districts around the country, The Washington Post reports, as educators ponder how to make up for lost time and the damaging effects it could have on students. 

Some experts suggest holding back more kids, a controversial idea, while others propose a half-grade step-up for some students, an unconventional one. A national teachers union is proposing a massive national summer school program. … The ideas being considered will require political will and logistical savvy, and they are already facing resistance from teachers and parents. They’ll also require money, and lots of it, at a time when a cratering economy is devastating state and local budgets, with plunging tax collections and rising costs.


Coronavirus shines a harsh light on inequity
The coronavirus pandemic has given new exposure to racial and social inequities, both in health and in access to savings and worker protections. Before the pandemic, America was an outlier among wealthy nations for its limited protections for the financially vulnerable. And while the federal government has responded to the acute crisis of the pandemic with unprecedented financial relief for Americans, this relief is temporary. The Associated Press’s Paul Wiseman reports on how the harsh light the coronavirus has shined on America’s inequities could lead to lasting remedies:

“Maybe there will be a cultural shift,” Elise Gould, senior economist at the progressive Economic Policy Institute. “I see it as a great opening to try to (provide) those labor protections that low-wage workers didn’t have before.” Gould notes that the government’s suddenly expanded role now in distributing relief checks, expanding health benefits and sick leave and supplementing state unemployment aid would make it easier to extend such programs even after a recession has ended. Doing so could have the longer-term effect of reducing financial inequities. 

Why the South is suffering more

The South is poised to suffer more deaths and economic loss from the coronavirus pandemic than any other region in the country. High poverty rates, lack of social welfare programs and shabby health care infrastructure are contributing factors, as are historical racial injustices. Stateline’s Christine Vestal analyzes the myriad of factors contributing to the South’s disproportionate misery. 

“You really have this tragic mix in the South of populations who are at increased risk for acquiring coronavirus infections because of their socioeconomic and health status, combined with urban neighborhoods and rural communities without the health care infrastructure needed to protect people,” Heiman said. “That’s all combined with the highest uninsured rates in the country.”

Number of the Day
$147.1 million  – Amount of money Louisiana public colleges and universities are receiving as part of the federal coronavirus stimulus bill. (Source: The Advocate)