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State And Local Governments Argue Over Whether Relief Money Is Too Much Or Too Little


Federal pandemic relief is sometimes compared to a bridge to help struggling families and businesses get to the other side of the crisis. Now, as Congress weighs adding new planks to that bridge, some are questioning how wide the chasm really is. The House is expected to vote tomorrow on President Biden's $1.9 trillion rescue package. NPR's Scott Horsley reports on one of the more contentious elements in that plan.

SCOTT HORSLEY, BYLINE: President Biden's rescue package includes nearly $350 billion to help governors and mayors fill the holes the pandemic has left in their budgets. But after meeting with Biden earlier this month, Arkansas Governor Asa Hutchinson said, no, thanks.

ASA HUTCHINSON: It's too high. It needs to be lower.

HORSLEY: Hutchinson, a Republican and vice chair of the National Governors Association, says his state has already patched its pandemic budget gap and doesn't need as much additional help as Biden's plan is offering.

HUTCHINSON: We lowered our budget 5% because of the pandemic, and we have recovered from that because we kept our businesses operating. Our economy's moving. We're creating jobs, and we have a surplus right now.

HORSLEY: Nationwide, the pandemic's toll on state tax collections has been a lot smaller than many people feared last spring. JPMorgan says by the end of 2020, state tax revenues were down only about one-tenth of 1% from what they had been before the pandemic.

MARC GOLDWEIN: On average, state revenue has mostly recovered. And the key reason for that is that income has mostly recovered.

HORSLEY: Marc Goldwein of the Committee for a Responsible Federal Budget says that's especially true for upper-income workers, who've generally managed to keep working and who pay the lion's share of state taxes. Goldwein admits, though, there's a lot of variation around the country, and it doesn't break neatly along party lines. Tourism and oil prices both took a beating during the pandemic, so states that rely heavily on those industries suffered a much bigger blow.

GOLDWEIN: States like Nevada and Hawaii and Alaska and Texas are not doing very well. States like California have a $25 billion surplus. Idaho has had the fastest revenue growth it's seen in years. So there really are big differences between the states.

HORSLEY: While state revenues on balance have fared better than many people expected, though, that's only part of the story. State and local governments are also facing unexpected expenses, including tens of billions of dollars in added costs for Medicaid. Michael Leachman of the Center on Budget and Policy Priorities says some states are also providing direct assistance to struggling families and businesses.

MICHAEL LEACHMAN: Many families are having trouble getting food on the table. More than a third of adults who are renting are having trouble paying the rent. That adds up to costs to states and localities to help those people and businesses make it through and get back on their feet.

HORSLEY: Republican Mayor Jeff Williams of Arlington, Texas, says his city is spending $400,000 a week to support local vaccination efforts, even as it's preparing for a likely drop in property taxes.

JEFF WILLIAMS: Many cities rely on property tax revenue. We haven't even experienced that yet because the appraisals are going on right now. And many of our commercial businesses - the values have really gone down. So we are bracing for another 10% hit. And then we don't know.

HORSLEY: City and state governments have already cut about 1.3 million jobs in the last year. About half those jobs are in local education, some of which could be restored as schools reopen. But Leachman says state and local government layoffs are still almost twice as high as they were during the last recession.

LEACHMAN: After the last recession, we made a big mistake. Federal government provided some aid to states and localities, but it was far too little, and it ended much too soon.

HORSLEY: Leachman says that's one reason it took so long to recover from the last recession. Biden, who was vice president at the time, doesn't want to make that mistake again.

Scott Horsley, NPR News, Washington. Transcript provided by NPR, Copyright NPR.

Scott Horsley is NPR's Chief Economics Correspondent. He reports on ups and downs in the national economy as well as fault lines between booming and busting communities.