Massive layoffs and pay cuts are likely coming to state and local governments as federal aid goes elsewhere

WASHINGTON — State and local governments are warning of a wave of layoffs and pay cuts after getting left out of the federal coronavirus relief package expected to pass Congress this week.

In many places, those painful reductions are already taking shape:

• Los Angeles plans to force city workers to spend 26 days on unpaid leave as revenues are forecast to drop as much as $600 million next fiscal year.
• Detroit has proposed laying off 200 workers and furloughing thousands more.
• In Ohio’s Hamilton County, Commissioner Denise Driehaus is taking a 10% pay cut alongside county workers.

“We are really struggling,” Driehaus said.

The $2.2 trillion emergency legislation known as the CARES Act, which President Donald Trump signed late last month, included $150 billion in direct help for state and local governments grappling with the impact of the deadly outbreak. Democrats pushed to include another $150 billion in the next tranche of aid, but Republicans sought to keep the bill narrowly focused on support for small business.

By Tuesday night, Democrats yielded on their demand. The Senate passed the legislation by unanimous consent — without additional help for state and local governments. The House is slated to vote Thursday, and Trump is expected to sign it.

Senate Minority Leader Chuck Schumer vowed to revisit the issue in the coming round of negotiations over what could be an even bigger package of relief.

“The people who are on the front lines, they should get extra money, and at the top of the list is a robust state and local plan,” Schumer said. “We’re going to fight for that and many more things” in the next aid bill. It “will soon be upon us because the nation will demand it.”

But local jurisdictions may not be able to wait that long. They’re facing higher expenditures on health care and other services to combat the disease at the same time that revenues are plunging as Americans stay home and businesses remain shuttered. According to the Center on Budget and Policy Priorities, states could be $500 billion in the hole over the next two years.

“The approaching state budget cuts … will cause the U.S. economy to contract further — making the economic downturn deeper and more protracted, causing many more people to lose their jobs, and magnifying the serious hardship we already see,” said Robert Greenstein, the think tank’s president.

Roughly 20 million people work in the public sector at the state and local level, which is more than the number employed in the hard-hit retail industry. The last time the public sector faced such steep budget cuts was during the Great Recession a decade ago. State and local governments shed 627,000 jobs in the three years following the downturn, according to the Economic Policy Institute.

Experts are worried this time could be even worse, but plugging the hole could require a staggering infusion of cash, which the union representing public sector workers readily acknowledges. The American Federation of State, County and Municipal Employees is pushing for at least $700 billion in the next relief package.

Article source: https://www.cnbc.com/2020/04/22/coronavirus-relief-bill-layoffs-coming-to-state-local-governments.html