Lawmakers advance small business relief bill without extra cash for states

By: - April 22, 2020 1:00 am

The U.S. Capitol Building. Photo by Samuel Corum/Getty Images.

WASHINGTON — The U.S. Senate on Tuesday cleared an “interim” COVID-19 relief package that includes billions of dollars for small businesses, hospitals and testing, but no additional funds for state and local governments.

The nearly $500 billion package passed by unanimous consent Tuesday afternoon.

The U.S. House is expected to reconvene on Thursday to vote on the measure — although it’s unclear how many lawmakers will return to Washington — and President Donald Trump tweeted Tuesday that he will sign it.

The bill includes more than $300 billion to replenish the Paycheck Protection Program, a fund created last month to help small businesses stay afloat amid stay-at-home orders. It also includes $60 billion for emergency disaster loans and grants and roughly $100 billion in health-related funding.

“This is a significant package,” Senate Majority Leader Mitch McConnell (R-Ky.) said on the Senate floor Tuesday. He pointed to a focus on community banks and credit unions and said farmers and ranchers will be eligible for the disaster loan program.

Senate Minority Leader Chuck Schumer (D-N.Y.) called the bill “significantly better and broader” than the smaller “interim” proposal Republicans offered earlier this month. Democrats opposed that version because they wanted it to include more funding for hospitals, testing, and state and local governments.

The contours of the package came together after harried negotiations on Capitol Hill.

Congress set aside $349 billion for the Paycheck Protection Program in a $2.2 trillion relief package approved last month. But the fund, intended to shore up small businesses, was quickly depleted as firms — including some large corporations — sought emergency aid.

Access to funds has not been proportional across states; businesses in the West and Midwest have received a higher share of loans than those in other parts of the country, according to Time Magazine.

McConnell tried earlier this month to pass a “clean” bill that would inject $250 billion into the program before moving on to a larger stimulus package.

But Democrats pushed for money for hospitals and state and local governments and protections for “the underbanked small businesses” and others who were struggling to access loans.

Negotiators reached a final deal Tuesday, agreeing to far more for the small business loan program than Republicans initially sought. The package also includes $75 billion to support hospitals and frontline workers, and $25 billion for state-led COVID-19 testing plans and for federal health agencies. It also reserves funding for underserved businesses, such as those owned by women and minorities and in rural areas.

“Testing is the key that opens the door to our economy,” House Speaker Nancy Pelosi (D-Calif.) told CNN Monday. She said Trump has resisted funding for more widespread testing because he fears political ramifications from higher numbers of people who test positive for the virus.

On Tuesday, the Centers for Disease Control & Prevention cited nearly 750,000 confirmed and presumptive positive coronavirus cases in the United States and nearly 40,000 deaths. Cases have been reported in all 50 states, the District of Columbia, and U.S. territories.

‘We need to prime the pump’

Left out of the package is $150 billion Democrats wanted for state and local governments.

The Congressional Black Caucus also raised concerns about lack of funding to address health care disparities. “Without targeted specifications in the bill, it is unlikely that funding will benefit those that have been impacted the most: Black America.”

Trump tweeted Tuesday that he will push for state and local funding in the next round of coronavirus legislation, as well as for investments in infrastructure and tax incentives and payroll tax cuts.

Earlier this week, a bipartisan pair of senators unveiled a proposal that would create a $500 billion “stabilization fund” for cities and states with more than 50,000 people. It would divide the money into three equal tranches — one that would allocate funds by population, another by infection rate and a third by revenue losses.

Under the plan, all states and the District of Columbia would receive at least $1.25 billion, and the money could be used to address revenue losses.

It comes in response to a recent plea for help from the National Governors Association.

The $2.2 trillion relief package that passed in March set aside $150 billion to help cities respond to the pandemic, but it only applies to those with more than 500,000 people and doesn’t allow officials to use the funds to plug budget shortfalls.

Sens. Bob Menendez (D-N.J.) and Bill Cassidy (R-La.) told reporters Monday they will introduce the legislation when the Senate reconvenes.

State and local governments are struggling to address the health crisis and, at the same time, pay teachers, first responders, trash collectors and others who provide essential services at a time when revenues have dwindled.

“The tax base has been destroyed,” Cassidy said. “We need to prime the pump so that basic municipal services can be in place.”

The senators — who represent two states that have been hit hard by the virus — said they expect colleagues to support the deal.

In response to the last major economic crisis — the Great Recession of 2008 — Congress approved a $54 billion “fiscal stabilization fund” that was to be shared with local governments, according to Politico. It was part of a $787 billion stimulus package that was enacted in 2009.

Schumer and Pelosi called for a much bigger coronavirus relief package in the coming weeks.

“Democrats are disappointed that the Administration has not agreed to more funding for state, tribal and local governments on the front lines of this crisis who desperately need an infusion of funds to pay the essential workers who keep us safe,” they said in a joint statement on Tuesday.

They welcomed Trump’s commitment to state and local funding in the next measure and said they would “work with urgency to see that this commitment is fulfilled. Our lives and well-being are threatened if our health care, police, fire, EMS, transportation, teachers and other vital workers do not have the support that they need, and we will hold the Administration accountable to their promise.”

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Allison Stevens
Allison Stevens

Allison Stevens is a Washington D.C. reporter for States Newsroom, a network of state-based nonprofit news outlets that includes the Ohio Capital Journal.