May 21st 2020

By Josh Israel

American Independent Foundation

Senate Majority Leader Mitch McConnell is blocking a key coronavirus relief bill that would provide billions in aid to his home state of Kentucky, which has experienced massive revenue loss due to the pandemic.

The Health and Economic Recovery Omnibus Emergency Solutions (HEROES) Act would provide more than $7 billion to help Kentucky’s struggling state and local governments. But McConnell has vowed to block the bill from even coming up for a vote.

The $3 trillion-plus legislation, which includes nearly a trillion in direct aid to state and local governments, passed the House of Representatives on Friday on a mostly party-line vote.

McConnell has already ridiculed the emergency bill as “not serious” and declared it “dead on arrival” in the Senate.

“This week, [House Speaker Nancy Pelosi] published an 1,800-page seasonal catalog of left-wing oddities and called it a coronavirus relief bill,” McConnell said in a May 14 press release. “This is a totally unserious effort. Even the mainstream media says, quote, ‘neither this bill nor anything resembling it will ever become law. It’s a Democratic wish list.'”

McConnell also vowed previously to oppose direct aid for the states, dismissing the idea as “Blue State bailouts,” and suggested broke states consider filing for bankruptcy, which they are not legally allowed to do.

But it is not just Democratic-controlled states that are hurting. With more than 33 million Americans newly unemployed since the start of the pandemic, payroll tax revenue is down across the country. And, according to Fitch Ratings data released last week, Kentucky now has the highest unemployment rate in the country, above 36%.

Analysis from the National League of Cities, published by Bloomberg last week, predicted that cities in Kentucky will face the second steepest revenue losses through 2022 of any state in the country due to the pandemic’s economic impact.

The Kentucky League of Cities warned in a May 7 news release that the state’s municipalities were “facing an estimated collective budget shortfall of $85 million in Fiscal Year 2020 as a result of lost tax, utility, and other revenues due to COVID-19.”

“Four in 10 municipalities will cut public services, while nearly one-third will lay-off employees. More than 20 percent of these cities will increase taxes, borrow debt, or increase fees before the end of the fiscal year,” the group stated. “Nearly as many will furlough employees or take other actions, such as freezing hiring and/or delaying public works projects. Seven percent will close facilities, such as public pools.”

In an email, league executive director and CEO J.D. Chaney said that while the HEROES Act “contains many unrelated components than the more important issue for cities, we hope the funding elements of the bill will continue to spur conversation in Washington on the need for direct federal aid to local governments.”

Without congressional action, he predicted, cities “of all sizes face the very real threat of reducing city payroll and vital services.”

Anna Baumann, deputy director of the Kentucky Center for Economic Policy, agreed.

Kentucky has “never seen revenue declines like what we’re dealing with,” she said. Without federal help, “cuts will harm education, health, infrastructure, parks, our court system, and so much more.”

Adequate federal relief “would keep us from furloughing and laying off teachers, social workers and firefighters, from cutting public health, infrastructure, environmental protection, higher education and other critical services, and from making this crisis even more painful, long and deep than it has to be,” she added.

“It will be the difference between having the basic building blocks of our economy to return to once this pandemic is over, or struggling for a very long time to be able to educate our kids, invest in healthy families and strengthen our communities.”

Not everyone’s outlook is as concerning, of course. Mayors Bruce Wilkerson of Bowling Green and Tom Watson of Owensboro say their towns are in relatively good shape, despite the crisis.

Bowling Green is a “financially stable municipal government” and does not plan to “borrow funds, nor count on any other government entity to make up our shortfall,” Wilkerson wrote in an email. “This is what we do and do well; manage our finances. The people of Bowling Green know that we will prioritize public safety, then public works.”

He said any reductions would likely “come from capital improvements, and maybe delaying replacement of some vacant positions.”

With a diverse economy, lack of furloughed workers, and record of conservative spending, Owensboro is also “in very good shape,” Watson said in a phone interview. “Our county judge [executive] likes to say: ‘We’ve got money in the bank and we’re paying our bills.'”

Still, Watson noted that many other Kentucky communities are not so fortunate. “We’re in really good shape comparatively speaking to what I’m hearing from other cities. Most were in bad shape before this thing hit, always just barely making their contribution to the pension [fund] and barely] being able to hire public safety, police, and fire. It would always seem like it would come around just enough to keep them going to the next year.”

One such struggling city is Louisville, though its congressman, House Budget Committee Chair John Yarmuth, says it is not to blame for the crisis.

“Louisville did nothing wrong and had been experiencing an economic boom and that was great — that has all gone away,” he told reporters earlier this month.

Ashley Sims is president of AFSCME Local 3425 representing hundreds of Louisville’s public library workers. In a phone interview, she said that, last year, the city faced a budget shortfall and narrowly avoided massive library layoffs.

“That was 2019. I thought that was the scariest situation we could be facing,” she recalled. “A year later, I’m sitting here going ‘Oh my God. Our city has such a deficit.’ Most of our taxes come from payroll. No one’s getting paid because no one is at work. They’re laid off or furloughed.”

She continued, “Looking at what Louisville is facing, I don’t think it’s really hyperbole to say ‘If we don’t get this money, we might not have a library system next year, or one that looks anything like what it did last year.’ Our mayor is unfortunately looking at cutting services like EMT and fire. I know when they’re cutting firefighters and EMTs, there is no library system.”

Sims said McConnell’s lack of concern for her community has been a gut punch.

“For him to stay we should just let the states go bankrupt — that McConnell could say something so terrible about his own state, his own city,” she said, “it was quite shocking to hear what a lot of people felt was an abandonment of his own state for [Donald] Trump’s agenda.”

McConnell’s office did not respond to a request for comment for this article.

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