The biggest debate in Congress right now is what provisions end up in the next stimulus bill.  Senate Republicans want to end the increase in unemployment insurance payouts, which in some cases paid employees more during their time unemployed than they made while working.  House Democrats want to avoid business immunity from Coronavirus-related employee lawsuits.  One area both parties are at least exploring: further financial support for ravaged state budgets.

Covid Causing State Budget Collapse

To say state budgets were decimated by the Coronavirus understates the impact.  Decimate traditionally meant to destroy 10% of something; the impact of the Coronavirus pandemic exceeds that in many states.  The governor of Georgia has mandated 14% budget cuts for every agency, and in many cases that means furloughing agency employees next year.  New York also projects a 14% budget shortfall, and is cutting much of it from the money it provides to towns and cities – effectively pushing the problem downstream.

Budget cuts this significant are going to affect state employees in nearly every state.  California’s governor has proposed a 10% pay cut for state employees, although the details are currently being worked out through union negotiations.  Pay raises scheduled for July, of course, are also wiped out.  In Michigan, more than 31,000 employees face three day workweeks from now through July.  And public schools and universities across the country are preparing for painful budget cuts with plans to furlough or lay off employees and keep unfilled positions vacant indefinitely.

Most federal legislators are predicting passage of the next (and possibly final) major Coronavirus-related stimulus bill by early August.  How much aid states get may ultimately come down to the amount of pressure received by legislators reluctant to dig the US into a larger debt hole, especially in the Senate.  As constituents learn what services will be reduced or eliminated in the coming fiscal year, shifting public opinion may force action.  Until then, governors and legislators will be making politically unsavory demands of their agency heads.  And no matter what they cut, citizens and public employees alike are going to feel the pain.

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