Congressman Wants to Restore Nixon-Era State and Local Aid Program

April 30, 2020by David Lerman, CQ-Roll Call (TNS)
Congressman Wants to Restore Nixon-Era State and Local Aid Program

WASHINGTON — House Ways and Means Chairman Richard E. Neal said he wants to go back to the future in the next round of coronavirus relief aid.

The Massachusetts Democrat told the nation’s mayors Wednesday that he would try to resurrect a federal revenue-sharing program for cities and states that was popular in the 1970s and 1980s. The initiative would be part of a Democratic push to help states and local governments that are bleeding from lost revenue during the economic shutdown.

“We are going to insist, on our side, this package include direct assistance to all of you,” Neal told the U.S. Conference of Mayors in a video teleconference that was streamed live on Facebook.

“I’ve even suggested, you should know, we contemplate returning to a grant initiative that fell by the wayside in the 1980s called revenue sharing to help you with getting through these challenging moments,” he said.

While he offered no details, Neal said a proposal could be unveiled “in the next few days, certainly within the next week.”

A program known as general revenue sharing, which offered largely unconditional grants to states and local governments, began under the Nixon administration in 1972 and was extended several times as its popularity grew. A Neal aide confirmed the congressman was considering trying to revive some form of that program, among other ways to help states and cities.

By the time it expired in 1986, the program had transferred about $83 billion from the federal government to state and local governments, according to the Congressional Research Service. That level of assistance would equate to about $313 billion over 15 years in 2008 dollars, the CRS calculated in a 2009 report.

Money was distributed by a formula that considered a locality’s population, per capita income, taxing ability and tax collection efforts. The program was designed to help ease state and local budget shortfalls, while giving local officials greater say in how federal money should be used, the CRS said.

“Revenue-sharing was a success from the beginning,” a New York Times editorial said in October 1986, as the program ended amid mounting federal budget woes. “Big cities got a boost and small-town America could for the first time count on direct aid from Washington. There were no strings on how the money could be used, and the oversight requirements were simple.”

But the CRS cautioned that the effectiveness of a resurrected program wouldn’t be guaranteed. The agency studied the issue in 2009 as Congress considered its options for responding to the 2007-09 Great Recession. Revenue-sharing grants, it said, “may be subject to two time lags, thus increasing the potential for mistimed fiscal policy.”

It’s not clear how long it would take Congress to agree on a distribution formula, which can raise a host of fairness questions. Basing grants solely on need, for example, means that “states that may have been more fiscally responsible would receive less, possibly violating the fairness criterion,” the CRS said.

Neal said he was inclined to adopt guidelines used in the existing Community Development Block Grant program, which provides grants for low-income housing and economic development projects.

It’s also not clear how quickly grants could get to state and local governments to ease their current budget shortfalls, the CRS said. Grants that take months to deliver may prove useless for the current fiscal year, for example.

Governors have been clamoring for federal relief of as much as $500 billion to make up for revenue losses. Cities and counties have asked for about $250 billion — a request reiterated to Neal in the videoconference Wednesday.

“There will not be an economic recovery if our states and our cities were bankrupt,” said Pittsburgh Mayor Bill Peduto, a Democrat. Recalling the steel industry collapse that devastated his city in the 1970s and 1980s, he called for federal help to come quickly. “It took 30 years for us to dig out of that hole,” Peduto said.

Congress provided $150 billion in state and local aid as part of a $2 trillion relief package enacted last month. Speaker Nancy Pelosi suggested Wednesday that the next round of aid could be far more expansive.

The aid last month went to states as well as counties and other local jurisdictions with more than 500,000 residents — a formula that left many smaller cities and counties feeling neglected.

Pelosi and Senate Minority Leader Charles E. Schumer later proposed another $150 billion in negotiations over the more recent aid bill for small businesses and health care providers. About $53.6 billion of the funding for localities would be distributed based on the CDBG program that Neal cited.

That proposal, which wasn’t included in the final bill because of GOP objections, would have delivered about $37.5 billion of the local money to cities with more than 50,000 residents and urban counties with at least 200,000 residents. Less populous localities would have received about $16 billion.

Pelosi said at a Wednesday news conference that she now envisions two or three separate pots of money to target states, counties and municipalities. “And we can take it all the way down, we’re thinking to 10,000 and fewer,” she said of local population sizes.

———

Katherine Tully-McManus contributed to this report.

———

©2020 CQ-Roll Call, Inc., All Rights Reserved

Distributed by Tribune Content Agency, LLC.

A+
a-
  • Congress
  • Richard Neal
  • state and local aid
  • In The News

    Health

    Voting

    Congress

    March 27, 2024
    by TWN Staff
    Rep. Cleaver New Co-Chair of House Renewable Energy and Energy Efficiency Caucus

    WASHINGTON — Rep. Emanuel Cleaver II, D-Mo., is the new Democratic co-chair of the House Renewable Energy and Energy Efficiency... Read More

    WASHINGTON — Rep. Emanuel Cleaver II, D-Mo., is the new Democratic co-chair of the House Renewable Energy and Energy Efficiency Caucus. He was invited to serve as co-chair by Sens. Jack Reed, D-R.I., and Mike Crapo, R-Idaho, the co-chairs of the Senate Renewable Energy and Energy... Read More

    March 27, 2024
    by Dan McCue
    New Dem Chair Kuster Announces Retirement Following 2024 Election

    CONCORD, N.H. — Rep. Annie Kuster, D-N.H., who, among other things, is the current chair of the New Democrat Coalition... Read More

    CONCORD, N.H. — Rep. Annie Kuster, D-N.H., who, among other things, is the current chair of the New Democrat Coalition in the House, revealed Wednesday that she will not seek reelection to Congress this year. In a lengthy statement released by her office, Kuster gives no... Read More

    March 25, 2024
    by Dan McCue
    CPAC Releases Ranking of Most Conservative Members of Congress

    WASHINGTON — The Conservative Political Action Conference, also known as CPAC, on Monday released its annual ranking of members of... Read More

    WASHINGTON — The Conservative Political Action Conference, also known as CPAC, on Monday released its annual ranking of members of the House and Senate based on their conservative bona fides or lack thereof. To produce this year’s scorecard, the CPAC foundation’s Center for Legislative Accountability analyzed... Read More

    March 22, 2024
    by Dan McCue
    After a Decade on Capitol Hill, Brad Howard Steps Out on His Own

    WASHINGTON — After a decade on Capitol Hill, most recently as chief of staff for former Rep. Stephanie Murphy, D-Fla.,... Read More

    WASHINGTON — After a decade on Capitol Hill, most recently as chief of staff for former Rep. Stephanie Murphy, D-Fla., and communications director of the Blue Dog Coalition, Brad Howard knew it was time for change. “It was time to move into the private sector,” he... Read More

    March 22, 2024
    by Dan McCue
    Greene Files Motion to Vacate Speaker’s Chair

    WASHINGTON — For the second time in five months, a member of the Republican Conference in the House has filed... Read More

    WASHINGTON — For the second time in five months, a member of the Republican Conference in the House has filed a motion to vacate the chair of the party’s speaker. But this time, Rep. Marjorie Taylor Greene, R-Ga., says the motion is intended merely as a... Read More

    March 22, 2024
    by Dan McCue
    Gallagher to Leave Congress April 19

    WASHINGTON — Rep. Mike Gallagher, R-Wis., who already announced he would not seek reelection, surprised many on Capitol Hill on... Read More

    WASHINGTON — Rep. Mike Gallagher, R-Wis., who already announced he would not seek reelection, surprised many on Capitol Hill on Friday by announcing he plans to leave April 19, several months before his current term is up. Gallagher’s impending departure will further shrink the razor-thin Republican... Read More

    News From The Well
    scroll top