And extended Unemployment Benefits until january 2021. The heroes act will provide significantly more funding to cities and towns and also would clarify treasury guidance that currently prevents State Governments from using [indiscernible] alternative bills provide zero dollars to states, zero dollars for financial assistance, and clawed back hundreds of billions of dollars that could be used to support struggling businesses. In addition the president cut funding to states. The protestsike against racism and Police Brutality in the streets in many communities. Families across the country suffer [indiscernible] about the challenges their faces and the response needed from the federal government in this international crisis. I recognize the Ranking Member of the committee for four minutes. I think the chairwoman for yielding. Here we are again. We are having hearing about a bill the house passed four months ago that has no chance of becoming a law. The committee is being used to prioritize democrat priorities that arent going to become law. Gophe chairwoman wanted governors to attend she could have given us more than one witness that is provided for our witness to speak to the Economic Issues facing the State Governments and the relative position though State Governments are in. Not in ouris also community jurisdiction. If you want to appropriate money to that states theres no appropriations committee. We are the Financial Services committee. In our jurisdiction you have muchneeded lending that is being given to states through the Municipal Bond market and the Federal Reserve that is lending. Not spending. Is ai think we need reasonable compromise to support workers, Small Businesses, and make sure that we can get people back on their feet again, and make sure we have a better healthcare response and testing regime so we get our economy open and kids in school again. In the spring republicans and democrats had a great compromise in the cares act. We provided 2. 6 trillion in relief funds and approximately 1 trillion in direct and indirect state aid and locality aid. That bipartisanship was reflected in this committee. We had an understanding for thisngs we would keep brief so members could engage in have good questions, but today this is out of control because of how many witnesses we have. That is certainly the case, we are getting close to november, and things become less bipartisan and more, frankly, wacky around congress. Democrats are using this hearing to claim states are struggling, but it certainly isnt due to a lack of funding. Of the 150 billion in direct aid provided for by the cares states hadune 30 only used 25 of their distribution. Republicans believe any Additional Support should be based on data and directly related to covid. To date, states have yet to identify how they are using money and where additional funding to address covid may be needed. We should all agree that one of the best ways to support state and local governments during this pandemic is through strong economies,ocality and economies in those communities. The way to create stronger economies is by supporting local businesses and of the employees of those businesses. Thriving Small Businesses generate revenue that contributes to state and local tax bases. When people are working they can support their local eState Governments. Unfortunately democrats partisanship prevents Small Businesses from accessing that support right now. I want to begin and end where we asuld all begin this year chairman jay powell said in june, i the job market is probably the best single thing the fed can do to support gains by all low and moderate income communities, and particularly for minority communities heavily representative of these groups. Everything were doing this to try to get the labor market back to where it was in february. We should take that approach. To askte members time for money. Their bigger issues we should be focused on in getting people and, kids back in school, our economy back open. I yield back. Thank you, very much. [indiscernible] i now recognize the chair of the subcommittee on security [indiscernible] thank you, madam chair. In. Pe im have i gotten in . My own mute . I on mute . Youre doing great. Hear you. Can madam chair, im in kansas city where i served two terms as mayor, and i know the city and its systems quite well. I can say with absolute certainty kansas city, like many other cities is experiencing unprecedented stress during this pandemic. Every municipality and county in the nation are being financially revenues andd from exploding expenditures. Ant take my word for it, im democrat and a methodist, but the conservative American Enterprise institute on tv released a report saying while revenues have declined for the First Time Since the Great Depression, and i quote, the worst is yet to come. There have been a lot of discussions about defunding the police. If we dont get this bill funded we will be defunding the police and the Fire Departments around the country. Thank you. Thank you. I knelt recognize the gentleman from minnesota for one minute. The Ranking Member mentioned the bipartisan work of the cares act provided trillions in immediate and longterm assistance to First Responders, educators, and Small Business owners. It is because of congress in this administrations quick actions our economy has begun to regain its footing. Use these individuals as ponds to justify billions in new spending is uncalled for. Especially as states like mine have yet to use millions in relief money given to them. We worked on several occasions that help minnesotans. Since you chose to appear before this committee on the eve of another emergency extension of information they need to drive our economic ourback, instead of digging children and grandchildren deeper in debt. I look forward to everyones testimony today. Thank you, very much. Welcome our distinguished panel of witnesses. Thehonorable laura kelly, governor of kansas. She was elected to the Kansas Senate in 2004 serving as Ranking Member of the ways and Means Committee in 2007 throughout the Great Recession until her election as governor. Guerrero. Ble lou leon after a career in the Health Sector she would serve for 10 wass in the legislature, the ceo, president , and chairwoman of the bank of guam. Governor, is so good to see you. Thank you for being here. The honorable Michelle Lujan grisham, the governor of new mexico. She previously represented new mexico in the u. S. House of representatives and served as cabinet secretary of new mexicos department of health. Good to see you. The honorable tim walz the a veteranf minnesota, of the Minnesota National guard and a former High School Teacher and coach Estate High School football champion. He also representing minnesota in this house for over 10 years also represented minnesota in this house for 10 years. 2003 to 2009. He served in the george h w bush. Dministration without objection your written statements will be submitted for the record. Each of you will have five minutes to summarize your testimony. The timer will go off at the end of your time. I would ask you to wrap up your testimony. Governor kelly, you recognized for five minutes you are recognized for five minutes to begin your oral testimony. [no audio] governor kelly . One day i will get this. Let me begin again. I am laura kelly, governor of kansas. Thank you for the invitation to testify on behalf of my state regarding our need for federal aid as we overcome the unprecedented challenges brought forth by covid19. We have seen record numbers of weekly unemployment claims which overwhelmed our department of labors antiquated computer system. At times we struggle to access personal protective equipment for our healthcare workers and adequately test our population for covid19. Our Small Businesses have suffered. Many have been unable to make up for lost revenue, were forced to furlough employees, or shut their doors completely. Through all of these challenges, my administration has worked to keep kansas families safe and healthy. I would like to thank congresswoman davids for being a advocate for cancer small introducing education requiring transparency around relief funds to make sure they are getting to small kansas businesses. However, we will need significantly more support from our federal partners to protect our institutions from drastic, damaging cuts. Kansas is uniquely suited to address a looming budget crisis in these unprecedented times because we have already overcome one this decade. Albeit selfinflicted rather than an act of god. In 2012 my predecessor signed into law one of the most are coney and tax cuts in our states taxne of the most draconian cuts in our States History. I watched in dismay as other states recovered and grew in the wake of the 2008 recession, all kansas moved backward. State revenues plummeted by 900 million, School Funding was drastically cut, Infrastructure Spending was cut and critical spending for medicaid, temporary assistance for families, and foster care were gutted. Kansas bond rating was downgraded twice. Highway and healthcare funds were robbed. There are so many more examples, but the bottom line is years of austerity hurt our Business Owners, farmers, children, andhers, essential workers, families. Before the pandemic my ministrations budget was crafted to get kansas back on sound financial footing, a process we expected to take years of responsible governance. We have prioritized rebuilding our states fiscal foundation, reestablished Economic Development tools within our departments commerce, critical in ensuring kansas can compete on a global scale. We have a historic 10 year fullyortation plan, funded education for the first time in years. In 2017 a Bipartisan Group of legislators came together to undo the tax cuts implemented in 2012 and began the uphill climb of closing the budget deficit. Ship weere righting the were hit with the worst Public Health pandemic in history. This is different and a fix is not as simple as tightening our belt buckle. That cuttingand local and State Government funding will hamstring states ability to fight the pandemic and leave us more vulnerable to future crises. Severe budget cuts dont create small government. They create failed government. Governments that cannot provide the essential services and investments this country was upon. Good schools, stable infrastructure, a solid social safety net, and a robust economy. I had a front row seat to the worst budget crisis in our States History, and i know it hit the most vulnerable among us the hardest. We need continued investments at the local and state level to allow for decisions that best respond to individual community needs. We need support for Strategic Investments to stop the spread of the virus, and hence states ability to respond, protect our schools and provide needed economic assistance to Small Businesses. We need the federal government to support states and support kansans who are struggling. Coherent, topdown strategy that will reassure businesses and americans that our government has a plan to keep our economy stable until a vaccine is available. I thank you for the opportunity to speak with you this morning and look forward to questions. Chairwoman waters you are recognized for five minutes to present your oral testimony. Thank you. Ranking member mckenzie, vice chairman nicholas, and members of the committee, hello from the people of guam. Thank you for this virtual opportunity to appear before you. Throughout guams history, the sense of the nation has been strategic precision in the western pacific. From Anderson Air Force base and naval base guam, america is able to project power or humanitarian assistance at a moments nose notice. Indeed, guam is no stranger to the impact of global conflict or the unity of that must rise to meet it. Prior to the pandemic, guams Tourism Industry was our economic cornerstone, breaking the star and records among nearly on a nearly monthly basis. 88 of guams visitors came from south korea and japan. That number is now zero. Precovid19, guams unemployment barely rose to 4 . Now nearly half of all private sector employees qualify for the pandemic unemployment assistance and federal pandemic Unemployment Compensation programs in this congress. Madam chair, i think you and your colleagues for guams inclusion in these mode in these programs. Your actions help people you may never meet and in ways he may never know. Continuelly, while we the spread of covid19 from march through june, are positive case numbers rose as our economy reopened. Two contain that community spread, i issued a second stayathome order that remains in effect today. Now, government revenue has risen up in fiscal year 2019 to cut our deficit in half. Dacey a 7. 2 decline in fiscal year 2021. This means dangerous cuts to guams Public Health, drastic cuts to Public Safety, and potentially severe cuts to education. This story is being told in every state and territory throughout the country and it is why bold congressional action is required. Congress took serious bipartisan steps forward early in the pandemic. But these are temporary economic backstops to the already that are already beginning to stay. We are good stewards to the aid we have received. We have worked to follow all federal guidance in relation to federal money. At every juncture, we have tried too much earnestness with speed, trying to never stop on the sides. Accordingly, we welcome the review by guams office of public accountability, other independent viewers, and our federal partners. As you act in the we ahead in the weeks ahead, i ask you treat your fellow citizens in our nations territory with continued fairness. One, we are included equitably in every federal relief package. Two, that this package contains direct unemployment assistance to guam and the territory and removes any cost share during this recession caused by the pandemic. Three, the direct aid to Small Businesses be a central component of any relief package ownersith rental and assistance. Four, that a program be created to provide assistance to jurisdictions whose economies rely primarily on tourism. Andfive, that states territories be allow the flexibility to use funds for budget shortfall. While these steps will help guam, we also know that existing problems require new policy solutions to enable us to make a real economic progress. This includes addressing federal coverage of the 60 million in annual earned income tax credit payments that comes directly from guams coffer. And an h to be policy that recognizes guam civilian construction demand. Finally, im supportive of securing eligibility for guam to participate in the Municipal LiquidityFacility Program as a net. Y in april, i wrote the federal receipt Federal Reserve chairman powell, secretary mnuchin, and another to request guam inclusion in the program. I am certainly pleased to hear this request is now being considered. It has been said that in times of great conflict or struggle, we see the individual american states and territories. We can now become the United States of america. Thank you. Thank you waters very much, governor. Thatld like you to know the successes that you have been able to realize are all because of your representatives. I want you to know your congressional representative here has done a fabulous job in recognizing your territory. Thank you very much. Next we will hear from governor Lujan Grisham, you are now recognized for five minutes to present your oral testimony. Governor grisham thank you. Good morning honorable chairwoman waters. Lovely to see you again. Ranking member mchenry. And our other kids other distinguished committee members. I thank you for the opportunity and the time. As you know, the pandemic has unleashed economic devastation in states all across the country. The wave of financial pain threatens to swamp states like new mexico despite our healthy fiscal posture prior to the arrival of covid19. We labored for years here to diversify our economy, strengthen our overall financial position, and improve our longterm budget outlook. Mostly that progress was undone in only a few short and brutal months and we face a long, difficult road back. Indeed, new mexico and other Energy Producing states have experienced not only pandemic related budget shortfalls but a collapse in the global oil market. These dual Economic Crises have created a revenue gap that threatens to swallow essential services that so many depend upon. Everything from education to Small Business support, Child Welfare to Health Care Services and more. The fiscal impact of the pandemic is threefold. We have already spent more than 400 million on direct covid19 costs, including the purchase of ppe and testing supplies. And those costs continue to mount. Statee indirect cost as agencies and businesses adapt to a covid positive world. These costs for k12 Public Schools alone totaled more than 520 million. And we face the exponential loss of revenue due to the economic downturn, which compounds the other two. These three expenses are tied together and we cannot emphasize one over another. Let me be clear. These are not static data points. The pandemic is ongoing. The storm is raging. And those dickies of physical damage are not dying down. In all, new mexico faces a nearly 20 decline in general Fund Revenues year over year. Shortfall is a line item in washington. But in new mexico, its the difference between healthy, well fed families and the alternative. For our current fiscal year and the next. Even with a record level of state revenue prudently sent aside and reserved, the fiscal crisis threatens to touch new mexicans in every corner of our state who rely on state programs and local level programs powered by federal funds. So many of whom have already struggled to find and maintain work. To provide for their children, and to stay safe from the virus. States like mine that have taken top and proactive measures to blunt the spread of covid19 must be able to use federal assistance to replace and back their lost revenues, or else make drastic, difficult cuts to essential services. Are effective lifesaving response to the pandemic cannot be left as a millstone around the next of new mexico workers, families, local governments, and Small Business owners who of already given and lost so much. Small Business Revenue in our state is down 21 this year. Many have furlough many are furloughed or laid off workers. Smallerl businesses are than the national average, meaning they cannot take on more debt. My administration in partnership with our state legislature has delivered more than 400 million for Small Business support, programs sustaining hundreds of jobs, and still there are businesses on workers needing more. We were one of the first seven states in the u. S. To operationalize every emergency unemployment funding stream made available, and we have delivered more than 2 billion in assistance. This has depleted our trust funds and we will need help in sustaining these lifelines. We all know, and i know, that tightening our belts in the coming months and years is critical. Have. Deed, we are ready these costcutting measures will not be enough to weather the storm. An umbrella is not enough protection in a hurricane. In the rubber will meet the road across states like mine where families, children and workers may be left without. States and government need more funding and flexibility. Already this year, new mexico has demonstrated how expeditiously we will use and provide funding to those who need it most. We need to expand the toolbox and fill it and refill it. The health and economic crisis battering new mexico in the hall tates require a a all hands on deck approach. Chairwoman waters thank you very much, governor Lujan Grisham. Muchmessage here today so we appreciate your message here today so much. We will ask governor walsh. You will be recognized for five minutes. Governor walsh chairwoman waters, ranking memory Ranking Member mchenry, thank you. Im tim walsh. Im the governor of minnesota. For many of you, im a former colleague. I want to thank you for the opportunity to speak about the critical needs and update you on where our state is at. I want to acknowledge my minnesota colleagues who are on this committee representing representative tom heller. The Paycheck Protection Program flex ability act or unique innovative advocacy around coronavirus, minnesota is lucky to have you serving on this committee. I want to address all of you, or complain. To ask im here humbly and deeply grateful for the work the c. A. R. E. S. Acted. Were think the to the administration for what it did. Like any good a budget, 92 of the money is allocated and obligated. We have to look at an open pandemic to deal with that. Please know we care and it made a difference. That is why we are here asking humbly that you continue this assistance that has made a difference, not just in the safety and the health of my constituents and fellow minnesotans, but help businesses get back on their feet. That is why we are asking in a bipartisan way from the National Governors association, as you negotiate, keep states in mind. In my state i came to this job 19 long months ago. At times, it feels like yesterday. At times, it feels like a lifetime. We worked together to invest in education, jobs, housing. We did it in a state with one of the few bipartisan split legislatures. We did it together. We were able to make that fiscal work. Line we were able to make sure we came together to get things done for the first time in 40 years. Of talkhere is a lot about poorly managed states wanting to balance the budget. Let me be very clear. Minnesotas house has been in good order because of bipartisan cooperation. After the volatile times of 2000, we went from deficits to surpluses. You dont have to take my word. The aaa to bond rating we get from the agencies tells us minnesota in february of 2020 was in strong control over revenues and spending that led left the state wellpositioned. We had a 1. 5 billion surplus. Then covid19 hit. Within a matter of step of months, we saw our financial situation decline. Literally in weeks, we went from a 1. 5 billion surplus, to a 2. 3 billion deficit. Now we are projected at over 4. 7 billion over the biennium. Minnesota entered the crisis in a strong manner. Low Unemployment Rate as low as 2. 9 . In a matter of weeks, we went to 7. 7 . Minnesota entered it this way entered this well. We had a welleducated workforce and a Diverse Economic base. We receive less federalaid than all but seven other states. This was not enough to insulate us from covid19. Im sure i speak for my fellow governors when i say we appreciate everything youve done. But we are not through this. Its not over. C. A. R. E. S. Act funding went to helping our School Districts prepare. We have Safe School Operations where many of our schools are back in person learning. Some are in hybrid and some because of the nature of the pandemic are in distant learning. Our children are being served. I went and delivered meals. Hascity of st. Pauls delivered 8 million meals making sure no child goes hungry. That is because of the work you did. Thats because of the assistance you gave to the state. That is what we are asking for until covid19 is over. We are going to continue to have that. We are at a critical juncture. For us to continue our Testing Program and robust Testing Program, make sure we could keep businesses up and running, when we have an infection at a meat plant, we can isolate and get folks back to work to make sure those good jobs continue and the food supply is there for the country. I have to tell you, these are challenging times. This has not pitted us against you. We are not complaining. I want to thank the committee for taking this up. This is truly an all of government, all of society approach. In the help you have given has saved lives. The help you have given opened up schools. The help you have given restarted businesses. The help that you have given has given us hope for the future. We are here today and i think i would speak for the other governors, we know that is coming to an end. And the pandemic and the virus does not care about our timeline. So we are asking you to prioritize the help you have given. We are asking you to continue to make smart investments. And we are asking you to work with us to make sure states are able to deliver those services. I thank you, chairwoman and Ranking Member and im glad to take any questions. Chairwoman waters im going to call on another governor. I apologize for the previous pronouncement of your name. You are now recognized for five minutes. Thank you, chairwoman waters and member mchenry, members of the committee, it is a privilege to be here today. Let me make three points and i look forward to answering your questions. That this is recession is different than anything the u. S. Has ever experienced. Sentry recessions were income driven events, often triggered by inventory buildups that led to layoffs and reduced Household Spending. In this recession, we saw no income declined. Income remained strong even as the economy paul omitted. 21st century recessions were from the financial bubbles ,hether it was the. Com bubble where the final distress spilled over to the main street economy and dragged it down. This is an entirely different thing. It was the coronavirus itself which caused people to pull back under economic activity, leading to an extraordinary decline. The speed and severity are hard to capture. Itthe Second Quarter, contracted at 31. 7 . In real people terms, our economy got 9 smaller in three months. In the worst year of the great since the Great Depression, it got 12 smaller. The most visible manifestation of this was 20 Million People losing their jobs in a single month, 10 times more than had ever happened in the United States. The composition of that decline is also very different. This is a decline led by a strong contraction in Household Spending. And in particular, Household Spending on services. Americans stopped going out to restaurants. They stopped flying, they stopped going to hotels, they stopped doing anything that came into contact with people who might be carrying the virus. In particular, when we look at the micro data of this event, it is the spending by households in high income zip codes who contracted the most. And those services were provided by low income americans, so we had a very Strong Division in this recession where the spending went down but the job loss has been at the bottom half. I do want to note that the policy response is also historic. The Federal Reserve response to enhance its Balance Sheet by 3 trillion in private liquidity and on an openended basis was successful in stabilizing Financial Markets. I think congress has been too little commended for the speed with which it passed the c. A. R. E. S. Act, the targeting of the c. A. R. E. S. Act on the problems that faced the economy, cash flow in the household sector, cash flow and Small Businesses, cash flow across the economy, and getting the scale right. The c. A. R. E. S. Act was 10 of gdp. Gdp. Roblem was 10 of i think you for that response. I think it is exactly right. My second point is there is no way states and territories remain immune from this event. We certainly know they have the bulk of the Public Health response and some of the costs that came with that. We know First Responders, ppe, and Health Care Professionals have stretched their budgets. But there has also been a significant response for those states and territories. The c. A. R. E. S. Act had 150 them. N for as a fraction of the total package, that is larger than was provided in the recovery act when we faced the last recession. Congress has responded to a real problem in a substantial way. Because point is that this is so different than the past, using historical experiences as a guide to the appropriate level of support to the states and localities is probably going to be off target. You think about it, tax basis for the sector held up better in the session then one might expect. In the data, this is now a lowwage worker recession. If you are a high wage worker in america, you are probably back to work in the recession is over. The taxation at the same level will probably hold up. Unlike any other recession, the stock market did not go down. It is not. It will maintain it is up. It will maintain the level of capital income. So income taxes bases will probably hold up pretty well. Sales taxes, with a big decline in Household Spending are probably at risk, but it is in services and that is the least heavily taxed part of the sales tax base. Housing markets are quite strong. We have seen property taxes across the economy. People tend to focus on what we should do now. And measure the needs based on that. I dont think that history will be a very good guide for what we need going forward. Thank you, madam chairman and i look forward to answering your questions. Dr. Hopen waters deacon for your testimony. We are pleased you are here today. I will now recognize myself for five minutes for questions. We are facing a growing crisis in this country. List, 34 to apartment percent of renters were unable to pay their rent in full at the beginning of august. According to some experts, we can see up to 40 million renters at risk of evictions by the end of the year. Walsh, you have tried to take action to address this problem at the state level. Yourly, you extended eviction moratorium. You also established 100 million until assistance program. But that is not going to be enough. According to a Census Bureau minnesotans 547,000 either missed a housing payment in july or did not know how they would pay their rent or mortgage in august. In california, that number is over 6 million. Governor walsh, how many more minnesotans code you protect if Congress Approved could you protect if Congress Approved a rental assistance . Gov. Walsh thank you for the question, chairwoman. A lot, is the answer. Im grateful. Im grateful the Administration Made a move on eviction moratorium. If it does not come with the assistance, it pushes the problem down the road. I think you have seen many economists picture that and i think dr. Holt deacon is right, that the Housing Market has remained relatively strong. That has kept rents up and mortgages and why the Interest Rates are good. Move 100le to million which makes a difference. To be clear, that as with the support of landlords and Business Owners. It goes right to them. It keeps them in order. Is coming on the heels of the expiration of the 600 expert extra on the ui. I think the congresswoman is hinting at exactly what we are asking for. I want to be very clear. Im not critical of anything you have been able to do to try to help us. I think folks know better where we could have adjusted it. I agree with you on the recovery act i was part of congress at that time. That allowed us to replace lost revenues immediately. That indicated, that impacted state budgets differently. The housing issue is going to come it is a top priority before covid19, housing was a crisis. It has been exacerbated by that. This is one of those issues that i do think, and i would be interested to hear our witnesses talk about this, i do think this has the potential to bring a drag on as if it brings the Housing Market into this. I think the help we get on the front end can maybe proactively stop that. Congresswoman, the answer to your question is we are very, very worried that at the end of december, what will happen come january 1. Chairwoman waters im also worried, not only about the renters, but about the landlords. Landlords are struggling to pay mortgages, and other costs associated with property maintenance. According to the urban institute, black and blackx landlords are struggling to pay their mortgages. What are you hearing from landlords in your state . Particularly those small momandpop landlords . Gov. Walz first of all, these are people trying to make it work. They are going out of their way. This idea that they dont care or heartless, that is a myth. They are doing their best to keep. People in their homes. I do think the chairwoman has hit on something that we are really grappling with. We have been in the news for grappling with, inequities and racial issues. It extends into homeownership, it extends into rent, and it extends into blackowned businesses and black landlords who are facing this. What i will tell you is that these landlords are trying to do the best they can. It is not on their best interest to put people on the streets. I will say one of the things ive seen here, the lenders in the banks are making adjustments to try to get this; put the piece that is missing from this is the money in the system to make it work. That is the piece that is missing. It does not move from the renter to the landlord to the bank, into our system. And that is one we are really struggling with. It hits disproportionately to those black landlords, theres no doubt about that, as well as black tenants and communities of color. Chairwoman waters thank you very much. I yield back the balance of my time. Ext mchenry. Chairwoman waters this or mchenry, Ranking Member, you are called on to present for five minutes, thinking. Generally speaking, do state, local, and federal revenues they the economy, are indicators, do they lag . Can you give me some measure of this for both state, local and federal revenues . It would be Something Like a sales tax. Particularly in this event, we have seen dramatic changes in the level of spending. You expect that to be an indicator. Fully until wet look back and get the previous year. That has not matched up quite as well. Property taxes, depends on local and ministrations. Thathus keeping uptodate. Corporate revenues track the current economy. The one that i think is the hardest to understand in this moment is the large chunk of state and local budgets that come from highlevel education, hospitals, and things like that and how they will track in this event. Weve never seen an event like this before, i just dont know. Rep. Mchenry ok. At this stage, where are we with state and local financial conditions across the 50 states . Are they different . Are there some differences . Dr. Holtzeakin there will be differences. You notice the governor of mexicos seating will doubt the oil market decline. If you are heavily reliant on severance taxes, it will look states. T than most there will be differences. An examination of individual cases is the best way to go. My remarks in the opening were based on aggregates. Rep. Mchenry right, but you say the revenue fall offer states will be quite variable. North dakota will be different than california. California will be different than connecticut. Right . That is what we have seen in previous falloffs in the economy, or changes of economic condition. Right. Our current financial conditions, the state and local governments, are they a true indicator of the current economic environment . Dr. Holtzeakin no, i think they are doing better, from the aggregate data we have through the economy. As i described in my opening remarks, the Economic Conditions in the Second Quarter were disastrously bad. If you look at the state and local sector in the gdp release, it was doing remarkably well. Income taxes were down by 100 million. 1 10 of a billion. They did better than you might expect in those circumstances. Rep. Mchenry ok. So, doing better. And the federal government is spending a lot more. Only haveoned, you 25 of the funds set aside for state support allocated as of june 30. What additional federal support do you think there should be for state and localities, based off your Current Research . Or is it too soon to tell . Dr. Holtzeakin i would say two things. The mystery to me has been the performance of the treasury in using essentially half 1 trillion to backstop facilities. Underutilized, to my eye. I dont fully understand why that has not happened. That is something that can and should be more aggressively used. My own Research Suggests if you pretended that state budgets track the economy, then using the forecast in the local sector, it would be short by 380 billion over two years. We have provided 150 billion. That seems to me a sensible upper bound given that we expect it to perform better than the economy, for the reasons i mentioned. Services are not taxed. Those are things that are going to contribute to better performance. Rep. Mchenry ok. How do you best help state and local government get revenue . Isnt it through a sensible reopening, rapid testing, and getting schools safely and effectively open . Arent those the Stronger Economic motivators that would then benefit state and local governments . Dr. Holtzeakin no question. The foundation for success is growth. We have to be able to operate in the presence of this virus. I think it is very instructive that in 20082009, employment in the states and localities did not decline for nearly two years. They held right in there. We dont want to have to have bad growth. Rep. Mchenry thank you, dr. Holtzeakin. Chairwoman waters thank you very much. I will turn over the gavel to the vice chair of this committee , miss suzanne nicholas. [indiscernible] [choppy audio] the intent of this committee to pursue the heroes act and the relief it provides has less to and moreartisanship, with us continuing our mission of focusing on the need for us to address the circumstances of every american. So we sought out governors, democrat and republican, because we want to get the perspectives [indiscernible] today, we have voices here today that are expressing the chief executive level within our states and territories to continue our focus on providing support, particularly with , inect to the response delivering [indiscernible] fire services, emergency response, health services, and all the Additional Services we are required to provide. [indiscernible] chairwoman waters mr. San nicolas, there is a problem with your technology. So we are going to move on. And we are going to ask another member to step in until they can clear up your sound. I dont know what they have to do to do that. But i think mr. Cleaver, as a subcommittee chair, would you please step in and continue with the next member who will be asking questions. I will, madam chair. Chairwoman waters thank you very much. Ms. Maloney. Yes, im here. Do you hear me . Do you hear me . Chairwoman waters im going to turn it over to mr. Cleaver. Ms. Maloney, you have five minutes. Im recognized now for five minutes . Thank you. Im sharing a Committee Meeting on the census now so i need to get back. But this is so important thank you, maxime, for having this. New york was one of the first on hardest hit states by covid19, taking the lives of over 25,000 neighbors, and disrupting our way of life the neighbors, and disrupting our way of life the pandemic new yorks economy has created an insurmountable budget deficit that the state cannot solve by itself. From march to may, tax revenue was down 37 compared with last year. The decline in state revenues combined with the staggering cost of responding to the andemic have created unprecedented economic crisis for our state. New york state needs 30 billion in funding and the in the current fiscal year and next year to make it full a game. We are not alone. Because of the pandemic, State Governments are facing projected budget shortfalls of 500 billion next year. Which is even worse than what was ever seen during the Great DepressionGreat Recession. We have seen the Devastating Health and Economic Impacts of the corunna crisis. Andfuse to stand idly by allow the senates in action to exacerbate the pain the pandemic has already inflicted or jeopardized our road to economic recovery. So im deeply thankful to the chairwoman for having this hero having this meeting. Other economists have repeatedly stressed the Important Role that State Governments play as employers. Research has shown that state layoffs and budget cuts prolonged with the Great Recession and delayed state and local governments economic recoveries. Since february, more than 1. 1 million Government Employees have lost their jobs across the country. And that is on top of the nearly 30 million americans who remain unemployed and collecting Unemployment Benefits. In new york, our governor has stated the state will be forced to reduce funding for hospitals, schools, and local government by the services when they provide are needed the most. New yorkore funding, and other State Governments will be forced to lay off tens of thousands of state and local Government Employees, including teachers, firefighters, and other civil service, process unemployment applications or inspect the food we eat. So can all of the governors this is a question to you, can you speak to the effect that these budget cuts and mass layoffs will have on your states ability to recover longterm . Thank you. Well, and speak for minnesota. Well, i will go and speak for minnesota. Are for your projection of dropoff revenue is 8. 4 billion. The one thing i would respond on some of the numbers of what governor expenditures are, we are responding to a Global Health pandemic. We still have other jobs that they have to do. We have to maintain the roads, state patrol, we have to have everyone else who does this work. Just to give you an idea of the deficit minnesota is looking at, and remember we had one of the highest percentage Rainy Day Funds, aaa bond rating, and on track for surpluses into the future. If you are looking at what happens with State Government employees, if i furloughed all 38,000 of our state employees, it makes up about 9 of that deficit. We still have 91 that is there. And then the impact that would have on the economy of jobs and services that would be provided. I hear all of you and i hear this desire. And i just want to say, im in total agreement that getting our schools up and running, getting our businesses back operating and generating the economy, but it is a chicken or the egg for some of us on this call. None of this will happen if we dont manage the pandemic. That costs us a lot of money as a state. The states can be the catalyst and get out of the way. At this point in time, it doesnt matter if the state has a mandate on or not. People are not going to restaurants. People on not spending the way they should. I think what dr. Holtzeakin was talking about, its true, we are seeing savings at a high level, which in normal times, is a good thing. Not right now. Because people are nervous. It is the states that provide those services. Thank you, governor. This question too, the c. A. R. E. S. Act provided 100 billion to states. Because of restrictions on how they could use the funds, governors complained complaint of the funds were of little help. States like new york could see their revenue dry up and expenditures skyrocket. Let me be clear, this is not a partisan issue or a new york based concern. Members on both sides of the aisle in our delegate have written to leadership requesting additional, flexible funding. Even some republicans have expressed the same concern. So to put it simply, the need for additional i see my time is up. Quickly, if the governors could say whether they would like flexibility in the funding. Your d it approve improve your ability . I would like to respond to that, representative maloney. I was told at the beginning when the money came in, that it was to be for covid related expenses only. I can assure you that here in phase, we are now in three of dispersing those funds. Week, we will have spent all of those funds on covid related expenses. No matter if we are given flexibility or not. So it is imperative for kansas and i think a lot of other states that congress followup with the c. A. R. E. S. Act, which i too very much appreciated. We could never have gotten through this. Mr. Chairman, point of order. Mr. Chairman, point of order. Yes, mr. Mchenry. I apologize. We are going over. Mr. Chairman, in the interest of balance of time, i think my point of order is on the fair adherence of time and of time restrictions. For all the members. I know the technology is quite limiting. But i raise the point of order that we are not adhering to committee rules. Let me apologize. You are absolutely right. The problem was the switch. I was unable to get the attention of the last of miss maloney. I apologize. There is no argument. Rep. Mchenry thank you, mr. Chairman. I will now recognize the gentlewoman from the magnificent and the adherence of time restrictions. Great not unmatchable state of missouri. Thank you. I think my friend from the western half of the great state of missouri, emanuel cleaver. A great member of congress and a friend of mine. And i thank our witnesses for joining us today to discuss supporting our state and territory during the covid19 pandemic. I was very proud to vote for the c. A. R. E. S. Act and for four total bipartisan packages. As c. A. R. E. S. Act provided 1 trillion in funding to stabilize local economies. These dollars are critical in supporting health and Public Safety operations. As the pandemic continues to impact our neighborhoods. In many places, our Public Safety is at risk without these funds. Funds are needed to prevent Law Enforcement layoffs, pay Public Safety officials, and help pay for medical care, housing, and other essential services for American Communities and families. I have been actively involved in trying to ensure these funds get to those who need it most in my district. The c. A. R. E. S. Act was signed into law on march 27. And in missouris second congressional district, st. Louis county received 173. 5 million in late april. Later, four months million still over 100 unspent Financial Aid at that desperately needs to be distributed, including 47 million in Municipal Reserve Fund for our local municipalities and localities, that should have already been spent in support of Public Safety officers, medical care, housing, among other critical services. I have spoken to the municipal municipalities. They need these funds now. They needed them months ago. I am deeply disappointed that st. Louis county has been unable to distribute these funds in a timely and efficient manner. As we intended, all of us, on a bipartisan basis in the c. A. R. E. S. Act. I have had meetings, i sent a letter to her county executive and counsel asking for them to distribute these funds immediately. And i would like this letter entered into the record. Objection. Rep. Wagner thank you. My story is not the only one. As of june 30, per crs, only 25 of the funds provided by the c. A. R. E. S. Act have been used by states and local government. And we need to get to the bottom of why this is. I ensure i am sure that the answer varies across states and regions, but having this information and a breakdown of how funds happen ive been spent and where funds are needed is critical to lawmakers as we look forward to future release relief. Holtzeakin dr. , in your testimony holtzeakin holtzeakin dr. , and your testimony, you highlight the distinction between the Great Recession. Would you describe the role that state and local government has played in each, dr. Holtzeakin . Dr. Holtzeakin certainly in this recession, it was the virus. It was the natural reaction of individuals that drove the downturn. State and localities had to the virus itself. They have since, as the governors have testified, a lot of money trying to get ppe. State localities are dealing with an economic followed from the pandemic. It is concentrated in different systems that have been strained beyond capacity in many cases. Those are legitimate concerns. Theres no question. What im trying to do is gauge above and beyond that how much additional revenue loss you have to be concerned about, given is this that will hold up better in the past. Thats whats going on right now. It is a completely different episode. This is a selfinflicted wound. They didnt have to have the same concerns. By and large, they were able to [indiscernible] growth, theyr caught up with that. It is a prolonged slow recovery in the state and local sector. Rep. Wagner what type of congressional support does the economy need during the ongoing covid driven recession . Dr. Holtzeakin i think the congress did the right thing in the c. A. R. E. S. Act. Going forward, i would think it needs two things. Number one, it needs to support making schools safe. That means testing, workplace modifications, the kinds of things that allow you prove allow you to proceed in the course of the virus. That would include Liability Protections as well. It also will need to be keeping an ion those who have prolonged spells of unemployment, income support. Those are our concerns. Rep. Wagner i appreciate that. I dont know if you have any opinion as to why it is that only 25 of these funds, these federal funds that we allocated months and months ago, are still not getting to the point . Governor will hold, i saw your hand. Please. Good to see you, congresswoman. It is a really good question. One of the reasons we were a little slow is a legislature could not agree. What i want to tell you is it is the obligation versus the spent. Our budget has 92 . I can assure you we spent a by december 31. Most of it in our case went to local county commissioners and city councils. Rep. Wagner our governor got the money out. Im upset with the fact that st. Louis county is not getting the money out to my local jurisdictions. Im over my time. Thent want to exceed chair. So i will yield back. I think you all very much. Thank you all very much. Miss waggoner, your time has expired, but im giving you extra time because ms. Maloney ran over. If you want to complete. Rep. Wagner thank you. You are very kind. Im fine. I yield back. We will move on with the rest of my colleagues are thank you so much. Thank you. Miss velasquez, you are recognized for five minutes. Thank you, mr. Chairman. And thank you all for your great testimony and for sharing your insight is as to how we can tackle this pandemic. Because of the current crisis, state and local governments could face budget shortfalls of 500 billion through fy 2022. A chief economist has warned that the entire National Economy will sink if we do not support this. What do you foresee happening to the national ddp over the next 24 months if we do not support state and local governments . Gov. Walz thank you, congresswoman, for the question. I think like so many, i think we have more agreement on here than we might think. We are facing a 4. 7 billion deficit, and i went from congress with many of you to the states. I cannot deficit spend. I have already had to make facilities, close corrections facilities and other things because im statutorily obligated to do that. That starts to have a trickle effect, especially in our mower greatest minnesota in the rural areas where these are input are important employers. I hear where you are at. I hear this concern we need to be very thoughtful of where we put things, the money out. But we see the drag. And ive been hoping the whole time that we would see a vshaped recovery. Our economists are less hopeful of that. I know some of the projections have reduced the upcoming third, Fourth Quarter gdp of what it will be. I am concerned about that. Heres what i can tell you from a state perspective. I have to start planning scenarios across the board of what that would look like. I think everybody on here would ask us, we should always be thoughtful. We should always be doing that. This is not cutting fat, this is bone. G the problem i have now is it is the very things we would have to cut that are going to spur the economy to come back that we are seeing go down. Im worried about that. These deficits are real. They are not speculation for us. And i think many of you on here, i know you are fiscally responsible when you think about this. When that number is so short, and we get to the end of june, i have no case but to cut. Then those cats have an implication. So it is a challenge. I will let other governors speak to where they are at. Each state is in a different spot. I think if i can speak from the National Governors association, the overriding factor is because of the ongoing nature of this done, thet is not uncertainty to state budgets is so damming that it makes it very difficult to plan. Rep. Velazquez thank you, governor. Guam,or guerrero, like covid cases are surging in puerto rico. There have been more than 16,000 positive cases in the since the pandemic started. 18 Puerto Ricans died because of the virus. How will the territorial provisions included in the heroes act will help territories like guam and puerto rico find a surge in spread of covid19 . Gov. Guerrero yes, thank you for that question. I just want to also make it clear that we are using our covid virus funds. To smallven it up businesses, i have given it out to individual grants. To medicalit out clinics and facilities. My greatest concern in the covid Health Carethe system to deliver the quality of care that is needed to have a healthy community. When we have a healthy community, we will have a healthy economy. Is veryoronavirus funds much healthy helping not just our guam, but also all the other territories. Ask, whichwanted to i did in my testimony, is our ability to use those funds to make sure that we do continue employing those employees that services. E public in my budget now, we are arguing with our legislature. I stand to lose employees because of our cuts from fiscal year 2020, to now fiscal year 2021. Governors, we are certainly making good use of that money. We are allocating it out. And we have budgeted it out. Paid foror ppe, we testing. Weve paid for hazardous pay, differential pay for our front liners. Rep. Velazquez thank you. My time is running out. I would just like to ask another question. I guess my time is up. Yes. Thank you, representative velasquez. Rep. Velazquez i yield back. Thank you. Representative posey, you are recognized for five minutes. [indiscernible] posey . Esentative hes muted. Can you hear me . Can you hear me there . Hes good. Proceed. Rep. Posey can you hear me . Yes, proceed. Rep. Posey thank you, chair. As the Ranking Member pointed out earlier, and almost every member on this side pointed out hearing, instead of holding more hearings on a bill that has already passed, i think we should be putting priority on the elements of relief that goes to the working families of this country. Additional direct payments that extend the payment program, shoring up unemployment insurance, at an adequate level. Things of those natures, our constituents are waiting. We need to make the hardworking men and women and their families our priorities. Today, we are holding a retrospective hearing on state and local governments. The majority leadership wants 1 trillion for that purpose. Go doubt that some state aid and local government aids would be warranted, but im not seeing a rigorous analysis of the need or assumptions that underlie the third distribution of such aid. We should advance assistance for documents and extraordinary coronavirus consensus. We should ask ourselves what is the estimate of the coronavirus is it fair to place all the lost revenue of states that have dramatically different revenues per capita . The tax report on foundation ranks new york state as number one in state and local revenue burden. New york raises 15,238 per person. That is men, women, and children, not just taxpayers. 9,122 per person at ranks 24th. One would help the hope the higher tax states have lower burdens. Of york carries the burden 17,839. More than the per capita revenues and ranks first in debt per capita. Kansas has a local debt burden of 9,335 per capita and ranks 17th. Governor kelly, would it be fair to replace the covid related revenue losses of all the States Dollar for . Dollar for states that have a different approach to government and size . Governor kelly, are you there . Governor kelly . Know, we may be having a technical problem again. Governor kelly . You may need to unmute. Rep. Posey if we may have lost connection i would like to put these in for the record and have her respond in writing. How dot question being of stateine the amount and local agent to make it fair and adequate . What do we need to fund and how should we estimate them . Whatly, i was wondering the amount of covid related state that have not been reimbursed by the federal government or provided for in the previous federal bill . With those questions onto the record i will give back the remainder of my time. Please make sure we get those questions to governor kelly. Recognizes mr. R chairman for five minutes. Thank you. In pointed out that we cant look at this recession as a replay of 2008 and he is right. State and local governments are being hit by a double whammy. Up. Nses are financial crisis does not require a big Public Health response, a pandemic clearly does. I used to had the largest state thelocal Tax Agency Head largest state and local tax agency. A california we went from 5. 5 billion surplus iia 54 a 54 billion deficit. The question is how could states respond . They couldnts raise taxes. Which is exactly the wrong thing to do in a recession. Second, although the heroes act would solve this, we have taken away the state and local Tax Deduction and the push to that provision did so because they said it would make it difficult for states to raise taxes. The competition for upper income taxpayers, plus the elimination of the deduction means those in and local taxpayers are more expensive for those mobile. As governor walz pointe out cannot pointed out, they cannot deficit spend. The only lifeline is the federal government. I want to welcome back especially the two governors, our colleagues recently. You testified that between february and may minnesota went from a 1. 5 billionsurplus to a 2. 5 dollars projected deficit. Mcconnell has a bill with less than 1 5 of the amount. Came to thecans table and said we cannot defund the police. I have faith in the state and local governments to spend the right amount on Public Safety and the right mix of sworn officers in the right way to deal with Public Safety problems. Angeles, overlos 40 of the city budget goes to Public Safety. The one thing that would prevent my city and many states from sending suspending the right amount is they dont have the money. I know what the answer is for los angeles. Governor, if the heroes act does are minnesota and its local jurisdictions going to have to spend less on police then you at the local level think is necessary . Alz the answer is yes. Our biggest expenditures are health care and education. At the local level it is Public Health and Public Safety in many cases. That is their only alternative. You are right. The issue is we could deal with this. That simple equation cut services or increase revenue both of those work against us in a recovery. This isnt i want to squeeze in a few more questions. 1. 2 million Public Sector employees have lost their jobs since february. Expressing concern over this chair jayape powell noted it would hold back local recovery if local governments continue to laid off lay people. When you layoff the state and local employees you have the economy to ways. They dont have money to spend in the economy. Second, no one is doing their job if they have been laid off. Form as longer to corporation, longer to start a business. Out, thewell points essential services that are critical to the economic recovery. , are yougrisham anticipating the possibility of public job losses in your state if we failed to pass the heroes act . Grisham ours jumped four Percentage Points at the reporting of the last quarter. That is largely publicsector employees, largely in local government. We tapped into our 25 reserve to avoid furloughs and layoffs. If we dont get Additional Support, you will see that exacerbated at the state level. Isone more question, that medicaid goes up in a crisis like this. The cares act changed the formula with the 6. 2 increase to medicaid. Im sorry mr. Chairman, your time is up. Thank you. Recognize the gentleman from missouri. Thank you, mr. Chairman. Chairwoman waters is not here. I would like to get into a dialogue with her about comments she made in her opening remarks. Thent want to discuss situation. Her first comment where she said it is within the jurisdiction because we chose to do it. That has to be one of the most arrogant and ludicrous statements i have heard of all time in this committee. Congratulations, madam chair. For those people watching, they see this as an example of exactly what is wrong with the house today. The party in charge believes they could do whatever they want , without regard to rules, jurisdiction, or process. Again, breathtaking. Holtzeakin, thank you for being here. Your initial statement was really a breath of fresh air. They gave us a lot of good information on where we stand with the economy, who is doing well, who is struggling. That is what we need to put together another bill here if we need to. Where we need to target that relief. I appreciate your information. Kitty i was on the select committee on coronavirus, we had a meeting last week with secretary mnuchin. We discussed all of the things that went on with the administrations response to the different facets of economic hardships we are going through. Local, state, individuals. All of the people on the committee, democrats and republicans were complementary with regards to everything on the total focus the total focus was on this issue today. State and local money. The focus in our Committee Last ink was get as much money there as you can and states will figure it out. Response withour regards to targeting it. To me, this is a targeted area. We need to be putting money in. I would like to have your opinion. Is 105senate bill, there billion dollars. 70 billion goes to education. Is that an appropriate amount, should be more, less . How should we target that . Dr. Holtzeakin i dont know the right number. The way i think about this with schools, it is likely we will have to continue to operate in the presence of the virus. I know people are optimistic about the Vaccine Development process, between the inevitable uncertainties about success and takeup rates and how quickly we are effective in illuminating the virus. I think you have to think about 2021. To do that, we have to be able to make this safer. That means changing and physically so there is more space. Providing ppe. Aggressive. Vy and the money should be devoted to those paths, not a blank check. One of the ways you could get that money is through a direct payment. The other ways is to give the money directly to the states and let them divide it up how they want to. What would you suggest to make sure they get the proper amount of money to the proper folks . Dr. Holtzeakin businesses, the right thing to do if they give directly to them with a refundable credit against their payroll taxes. They are not for profit thinking about schools and other entities like that. You want to limit that in some way and reimburse and guarantee them that if they undertake expenditure they could make things safer so they can operate and they will get support. I had a discussion this morning with the director at fhfa. Talk to him about the performance programming. It seems as though what is working, people paying down loans, even though they are in forbearance. This would align with the comments you made a minute ago. To me, to make sure we keep this from, i think forbearance the regulatory side if we dont have the regulators give forbearance to the banks and Credit Unions who are in charge of most of the lending in this situation. Force them to foreclose on and get rid of entire lines of credit. It could upend what we are doing here. I have a bill that basically gives two years of forbearance. You indicated, this is a different kind of recession that we are in. Everybody backet on their feet, which you say is happening. What do you think of that . Dr. Holtzeakin i think you diagnosed it correctly. Intont want to turn this 20072008. Make sure you address the real problem on the ground. Make sure those people who do not have income have enough to not ask for forbearance. When there is forbearance, make sure we dont just leave them with the bill. Thank you. I yield back. Thank you, very much. Let me mention before we go further. Governor kelly will be unable to complete the hearing with us today. We appreciate very much her willingness to be with us for the period that she was. I would chairwoman our chairwoman it directly relates to states and territories by the pandemic. The state and territorial governments are on the frontline of this through the crisis. Didntomment, again, i argue about the jurisdiction, whether we did or did not have jurisdiction. It was against her statement that we could do whatever we want to do. Noted. Recognizes mr. Scott, from georgia. Can you hear me . Yes sir. Rep. Scott in my state of georgias legislature, george or speaker of the house georgia speaker of the house, a republican and good friend of mine sent a letter to congress in august. Speaker ross is asking congress for more financial help. Permissionested this to enter speaker the speakers record letter for the record. Ross etter, speaker let me say he is a friend. He and i worked together for many years during my days as a senator in georgia and chairman of senate rules committee. This is a good man here. He is a very conservative republican. Hes asking congress in this million for500 state and he writes inflexible financial assistance. He notes this. Orsays the reserve vaults, Rainy Day Fund is a part of the fiscal toolbox. Rely solely on the reserve funds or Rainy Day Funds , for it is unsustainable. Governor walz, let me start with you. Given the uncertainty of this virus so far, are you confident that reserve funds or rainy day these estatesain during this covid19 crisis . Governor walz absolutely not. We had one of the most robust in the nation, Rainy Day Funds. You cannot it cannot take this. It was too deep. Rep. Scott let me go to another question. In the cares act that we worked on and passed in march, it included 150 billion in assistance to help the states and local government. Georgia if think it is applicable to other states. 30 only 30 of that funding for local and city in georgia have been allocated. 70 of the funding is on allowed unallowed. This is despite deadlines for cities to receive and use these funds before the end of the year. Weve got trouble in river city here. This is plaguing us. Us, is there tell any problem with restrictions or limitations . What is it that is slowing down our states abilities to get to our localfunds governments and cities who needed so desperately need it so desperately . What could we do to help . This is a big problem. First of all, i appreciate the focus on this. What you are seeing is the data lag in a spending allocation. I can only speak for minnesota. The money is out there in the locals, they are doing it. We planned the whole budget. You will not see september, october, november, december spending right now. If you go back to where we got this and we are looking at six months of this pandemic, weve got four more months that we have to deal with. Ive heard representative wagner. We are allocating paying in a timely manner. My biggest fear is we fall off a cliff. Rep. Scott thank you very much. I will end my comments with this. Hank you all very much your testimonies have opened our eyes too much of what we were only dimly aware. Recognizes mr. W barr. I will state that after mr. Will mr. Saint nicholas assume his rightful role as the vice chair and complete this hearing. The chair rep. Reed recognizes mr. Barr for five minutes. Good to see some of my former colleagues who are chief executives of their great states. Thank you for offering your views on this issue. I think a lot of the witnesses have testified that what is ailing in a lot of state and local governments is revenue. As the financial crisis, there is a decline in revenue. Is of the reasons for that we have had some shutdowns of businesses to respond to the Public Health crisis. The mostto me that important component to economic recovery and for strengthening revenuesd local is for businesses to safely reopen. Safely reopen. O for businesses to reemploy workers so they could continue to generate tax revenue. The government imposed shutdown of the economy left many businesses unable to operate. We need those businesses. Businesses of all sizes across all industries to reopen with appropriate safety precautions in order to rebuild the tax base. On how we suggestions could facilitate the reopening of those businesses is to give confidenceesses through reasonable Liability Protections. Whatis to cure in part for ails our state and local governments. Unfortunately, many of the states indicate they are suffering from budget shortfalls. There is no realistic plan to get people safely back to work where they continue to keep the dr. Y shut down or holtzeakin, beyond the assistance measures already implemented by congress, what legislative provisions do you view as essential to helping businesses safely reopen . To bring back their employees and bring back customers . Is Liability Reform part of that . Dr. Holtzeakin yes, i think it is part of that. The goal is to be able to operate in the presence of the virus safely. That will require physical modifications. Whether it is ppe, distancing, plexiglass, moving production lines further apart. That will cost money. Willing uire a being willing to open the doors. Bringing employees back. That is the liability. If you are afraid you will get a lawsuit if you a open the doors, you wont do that and wont recover as fast. It is a piece of a portfolio that helps everyone adjust to the presence of the virus as long as they need to. They could go to work, safely. They could engage in commerce with customer safely. The economy will perform better. That is the best thing for household incomes. Barr governor walz, do you agree or disagree with that . Good to see you again. Governor walz the surest way for our state to get back in good shape is for our businesses to get going again. Surest way for that to happen is for us to get a handle on the virus. I dont see the importance being overstressed on the liability. People will go back to a restaurant when they feel they are safe to be in there. People know they wont get Food Poisoning because we have inspections and they know it ruins their market chance. Just to have a Liability Protection alone wont do it. They have to believe it is worth going back. That is the problem with this. Even states that dont have mandates on businesses being closed, they are still not bouncing back because the cop public doesnt have confidence. I dont want to understate how risky it is for businesses right now. It is risky for employees, for them, and economically. Fairpoint, i think it may be a combination of both. Dr. Holtzeakin, advance refunding any thoughts about bringing back the Tax Exemption for advance refunding some municipal governments could refinance under these low rates . I have notakin studied that issue carefully. If you want me to insert something for the record i would be happy to do that. Thank you, rep. Barr. Mr. Saint nicholas, are you with us . Mr. Saint nicholas . Nicholas [indiscernible] i think we are still having some problems. Meeks. Go to mr. The chair recognizes mr. Meeks for five minutes. Me thank you for the leadership. I want to thank the governors for testifying before us today and my two colleagues and thank you for the job you are doing in your respective states. I want to commend the governors across the country. For the most part they have done a great part in the response to the covid19 pandemic. This whole lapse of [indiscernible] is aovernors association bipartisan association. Democratic governors, republican governors. They have all put in for this 500 billion they think they need so they could recover themselves. This should not be at democrat or republican issue. It is something that is important to the states, all of which are suffering from this pandemic. Part, the lack of having some direct federal thereention in new york, was basically no support from the administration. ,overnor cuomo, mayor de blasio the new york congressional delegation scrambled for everything and anything we could to bring assistance to the forunity and find resources overstretch Health Care Facilities and frontline workers. City lost over 22,000 lives to covid19. It was among the hardest hit nationally. I could tell you from firsthand experience the social and economic toll of covid19 will be felt for generations. This is why it is all the more thattant to learn President Trump and his administration were incompetent of the mismanagement of the crisis and misleading the public. Purposely making the job of governors, local officials more difficult by willfully spreading misinformation about covid19 as far back as early february. These lies and this incompetence have cost tens of thousands of lives. They disrupted millions of families who through the loss of a loved one. Hardship. Has also wrecked the budgets of states and cities which risked being a drag on the economic recovery in causing Financial Hardship for the hardest hit communities. New york is no exception. As we have incurred expenses on seeing are and collapse in tax revenues and the broader economic impact, new york state faces over 30 billion deficit over the next two years in new york city over 9 billion deficit over the next two years. By the trumpworse tax cuts which have caused harm. Cal harm fiscal cities and states across the nation faced serious Financial Hardships, which will be a drag not only on the local economy but on the broader american economy. Cities and states cant simply tighten [inaudible] cuts to the bone in public transit, health care, education, social programs, sanitization, fire department, policing, and other Public Services that impact all americans. But especially those least fortunate who have borne the brunt of the burden of the demic, including communing communities of color. Cities and states are major employers and in new york city, the mayor has indicated he may have to furlough 22,000 employees as a result. The governor say about 4 of individuals that may have to be laid off in new mexico if this is not taken care of. Ask thesk i will governor first the total job losses, both directly and , if you dont get [indiscernible] heard [indiscernible] [indiscernible] you can make the difficult decisions. [indiscernible] you are now recognized as the chair of the committee. At this time, i believe my sound still is not working. [laughter] [indiscernible] would like to afford the governor the opportunity. If you can provide a quick response. Thank you very much. I appreciate that. Congressman meeks, it is hard to identify exactly what those losses look like. It depends. Im going to have half 1 billion shortfall, i have had to take a reduction in education. The reality is, Public Education departments, workers, we could see that 12 unemployment with that additional we could see 22. Sustained well into fy it is immeasurable and im going to end with this. We still have to spend money and manage the pandemic. We know that without getting the 500 billion that the National Governors association has indicated, we cant do it. I appreciate your frustration about whether money is getting to where it needs to go and whether we are doing enough. We did not have the guidance or flexibility from the federal government to determine how we reimburse and identify strategies for expending those funds in most states are at 70 expenditures and so is new mexico. Thank you. Thank you. [indiscernible] [no audio] i am having some [no audio] [indiscernible] are still having some problems. Mr. Tipton. Thank you, mr. Chair. Good to be able to see our colleagues. Governor walz, good to see you as well. I represent rural colorado. We learned not to expect too much in terms of federal funding , even out of the cares act. Couldltzeakin, if you speak to the importance of making sure the federal spending is targeted, especially for the less populated parts of the country that need to be prepared for the coronavirus. I think in the biggest picture, this is an enormous undertaking by the federal government. It is the Long Movement the wrong moment to not do things for budgetary reasons but above 3. 3 deficit trillion going forward, the same pressures will prevail. It is a time to use money wisely and effectively. That does not call for blanket funding, we did that in the strategy was successful but now it is time for a different strategy where we target real needs and allow people to operate in the presence of the virus for as long as we need to. Rep. Tipton i would like to be able to follow up. It is important to get the economy moving again. See the doorsg to open up, revenue started to flow back into local governments, State Governments as well. I think governor walz made a fair point in regard to food safety. We want to make sure everybody is feeling safe. I did want to go back to the point of able to have Liability Protection, which you noted earlier. Why is that going to be important to get not only the consumers safety but give the business is safety in terms of opening up again . Dr. Holtzeakin you want businesses to open and that requires three parties to feel secure. Have to feel secure in their physical surroundings, customers have to feel secure, and the Business Owner has to both provide that it feel secure that they will not be punished for inadvertent infections that did not even occur on that property. It seems to be a sensible step. If there is no risk of that happening, it is a redundant step. I dont see the harm in doing it. Rep. Tipton would you give a couple comments on the best way to provide support for low and moderate income communities . Do you have thoughts on that . Are twozeakin there different things, there has been the ongoing issue of the ruler areas lagging the rest rural areas lagging the rest of the economy. Making sure the Education Systems are adequate to attract businesses in those communities, make sure the infrastructure was adequate. Those have been heightened in the pandemic. There is probably no time where it is more important to close the broadband divide that now. Businesses are relying on it, schools, households that did not think they need now needed. Now we need it. Now need it. Rep. Tipton we are seeing some of that during the hearing today. Just being able to have good broadband connections. Do you believe it is imperative for congress to continue to provide support for Small Businesses, to keep those businesses afloat and employees on the payroll . Dr. Holtzeakin i think it is a good idea to keep in place a Paycheck Protection Program. The first time, it did not hit all the needs. There are probably bigger needs out there. There are probably people we are not seeing in the data who will continue to try to operate their business. We are losing a lot businesses and each business we lose represents employees that will have to find a job somewhere else and that is the thing that takes time and brings economic pain. Rep. Tipton i appreciate your comments. I spoke with a Restaurant Owner yesterday who said her business was saved with payroll protection plan, the Economic Injury disaster loans came within a few days of shutting down, but they need to get that business open to operate once again. I fully concur with you in terms of throwing out brought a blanket, lets make sure we have a targeted it is worthy of note, in the senate, they have not passed we need to Work Together to get the economy going. Thank you, mr. Chairman. I yield back. Thank you very much. The chair now recognizes the gentleman from texas, mr. Green. Thank you, mr. Chairman. I think the Ranking Member as well. Thank the Ranking Member as well. I am hearing other persons. Rep. Cleaver someone needs to excuse me someone needs to mute your contraption. [laughter] please proceed. Thank you again, mr. Chairman. There are things that happen in the course of history that sometimes cause us to deviate from our program of activities. Such a thing has occurred today, is jane frazier has been announced at the next ceo of citigroup. I want to take a little bit of my time to commend citigroup for doing this but also want to acknowledge that this is not the end of the journey but it is a positive step forward. I want to thank chairwoman waters because she continues [indiscernible] i think mr. Saint nicholas, you need to mute your line, please. Mute your microphone. Sorry, mr. Green. Rep. Green i would like to thank chairman waters for her efforts to continue us along this journey of inclusivity and adversity and thank her for hr eight 160 promoting diversity and inclusion in banking. The act is one we just filed. She is an original cosponsor of it. Having said that, i would like to thank the staff for all they do to assist as we move forward. Cant do it without staff. Frankly, i will never be able to thank them enough. With reference to the issue at on march 27, congress economice coronavirus security act, the cares act, which included 150 billion dollars in local government funding. On april 11, the National Governors association issued a bipartisan statement calling for congress to pass 500 billion in additional assistance. That house responded on may 15 800 6800. The house has responded positively to the request from a Bipartisan Group of governors. I have a statement from the National Governors association that outlines the need for additional and immediate fiscal assistance to states from this statementn and this bears the name of the National Governors association chair,arry hogan, and the vice chair andrew cuomo. The Statement Reads in part this is an excerpt Congress Must appropriate an additional 500 billion for all states and territories to meet the states budgetary shortfalls that have resulted from this Unprecedented Health crisis. It goes onto to indicate, in the ence of fiscal resort fiscal support, states will have to confront the prospect of significant restrictions, but ductions to services reductions to services, hampering Public Health, the economic recovery, in our effort to get people back to work. I mention this because i want to give some clarity to the notion that this is something that impacts democratic governors only. Hardly the case. States,ts all of the but the impetus is this bipartisan statement. I would like to enter this statement for the record. Rep. Cleaver without objection. Rep. Green thank you. Useuld like to also language that would help us understand what is meant by layoffs with fire and police. The people will possibly be laid off as a result of cuts. But what this really means is that homes can be at risk. Lives can be at risk. Firefighters fight fires, we expect them to show up if there is a fire. Police officers provide protection and services that we need and want in our communities. We want them to show up when there is a need. Thea person who believes in police departments, i support police officers. My uncle was a deputy sheriff. This does not mean that i supported some of the ugliness i see from some police officers. I trust the need will be met. Rep. Cleaver thank you, mr. Green. The chair recognizes mr. Heald from arkansas for five minutes. I think the chairman, i want to thank our governors for taking time away from their busy addenda, i am sure they are looking at their emails on all the problems they are faced with, so thank you for taking time to provide advice and counsel to us in congress on how to properly tale taylor the remaining needs we have to fight the virus and get our economies open. I am also delighted to hear my friend, a great accountant and thinker on our committee, to say that it is the wrong thing to do to raise taxes in the midst of a recession caused by the coronavirus and that is good advice, i hope he provides it to his partys nominee who promised a tax increase. Let me thank you mr. Sherman, mr. Cleaver, and mr. Green in joining me in the right tone, which is we are not for defunding the police, we are for our bar and order men and women who put on uniforms, careful training, the right kinds of policies, and to make sure we get bad actors out of our police entireand not indict the universe of 800,000 americans that work to fight and help keep law and order and keep our safe communities for our businesses and families. Thank you for those comments these morning this morning. This afternoon, now. I want to provide background and andried to get slides despite our extraordinary staff, we could not do slides. I am going to hold up a piece of paper to the camera and talk about it. What is better than that . Be able to submit see it, i will submit it for the record. Rankednsas, we are similar to new york in terms of covid cases. However, new yorks economy that made close for longer than arkansas and it inhibited their ability to collect sales tax revenue which is doing our country a disservice. If you look at the slide, even arkansas,se states, texas, new york, california all have about 2000 cases per 100,000, in terms of infections, look at the difference in revenues. 14. 9 . S, texas, 4 . New york, down 9 . California is down 45 . It is similar when i look at the income tax data as well. This is a real challenge to our states but it is uneven around the states based on the states decisions about shutting down their states based on the nature of the Public Health crisis. The tailoring aspect is important and not an acrosstheboard type request in for our governors, the flexibility to spend the money you have now and extend that december 31, 2020 and i like Chuck Grassleys idea of moving get to 90 days after that fiscal year end. I think that is constructive as well. Theso highlight, looking at treasurys ig, in arkansas, we are about 90 obligated on the 1. 25 billion, even though i would say 50 has been spent. It is a moving target because i sunday reimburses and now we dont need to spend the cares act money. It has been a moving target for our governors as well. I also want in the record that in addition to that 150 billion that went out to the states, arkansas got 1. 25 billion, there is another almost 500 billion dollars advanced to the states for health care, education, unemployment assistance, and the like. Almost 750nced billion to the state in a variety of buckets. I think that is one of the most important things we can do. May i ask each governor, we will start with governor kelly, tell me what your Rainy Day Fund balance is today. How about you give me a number . Withcleaver we will start governor grisham, governor kelly had to rep. Hill thank you, chairman. Governor grisham thank you. Mexico had some interesting titles for both our permanent funds, which are satisfied, we have one of the largest reserves that are tied to education and constitutional limitation about how they are spent. Although, we did reduce some bonds for Early Childhood by 20 million. Probably more interested in our 25 reserves and we spent in a special session about half of that money already and are not going to have enough to meet [inaudible] we have 100 million left in that. Rep. Hill let me ask each of the governors to respond for the record their permanent funds or Rainy Day Funds, whatever your legislature because you are reserve capacity calls your reserve capacity. I yield back. 2. 7 billion. Legislature the removes that 2 of a Rainy Day Reserve Fund to use it for our services. Thank you, i yield back. Rep. Cleaver thank you. Recognizes for five just i willme raise one question. It is the program that the fed developed to by 500 billion from state and local governments that are suffering because of covid. On the 17th of june, i sent a letter to the chairman of the Federal Reserve and to secretary mnuchin and requested that they make some adjustments of liquidity to better assist the under that are suffering the budgetary weight of covid19. States, it for some is too expensive. I want to know if the two governors that we have here the three governors that we have , have you used the facility and if not, if it is not proprietary , share that with us because i am concerned that we have done few governors but are taking advantage of what we thought was a good idea. I would tell you that every tool in the toolbox is valuable and we appreciate and respect Congress Efforts to be multidimensional in how we address making sure that states can be made as full as possible for economic recovery. [indiscernible] currently or in the future. Guam, we are not eligible because of the requirement. [indiscernible] the program greatly helped to provide some kind of financial , to continue providing education and Public Safety. Thank you. We have not used it. We still have not had to use it. What i would caution everyone, i think two things can be true at the same time, much has been set about to we are at right now, a lot of the state would be in a better position if covid disappeared today and there was no issue. Our issue is the future. We have not used the program now, it is there for the future if we need to. Thank all of you for that response. Governor. Concern. Y sent to jeromee ofell and steve mnuchin, 97 the 255 state and local governments that are eligible, seemingly are locked out of what i thought would be something that i thought would be used all over and something to celebrate and the letter that we maybe take another look at this, to figure out ways in which they can become flexible so that muses polities so that municipalities and states and territories could also access these dollars. I am convinced now that the request we made was in line with what the governors are saying. Thisld also like to take opportunity to thank you for participating in todays hearing. I apologize for the technical difficulties that made this are unusualhese times and we try to do the best to mr. D and i apologize Saint Nicholas as well for the technical difficulties. There is a script im supposed to be to end the reading. I blast at the general counsel please reed read. Mr. Saint nicholas, maybe you can take it from here. Rep. San nicolas i am hoping that my audio is better now. Rep. Cleaver is fabulous. And you look fabulous even though it is friday there. Rep. San nicolas i am in the d. C. Area, my governor this speaks to the robustness of the technology we have in guam. My governor is having better connection than i am and i am having connectivity issues because of the reins we got hit with rains we got hit with. I am glad we found a workaround. I will go ahead and proceed with the remainder of the hearing. Rep. Cleaver all right. Rep. San nicolas thank you. The chair will now recognize mr. Loudermilk. Thank you mr. Chairman. I think everyone for participating today. I was afraid for a minute we were about to and the hearing. Im glad we had a few minutes to continue. I am reminded of something that my colleagues on the other side of the aisle do well and it is a quote by president obamas former chief of staff which said, never let a crisis go to waste my it affords the opportunity to do things that you have not been able to accomplish before. I think that is what we are ,eeing take place here today the fact that we are having this hearing, i will pine on some of the things my colleagues have come out the jurisdiction of this, ignoring rules and going forward. We are here today, we are talking about this issue, which i think we should be talking about what is working in america that other states can follow as how to deal with this. One of the directions i have taken from the beginning and the governor of georgia did, we have to learn to live with the virus. It is not something that is going to be easily defeated, it is a dangerous virus, but it is here and probably going to be here for some time. We cant put all of our eggs in the basket of a vaccine. We have to work hard for a vaccine but also we need an effective treatment. To continue this to operatecontinue this country with the virus for around with the virus around. Already provided 1 trillion in indirect support to state and local governments and of the 139 billion, a quarter has been spent. Adding another 1 trillion would be 30 times more than what has been spent so far merit so far. What has georgia done . Ofrgia is leading the way most states and returning the economy to full strength, unlike some other states. Georgia is not experiencing a fiscal crisis. This morning i have in my hand, the georgia governors august tax revenues report, which i would like to submit without objection to the committee for part of the record. Georgias august 2020 net tax revenues are up 7. 7 . In tax revenues are greater august of 2020 than they were of than they were in august of 2019. Why is that . Because of Good Governance taken not only during the crisis but before, and especially to get georgias economy rolling again. Of august, tax revenues were up by 135 million, almost 8 compared to august of last year. The National Press and many condemned georgia and pretrade georgias governor and portrayed gorgeous governor as a villain when he opened to soon. A few states would like to be in fortis position now. In georgias position right now. Construction had never been shut down in georgia and schools in much of the state are open. The state expected a budget shortfall of 1 billion for the year but the deficit was only 210 million. The governor says the tax revenue is rebounding and the state has not exhausted its reserve fund. The governor says he would Like Congress to allow him more flexibility to spend the money left from the first rescue but he does not need another bailout. Contrast that with Speaker Pelosis demand that President Trump agreed to 1 trillion for states and localities. A wellrun state like georgia does not need it while other , has asked illinois for tens of billions of dollars to pay its bills to public unions. Matter is many governors and mayors are refusing to open their economies and have mismanaged their budgets which is why they are in a fiscal crisis and georgia is not but somehow, it is now congress responsibility. States and crisis should follow like as lead and end pound of healthy people, find ways to live with the virus, and allow people to prosper again. That will bring the economy back and recover tax revenues. Yourhave time, in testimony, he talked about how two thirds of the economic decline is because people are not comfortable purchasing services that involved in person contact. Georgia would make it work with reasonable precautions. Do you recommend states do something to reverse the economic decline . Dr. Holtzeakin it is the most important thing. The most encouraging number we have seen is in the august employment report, able growth in the United States, hours, workers, at work, total payroll grew at a 20 annual rate. If we can have that growth in uniform, we will be in better shape. Rep. Loudermilk thank you, i yield back. Rep. San nicolas the chair now recognizes mr. Vargas for five minutes. Thank you very much, can you hear me . Rep. San nicolas we can share you. I want to thank the chairman, chairman what is for this hearing. I think it is in our jurisdiction and i dont think there is any question, i think it is clearly in our jurisdiction. I want to thank the Ranking Member who did not have any problem with the jurisdiction. Friend mr. Hat my loudermilk i love him and his family i thought he was going to say that one of the things his colleagues on the other side do well, that is science. Because the reality is that this is a virus that has been driving all this. California has had huge surpluses for the last number of years until this virus hits. We have been wellrun, it is the virus that has been in charge and yesterday was a devastating day for a lot of us when we found out that the president knew how deadly this virus was and has taken that has taken 200,000 american lives. He knew how dangerous it was it did not tell the truth. I also blamed mr. Woodward, if you take the president , the president had this information, he taped it but he wanted it to come out in his bookday for a le found and did not tell the American People, i also blame him. The reality is the virus has been in charge because we have had horrible federal leadership on this. We have not been told the truth, so the virus has been in charge. Who wants to reopen we all want to reopen. I live in california, of course we want to reopen. We want to reopen our economy but we want to do it in a sensible way, in a way that is safe, and we dont think we can unless we have the state we dont want to send our kids back to a school where they are going to get sick and that is why the federal government has to be involved. The federal government is the only entity that can do this. That is why the federal government was created. , notppens to be a virus the soviet union, it happens to be a virus. The federal government is the only entity that can step in like this. I know people like to throw rocks at states saying they are not wellrun. We have given more federal money that we have not gotten back then all these other states that were being helped. The truth is we need science. I want to ask my friend, if she grisham,on, senator this question about obligated versus spent money. Would you clarify that for us . That is a big deal. Are you still here . Governor grisham i am. I am still here. Rep. Vargas i dont see you but good to hear you. Governor grisham you and i have matching hair colors these days. All the new stress related to covid. It is an important question and i appreciate that i get a chance to answer it again. Take new mexico. Out of the cares act, we received just over 1 billion. This is how that money is spent and allocated. 100 million to local governments except our largest city and county which got money directly from the federal government. 50 million to Small Businesses, 28 million to tribal governments, 130 9 million we have spent on covid related expenses like testing and ppe, which is required. We have an average sevenday supply for First Responders and wantingols are Filtration Systems and they deserve it and they need more million to make sure all of our other expenses dont have but we guidance, clarity, flexibility from the federal government. All allocated, much of it directly spent, but without that clarification, states are going to be hardpressed to get over our skis about what we can spend and how. I think that clarifies a lot because people have been saying, we have all this money out there and no one is spending it. It has been allocated, it may not have been spent, and there is these technical issues, what can you use it for . We need to provide more flexibility. You, ito also say thank know you have sent a number of firefighters to our state, thank you very much. This is how we should act, as a nation, as one. We always felt it is time for us to act as one. Thank you. Rep. San nicolas thank you. The chair will recognize mr. Davidson for five minutes. Thank you, chairman. I think all of the governors thank all of the governors and witnesses. And my colleagues to participate in this, i look forward to seeing you. It is great to see you, even if only on an image on a screen. Youss working with many of and as mr. Vargas highlighted, there is not one party of signs in america of science in america but i am concerned that sometimes math has become partisan. As we talk about the math behind the spending, it is easy to lose sight of the money when the debt has accumulated for our country. It has been done in a different way. It is not money that is borrowed because when you borrow money, there is a lender. There is no lender. We just print it. I grant you that some people think you can print money since you have a sovereign currency and you can do it in an unconstrained way. Tohink they have a plan collapse our economy and our currency. When you print money, it destroys the value of all the other dollars in existence and idea that we have been able to get away with this so far is a moral hazard. Before we print more money, which we are divided on, not entirely on partisan lines, but divided amongst ourselves in terms of what is the right number, we are divided by state and locality on what is the right number of additional funds , but there is a great amount of consensus on the amount the need for consensus and clarity on the dollars that were spent. Governor grisham, you highlighted the 1 billion you had, 700 million of those iflars, you would benefit you had more flexibility. That is the same thing i have heard from my governor in ohio, my treasurer, my state legislators, and i spoke with all the local officials around my district, whether county commissioners, mayors, school superintendents, what have you, and they all say, if we had wider latitude on what we use the funds on, we can put them to use more swiftly. If you run out of money, maybe there will be more consensus on whether to spend more money and on whats. Right now, this money is sitting in reserve because they clarity is not there. Introduced in may, june the flexibility for states and localities act and it would be great to see that move because there is not a big divide on providing that flexibility. A maximumrovide amount of discretion consistent with federal law to spend money for states and localities. Once the state has funds, they can allocate it to their counties, smaller municipalities and what have you and it would not come with Strings Attached that are there today. We have had support not just from elected officials but from the township association, ohio municipal league, and individual Government Entities around our state. I would ask permission to enter those into the record. Hopefully we can do that. The sound we created money caucus recently to deal with the printing of money. What concerned you have about the tradeoff of flexibility now for money that is in circulation the moral hazard of bigger deficits and not borrowed money but printed money . Dr. Holtzeakin i think the Federal Reserve has done a tremendous job stabilizing Financial Markets but that is the easy part. The exit from that will prove to be the hard part. How do you get out of this without harming financial investment, ensuring the soundness of money in the future . The thing that concerns me the most about the federal budget we entered the pandemic on and on unsustainable trajectory. When we exit it, we will be on an unsustainable trajectory. There is a theory about how you can have higher debt and it is no big deal. That theory presumes the nation as stable gdp. We have not stopped the unsustainability ever. Thank you for clarifying. Thank you, chairman, and everyone who participated today. Rep. San nicolas thank you, your motion will be carried without objections. The chair will recognize mr. Gottheimer. Thank you, i appreciate that. Thank you for the time. I want to thank the panelists for being here. The pandemic caused a Global Economic crisis, as you know. The pandemic is attacking state budget from both sides of the Balance Sheet, the health care and economic response has led to a higher cost for State Governments while states are facing revenue shortfalls. The governor in new jersey said that without further assistance, he believes the state could have to cut half of its state and local Government Employees. I have heard the same concern from our mayors, these cuts affect our educators, firefighters, Law Enforcement. I know states are facing similar challenges and it is clear local governments are struggling through new fault of their own through no fault of their own and it could be firefighters and teachers who are left holding the bag. I would ask the governors, would you each speak to the economic effect that cuts in these services will have on your state s local economy and who will feel the brunt of these cuts . It is good to see you. Governor walz good to see you, congressman. I want to echo congressman davidson. Being a member of the committee for responsible federal budgets, i am concerned about it, but there is a time when austerity can have a drawdown and i think we are going to be left with that. If you are of the mindset that these employees dont add anything to the economy, they are access, that may make sense, but even if you take that into consideration, they are paying mortgages, car payments, doing the things that drive the economy. I can make the case that these employees are providing valuable services, but we have few tools and what i am fearful of, our biggest expenditures fall into health care and education and at a time when those are the things that are in most need, those are going to fall heavily on those least fortunate, and the way our system is set up, they are going to hit communities of color much harder. We are doing everything began to shield them, to think about this. This is not a theoretical exercise. We are obligated to come up with these things and implement them. Spending,o deficit there is simply either it is there or is not. That is what we are up against. This talk about more flexibility and longer time, wonderful. But if that plus what goes on further, we have to maintain our vigilance until this is over. If we cant, business is built close, schools will close, and it gets worse. Rep. Gottheimer are you facing budget holes because of this . Governor walz 4. 7 billion dollars, it will go further. That is out of a 50 billion budget. Obligated. Se are some of the work you did around the increases are helpful and those populations need it. I want to be clear, i am grateful for everything you have done, but covid is not over and those bills are coming due. Rep. Gottheimer thank you, governor. If i can also turn to governor grisham. Can i ask one more question as well . Going tohat this is place on your essential workers. Governor grisham it is nice to see you too, congressman. Infantry, states are, in dealing with the pandemic. Who do you think is doing the testing echo Public Health workers. Who do you think is delivering meals to students . Educators. Who was it that is assisting us with containment strategies and outbreaks . The National Guard and our First Responders. Done hiring freezes, reduce class sizes, reduced budgets. Got an additional 2 billion shortfall going into the next fiscal year. My total operating budget is just over 7 billion. No raises, no investments, no hiring, asking everyone to take investment,l 5 , no we cant keep doing it. We are going to need all of the above. [inaudible] rep. Gottheimer thank you, i yield back. I appreciate it. Rep. San nicolas the chair will now recognize mr. Kristof for five minutes. Thank you. I think the witnesses for remaining in the meeting today. Governor walz, two unrelated questions. The covidalked about money you have received. My question is, the money you have now, i know some of the guidance you have gotten from treasury may be ambiguous in terms of whether it is related or not. Anybody from the treasury department, what would you ask them in terms of giving you specificity in terms of what is covid related and what is not or what you want to know is related that could be used for that purpose . Governor walz thank you. A real worldyou example on this. , broadband. Onic we felt like we could make a direct connection to telemedicine, which is up 14 . Then education, making sure students have access to this. It was hard to get clarification but one thing they were clear about is we have to have the out bypent and obligated december 31 and my state does not allow me to pay for contracts until the work is done. It is those things that would have been helpful and there are numerous of those. You should ask for every penny where that is going, you should have accountability, and you better make sure it is being used for what you asked it to be. What i am hearing if you want us to use this wisely, to get it moving, and we have been held down. Im not critical of treasury other than to say we never got good answers and we are running out of time. Onnow you have to work fiscal and calendar years but the virus does not work on fiscal and calendar years and openended this would help us. Unrelated,f this is but in your state, you have a Major Airline hub, Delta Airlines. What can you share from Delta Airlines in terms of when travel will resume . What did they think im six months out, will their levels be . Governor walz they are nervous and you have seen projected layoffs and things. What i hear is i hear this from people who travel and i march, butown since they have this down pretty well. But it goes back to our dilemma again. It does not matter if there is a restriction or mandates. If people dont feel safe, they are not going to go back. What they are worried about is if we have these different ideas where a plane takes off and lands has different requirements and all that, they want what all of us want and i dont know the virus will give us that. They are nervous but for many of you, you are feeling the same way i am. I amwe get over this, flying, especially january, im going to visit mr. Vargas and get out of here. I think they think it is pent up. To be a going realignment of our economy. I cant imagine Business Travel resuming to the point it was. We are going to have to think about that. Rep. Kustoff thank you. If there is another package, a consideration for travel, youfically the airlines see different projections whether it is 2022 or whatever, what are the implications if congress does approve more money for airlines for those out six to eight months and what are the implications for the airlines if we dont approve . I would note for the record that treasury was given the cares act money for airline loans and less than 1 billion has gone out. The treasury performance continues to mystify me. There is a need and they can beat it and im not sure why they are not. Giving further assistance to airlines, they are a critical part of the supply chain, i dont think this is supporting some recreation, this is making sure that medicines and other things get delivered. And you have to make sure people only take it if they are going to be viable. Loans, not grants that allow them to survive. You veryoff thank much. Rep. San nicolas thank you. The chair will recognize himself for five minutes. By thanking myin governor for making the time to join us in this hearing. She is on the other side of the world in our territory of guam, equally american jurisdiction, and she joined us at 2 00 in the morning and has been here through 3 00 a. M. Guam time while she still had to manage a pandemic that is growing on our island. One of the things i wanted to open with is acknowledging the fact that this committees inclusion of guam as a member, as a vice chair, inclusion of diversity as a subcommittee and inclusion of the guam governor in this hearing has demonstrated in the most purist of forms the fact that this committee is looking out for every american in all of our territories, both hemispheres. That is one of the reasons why we are gathering to discuss the heroes act and discuss the circumstances that it will impact because it has jurisdictional basis if for no other reason than the fact that providing revenues to states and territories would be critical for us to make sure that financial circumstances do not deteriorate the capacity for debt service and capacity to maintain their bond ratings. I wanted to open with a question to our governors to begin with my governor. If we dont provide additional funding to states and territories, is there a rest that our bond ratings a risk that our bond ratings could deteriorate . Gov. Leon guerrero there is that risk because we have to have the revenue to provide the service. If we can get those assistance to also reach us so that we can bring back our tourism or i think we should have Economic Diversity and we have to adapt and innovate in terms of what economies can we use and how can we make sure that we are innovative enough to look at the resources that we can use. It would definitely impact our Credit Rating because what is our capacity and ability to pay those Debt Services down . Rep. San nicolas thank you. I point the question also to governor grisham. Governor grisham easy answer, yes. We have worked hard to improve. We spent eight years in a former administration after the Great Recession, we never climbed out of new mexico. We worked on and astarte basis. Bond ratings were lowered and we were working to correct that and we are on our way. Reformsplished pension and investments and infrastructure in infrastructure and all of that is resolved. That is solved because of covid and our bond ratings will suffer. Rep. San nicolas thank you. Governor walz. Governor walz absolutely. I would associate myself with governor grisham. We have worked with the same types of things and put ourselves in Strong Financial positions but this put it at risk. Rep. San nicolas i think the governors for sharing that because that is a serious implication and serious responsibility of this committee. Tois a jurisdictional issue ensure that we are providing the capital necessary during these times for our states and territories to not be suffering needlessly, Credit Rating damage and potentially even risk as a result of these pandemic revenue circumstances. I would like to highlight that as we consider the discussions because as our governors are faced with the difficult choices of whether to fund health, education, service and eccentric, the agencies will be looking at the revenue circumstances and adjusting their risk profiles accordingly and that would not only have an end tacked on the ability for states and territories to secure capital, but it would also provide circumstances where longterm prospects would be adversely affected because of these impacts. As the financial committee, we have the responsibility to be able to provide the liquidity they need in order to make sure we do not have these impacts. Thankingto close with the governors for joining us here today and i wanted to thank my governor for more for her participation and for staying with us this Early Morning our. I now would yield back to the committee and recognize mr. Gonzalez for five minutes. You, chairez thank and to our governors were being on today. To echo my thanks to governor guerrero for being on and i appreciate your testimony. We are going to join that initiative to try to help at the fed level with respect to that facility because i think it is important for you all and i see no reason why you should not have access to it. I appreciate your testimony on that. Ofant to try to get a sense what the right toggle is for the aid because i believe we need to provide Additional Support but i want to make sure it is right sized. I want to start with a question to dr. Holtzeakin. You said this with the other question, but i want you to say to get say it again. Budgets at the state level should track what is happening in the broader economy. , but not going to be exact if the economy drops by 3 , you should expect similar declines on the budget, is that fair . My only point is this is a little bit different. Right, a little bit different but directionally, it is going to be accurate . 19, my staff looked this up, the budget of the state of minnesota was 23 billion roughly . You are on mute. I apologize, that is correct. Rep. Gonzalez in terms of cares 2. 18llars, so far at billion allocated to the state. That is for fiscal year 20. If i just used the 19 number, roughly of what you lost. That,alz we moved 45 of 841 million to local because we manage Public Health counties we manage Public Health and counties implement it. Was 800 you that said . 841 million. Rep. Gonzalez so roughly 6 stayed at the state level. I will start there. Do you expect the economy to year over year 6 . An expectation. We dont expect it that we had the added expense that we did not factor into our budget. Rep. Gonzalez definitely true on that. Governor Lujan Grisham, same line of questioning. At roughly 7 billion fiscal year 19 for the states budget. 1. 25 million has been allocated. 17. 7 , prettyly sizable. It feels like it should be enough. Im just being honest. Maybe walk through why it is not . Gov. Grisham thank you. Statesy appreciate that, to operate Public Health systems differently. We are a centralized Public Health system so everything happens at state level. It is our responsibility for all of those deliverable and direct Services Related to covid. 1. 67 billiont and it got allocated in the following way. 100 million to local government, 50 billion to Small Business, 28 million to tribal governments, 139 million is what we have extended so far without having clarity from the federal government. Rep. Gonzalez if i could reclaim my time briefly because we are running low. Do you see where im coming from . Full budget to your state and we are expecting a 4 decline in gdp. Again, i want to help. I am somebody who would be willing to chip in for sure. It is hard to wrap my head around the trillion dollar number that Speaker Pelosi has turned out. I cannot imagine how you would come up with that. My time is up, i yield back. Thank you. Mr. He chair will recognize lofton for five minutes. Thank you. I want to welcome all the governors to this committee and thank the chair and Ranking Member mchenry for hosting this hearing today. , touestion centers around all of the members on this committee and i welcome my two colleagues back to the house. It is wonderful to see you all again. Countrys across this have been providing housing even though many renters have been unable to pay for the rent. That is significant. Does this will not work . Can you hear me . Can all members mute, please . Continue. About one third of adults in florida are struggling to cover julys rent and will expect to have trouble paying august and september. , access to stable housing is vital especially during the pandemic and yet we have done little so far to support landlords. 100eroes act included billion in rental assistance that would be paid directly to landlords once tenants qualify for assistance. Can each of you talk about what you are hearing from small landlords in your state and why the emergency rental assistance is critical . Congressman, i will jump in. Illpreparedly without Additional Support to deal with Small Businesses and individual protections for mortgages and rental assistance. Given that new mexico has the highest per capita women of color owned businesses, we know that women owned businesses and women of color have far less equity buildup in their businesses, far less access to credit. Their ability to negotiate with landlords who are also paying mortgages on large properties, the trickle effect here means that they are going into further debt providing relief to them for mortgage assistance doesnt quite work. Not having that Small Business arm in our state we have slower economic recovery and much larger gaps in our ability to meet a stick needs. We are hearing an earful from local businesses, independent Business Owners, Small Businesses across the board about their that cliff they are at that cliff particular going through the end of this current fiscal year. Ok. Good to see you, congressman lawson. I appreciate this committee. Congressman gonzalezs questions are fair to ask, what we are doing with the money and how we are spending it. We ask people to stay home to protect Public Health. Of thingsed a cascade where they could not pay for the rent and landlords could not pay. I would tell you we are extremely worried. We put 100 million in minnesota into rental assistance. , would be interested to hear and again, we have someone who understands this. I am fearing the cliff that is coming. They may not look like they are in the state budget but what happens when 27 of renters are not able to pay rent come the end of the year and how do we address that and how does the market . If you dont believe that the support we are getting or the help we are putting in is the way to go, how will that work out because im worried about it. It is an issue, it is impacting us and we are worried. The governor of kansas . Kansas is noor of longer joining us. We can move on. Assistance to the Small Businesses and renters is going to go a long way in our island. We are a very fragile island. Our revenues are very limited. Our economy is very sensitive to tourism. Ngm afraid about increasi homelessness. I am very concerned about increase in business is being shut down which will affect our economy. Clawson thank you. That year will recognize mr. Stlyle. We are here again using valuable Committee Time to talk about ideas and debate bills that will not become law. Discuss ideas without jurisdiction in this committee that are not connected to reality. Lets think about where we started. Billion provided 765 to support state and local governance. Governments. That included funding for schools, and Employment Benefits and other programs. 150 billion directly. Recipients had brought destruction discretion on how to spend. State and local governments the resources they need provided to get the money out the door quickly and meet the urgent need. We are months later. Billions and billions of dollars of this has remained unspent. It would be worthwhile to figure out why that money by so many states has not been spent to help people in need. Instead we are talking about more money. Lets dive in. According to the department of the treasury inspector at the end of q2, we are now in quarter three. In q2, illinois spent 14. 4 of its money of the grf resources. Michigan 3 . New jersey 2. 1 . 3. 8 ofn had only spent the money. Some of these states will point out that they have allocated more of their money to different purchases. Even if those funds are left in the bank account. Simply earmarking the money does not put the money to work for the hardworking men and women who needed relief. It does not buy ppe. It does not treat addiction and mental illness. It did not get our kids back to School Safely which is so absolutely critical when you look at states like wisconsin that have only spent 3. 8 at the end of q2 and our state does not give us an update as to where the funds are. We are told governments are in crisis and billions of dollars are needed no questions asked. We need to ask the hard questions. If it is so urgent, why hasnt the money been spent . Where are the Rainy Day Funds for moments like this . How much tax revenue is actually gone down . In wisconsin, tax collection has gone up this fiscal year and only slightly missed three coronavirus projections. Thanks to the high quality work of former Governor Scott walker, keeping money in the bank and giving us a cushion to navigate our way through this pandemic, wisconsin did it the right way. My colleagues want to send another 1 trillion state and local governments to spend it on anything they want. Hr 6800 are asking hardworking folks in wisconsin to pay for fiscal mismanagement of states like illinois that is a complete physical disaster. I am adamant, i have been from the beginning that wisconsin should not pay for irresponsible spending decisions made by our neighbors to the south. I want to emphasize that im going against not going against providing additional assistance in targeted manners we this broad approach have done needs to be called into question and we should be spending our time asking those questions rather than just having a conversation of how we spend additional money to states without asking any of them to make the heart fiscal decisions in particular i states to the south other than in wisconsin where we have done a good job. That is why i introduced legislation to provide state and local governments with grants to address the rise in addiction and Mental Health needs and challenges associated with coronavirus. We need specific targeted relief, not just broad brush stroke trillion dollar approach that we see time and again discussed here. We cannot use a trillion dollar blank check especially when the facts do not match the story. We have to do better. This committee needs to remain focused and disciplined. I find this hearing incredibly unproductive on a topic that we should be on something more relevant where we are dogging diving into the fact instead of the broad brush stroke we are seeing here today and i yelled back. Thank you. I yield back. Chairman, i can tell you as a person that comes from a city that made history in the largest municipal bankruptcy in the nation, i can tell you that making sure local governments can pay their pension responsibilities, making sure they can provide for residents and showing up for residents i think is a very critical issue for our nation. If folks looknk, at the billions of dollars, close to 300 billion that we used to bailout millionaires and billionaires, look it up in the cares act, i wish we could pull those corporations before this committee and ask them what did they still spend the money on. The one thing that i like is when we extend this money to local and State Governments, it remains in the publics hands. We know exactly where it is going. Late mayor of the city of detroit said that when the nation gets a cold, detroit gets pneumonia. Held true during this pandemic. Have heard from frontline communities and organizations that work within a lot of our cities. Many of them are very small. Some of them are challenged sanricts like chairman nicolasdistrict. Close to 1500 detroiters who died of covid, when i look at the thousands, close to 15,000 folks within my community that got the pandemic i know that a lot of the reliance on stopping the spread of covid lays on the state and local governments always. Not congress. Not the federal government. It is the state and local governments on the front lines. Strongly thatvery the Federal Reserve not only offer support for state and local governments but to adjust their Lending Facility to make the program more approachable for states. , undermining the impact of the one thing the Federal Reserve has directly in its power, is dealing with the programe municipal and i know somebody mentioned it earlier in the committee hearing. That functionality excludes about 97 of state. States. The Federal Reserve bank easily bailed out banks with urgency. Forre not doing the same states, cities and counties which i truly believe would have been a tremendous help for the whichf destroy detroit left so many of our employees that work for us for decades, lost so much of their pension because of the bankruptcy. Question is what each of the governors comment on whether you looked at using the Municipal Liquidity facility. If you have, house has how has it affected and what are your assessments on whether or not we need to changing it, whether or not you think it is something that could be reformed or modified so that it could be accessible. Walz. Start with mayor gov. Walz thank you, congresswoman. You must not be talking to as many as you should. I would like to ask chairman san icolas. I can show him where every dollar is going and how it is being expended and 92 of that is out there. I think that is an important question. I dont know how many times im going to continue to answer this. Amount please new note i am pretty new, please know you have to go through a process. We dont know where the billions of dollars we spent more money for the nares and billionaires than on the stimulus we gave to neighbors a question nation neighbors across the nation. I would like to talk more about my questions. The shortterm borrowing tool on cash flow issues, at this time we dont have a cash flow issue. They are not that different in this conversation. We are not that far off unless you believe we should not be addressing covid at all, unless you believe it is over. If you do think those things are go on that. Hould i think the entities would be a useful tool for us. It does not work because the catholic issue is not where we are at. Issue is notlow where we are at. I think i ran out of time. Will submit the question to all of the governors. I really do want to talk about this beyond the overflow to all the governors. Even to carry the debt so that you can respond to covid is important. Even just to hold it for a certain amount of years would be very effective. Thank you so much, chairman. Adviseditnesses are that they may submit written testimony in response to any russians that were posed any questions that were posed and submit documentation they feel is relevant. The chair will recognize congresswoman axne for five minutes. Thank you to all the witnesses for being here today. This is a very important topic. As someone who has spent a decade in State Government under democratic and republican administrations, i know how important this is. Some of the comments that i have heard today why people dont want to support state and local funding, really do not sit well with me. Every state in this nation has some type of balance budget requirement and so do the municipalities within those states. There is a requirement on almost every part of the country. There are not people out there spending willynilly trying to limit opportunities for their constituents by not keeping a good budget in place. Somebody who has been there working on the recovery act under president obama, i know how important it is to support our state and local municipalities. Governor walz it is great to see somebody next door to me on this hearing so i will start with you. Just for a little background, congress provided 150 billion in the cares act to cover costs and that has been helpful. I think you mentioned that earlier. Isnt it true that the bigger problem for your budget right now is loss in revenue . Yes,grisham thank you, that is correct. And i dr. Holtzeakin hope these projections are right that if we get a rebound and we start to see encouraging numbers, that does not do us any good because revenues have dropped off during the quarters and we have to make our budgets balance as you said, we are obligated constitutionally. That is the biggest problem. I think the questions are valid in where and how we are spending. You worked in local government and you get how this works. That is the problem. Thank you for that. You talked about local government. This is even more exacerbated for many municipalities. Im in the des moines area. We are estimating losing 10 million per month since we first started out with this. This is going to be a huge expense for the city that does not have the opportunity to show off these revenues. And then talking to smalltown mayors, they are trying to figure out how to shore up funding for one milliondollar whole that has been created which is a lot you think about some of the small rural towns. Meanwhile in iowa a few weeks ago we had the derecho which was an extreme storm. Our cities are trying to figure out how they are going to make sure that we put people right again after that with our hands literally tied behind our backs because of the expenses related to kobane. So life goes on related to covid. They still have revenues they need to shore up and take care of other issues on top of covid. I know you have been trying to hold off on making budget cuts for a long time. Could you walk us through what some of those cuts might look like for your state if you had to do this . Yes and i have asked my agencies to start preparing and it would have to be across the whole spectrum. It needs to be budget reductions and i have asked them to look at revenues. I share the leave it is hard to ask for revenue increases when you have economic downturn. With that said, it is hard to balance my budget and some people think get rid of State Government. If i laminated the entirety of if i eliminated the entirety of State Government, that would be 10 . The biggest part of our budget by far is healthcare and education. Especially k12. At a time when we know students need to get caught back up, we need to be innovative, that is what is becoming challenging. I agree with everybody. We are all finding creative ways to deal with this. There is this necessity that for a state to be able to balance their budget of this severe of a downturn, it is going to be very heavily dependent on those cuts to the most important things that i would argue need to grow in the future. And again, this is different because we ask people to stay home to protect Public Health and the only entity that can help is the federal government. Collapse ourose to Education System or collapse our Healthcare System in a time when we dont believe that is the right way to go. We have not made those decisions yet. When you look at the different scenarios, there is not a really good one. Thank you for that. Economists estimate we stand to lose 5 million jobs if we dont provide support. It takes me back. I want to turn to the recovery from the Global Financial crisis we had in the past. I think it is important. We knew that was a slow recovery and i was part of that in our State Government. It is established by economist including the International Monetary fund that job losses of state and local governments was a key issue for the recession and the difficulty in coming back. Governor Lujan Grisham, it is good to see you. I think during that time you will you were just becoming a county commissioner when we were recovering from the last recession. Is that correct, about a decade ago . Is she on . Well she may not be on. I wanted to touch base with the governor because as i mentioned having an a part of that recovery process, it was the code in determining what the states were doing to make sure they could meet the Economic Issues they were facing. We had difficulty in iowa and i hope to not see it again. I wanted to close this by saying this is such an important subject and im glad you are here. It is why i set forth a bipartisan bill five months ago to make up for the loss revenues at a state and local level. We need to get this done to ensure that essential services that are provided continue to flow so we can educate our kids and keep our economies moving and also protect the health of our constituents. Thanks so much. Thank you, congresswoman. Dr. Holtzeakin, good to see you again. Thanks for being on. Governor walz as well. Collectively the states and counties either directly or gotten 1 have trillion in relief funding and only 25 of the funds have been used by the government. The situation does not appear to be a funding problem but more of a flexibility issue. That is why i introduced along with a friend and a colleague, 709 and it ishr called flexibility for states and localities act. The bill gives states greater discretion over how to spend funds allocated by the federal government. In your opinion, what are some additional steps we should be taking to make it easier for states and localities to utilize these funds . There are i think legislative provisions. Thank you for your efforts on that front. There is also the administrative coming from the agencies. The money has to flow through federal agencies. That is not always a smooth process. That is also where a lot of the ambiguities, in. Place g takes the where a lot of the ambiguities, a come in. I think the biggest improvement will be to clarify the agencies roles, getting the agencies roles in getting it cleaned up. That would help a lot. Rep. Budd in Northern California about 9 of funds have been used and according to the National League of cities, 32 states are withholding funds from their local governments. Northern california is providing funding to county governments but excluding city and local governments. Are these the reasons the of federal funds are going untouched . Gov. Walz presumably. The cares act was designed with speed a paramount issue. Government stepped in and congress provided an extraordinary amount of taxpayer vacuum to stop the fall. It is frustrating to see in many ways that it did not happen with speed it was intended and finding out why is important. Rep. Budd thank you. The third question is multiparty. What is the best way to support state and local governments. Is it through another federal bailout . The nuts go back to and bolts of this. You cannot do anything better than to get the economy going again and getting the taxes going again. That is the lifeblood of those funding streams. People often harken back to the Great Recession. For theook at the data country as a whole, states and localities did not lay anyone off for the first two years. The layoffs came late due to the fact that there was very poor recovery and very slow recovery and those tax cases did not grow there where they were anticipated to and should have tax bases. That is why it is important. Getting the economy back to as high a level as possible as quickly. The other part of the question, what is the best way to support low and moderate income workers . Best way fore those who have a job is to enhance the return to work. You have an income tax credit, if you use that, that is the vehicle. Work, overallof Economic Growth is the fastest way to get people back into jobs. There will be a class of workers who will be the subject of a big restructuring. It will not look the same in the years to come. Finding the skills to get those jobs is worth taking about in this moment. Can we help the low end moderate income workers . That was the ppp. Check writingest machine in the world. Give it to the business. Keep that economic infrastructure in place, make sure the workers have their regular paycheck supported their families. There was a lot of monday morning quarterbacking on that. I think the 500 billion that went out was a great accomplishment in offsetting the downturn. Thank you. I yield back. Members,advisory to governor Lujan Grisham is no longer able to continue with us. At this time the chair will recognize congresswoman porter for five minutes. Thank you very much. Governor walz, thank you for joining us. I know minnesota and so many states are facing the same challenge as california. Everyone has to make difficult decisions and families including kids are bearing the brunt of it. We really dont have to. Governor i am sure you are familiar with the idea but for the folks at home, the individuals with disabilities education act, it is the federal law that requires schools to provide services to children with disabilities. Givesderal government this funding to the states. When it was passed, the federal government promised to fund 40 yet the closest we have gotten in recent years and 2019 was 13. 8 . I have been helping my thirdgrade daughter with homework and what i think we can definitely say is that 13. 8 is not equal to 40 leaving our state with a big shortfall. In california last year we underfunded this program by about 22 billion nationally. Has minnesota ever gotten full funding from the federal a . Vernment for the ided we did not. Fundingaking up ida above 20 . Underfunded kids with special needs by 22 billion. Money know how much secretary mnuchin negotiated for the big bang for processing no risk ppp loans . I do not. The big banks got 18 billion for processing ppp loans. That is enough to cover the cost of fully funding the i. D. E. A. This pattern continues as we look at it. Do you know how much the house set aside in the heroes act to deliver k12 schools to have instruction, teacher training, maintaining School Personnel . You know how much the house allocated in the heroes act . We do and it is substantial. Is a big number, isnt it . 58 billion. But you dont have that money, do you . We do not. Do you happen to know how much we allocated for the airline during Coronavirus Relief . I do not have the total. Guess what . 58ust happens to be billion. 17 billion went to defense. Ontractors the senate will not even vote on the heroes act to give our kids that 58 billion. Do you know how much we spend nationally on salaries with School Employees in a year . I dont know the total. About 511 it is billion dollars. Do you know how much secretary mnuchin negotiated work on Financial Relief for Corporate America . If i had to guess, i would say 511 billion. I dont know. Pretty close. 500 billion. You are good at this. And yet we have only used a little over 15 of that money. When it comes to our kids and our special needs kids, apparently we are out of touch. With state budget cuts, how much could your schools lose this year . It is a substantial amount. We dont have a lot of places to turn to. It is healthcare and education. Without the support, can you stop paying for teaching . You could, but the applications are dramatic in terms of longterm sustainability and ethical issues. Under federal law can you stop educating children with disabilities . You cannot. We do obligated, well, our best and maintain that effort. Even though the federal government has never kept his promise of delivering you 40 of the cost . This issue is personal for me. You would not know it from how much i love to talk now in this hearing, but without my speech therapist i spent five years in Speech Therapy in Elementary School and i know how important those services are to allowing schools to fulfill their potential. We have to educate all children including children with disabilities. I hope we step up and deliver that relief to minnesota and other states including california. Thank you, i yield back. Congresswoman porter, thank you. Thank you very much, a pleasure to see you all. Governor walz, i had all sorts of homework that i have done for the governor Lujan Grisham so im going to have to start with you. I wonder if you can put some numbers to some of the stuff we have been talking about. Cost thatas the added your state had specific to covid . Could you estimate how much of a hole . In the beginning would put 550nd 50 million in million to fight covid. We had a surplus coming in the next year. That turned into a 2. 5 billion deficit. 4. 7 billionis dollars and my guess it will grow bigger. Our revenue dropped off 8. 1 billion. Versus 500ion billion. What is that, 16 different . In the cares act, we covered the toid cost, were you able recoup most of the costs from covid . Received 2e billion from that. We put out 1 billion of that directly to our largest two counties and cities and 841 bi llion to our counties. You have a big hole. Quickly, when people ask about the spending, counties are managing this we have counties with zero cases and the representative from iowa will understand this. And then we rocketed into the top 10 counties in the nation because of our poultry and protein processing plants to read those counties went from having no expenses to expenses that were bigger than their entire budgets. One of the things is unpredictability. I have had to maintain my testing regimen. As far as i know for the next 12 to 18 months. 177 million. Thank you for doing it and i apologize that you have had to and the president decided to let states lead. This is what happens when you have no leadership from the top. You said a couple of times that healthcare and education is the bulk of your budget. On a percentage basis, how big is it . About 80 . For all practical purposes, are you subjected to balance budget rules . Gov. Walz we are. If you do not get money from the federal government, do you have any choice but to make draconian cuts . Gov. Walz it is a very difficult one. Probably not. I am in a divided legislature which is both good and bad and we are going to have to come to an agreement. That is what is on the doorstep. I know i talked to our governor in illinois. Havepect that you communication with the president at you as you communicate. Back in march when the president was telling bob woodward that he knew this was worse, did he ever convey that to you or the other governors . Gov. Walz i dont believe so. Have weeklyt would calls with the Governors Association so all of us were on their. I dont recall that. How much of your time do you spend managing people who think that this virus is not as bad as it might be and that masks are not necessary and that you can take unproven medicine . Gov. Walz a lot. I think it is a lot and i think it is unfortunate. I am home today mayo clinic. I think they are valid. This discussion shows there are valid different approaches. The elephant in the room is whether you believe covid is a threat to the health and has to be managed or you could simply let things go. That is the trouble we are in. The signs dont lie. Would your life be if the president had been honest to the American People in march about what he knew . Gov. Walz it is hard for me to speculate. One of the things i would tell you all as a member of congress and then as a governor, i have to deal with what is in front of me one day at a time. That is why i wanted to be clear, i am incredibly grateful for what he has done, but there is more to be done. If you could just step with us, we would be grateful. Thank you, governor. I yield back. Just an advisory to all participants, governor guerrero had to vacate to be at the hearing. The chair would like to recognize congressman presley for five minutes. Congresswoman presley. My colleagues on the other side of the aisle and their counterparts touted their messaging bill in the house. We have offered a comprehensive relief package that actually meets the scale of these crises, the heroes act which includes over 900 billion dollars in direct aid to states and cities. Collectively we are facing a pandemic, the worst economic crisis since the Great Depression. A historic moment demanding this country reckoned with the reality defined by systems of systemic racism and inequality and oppression. While this virus may not discriminate on race, every system in the United States from economic to education to healthcare certainly does. For black women, these disparities are compounded. Today we face a housing crisis where black women are twice as likely to be evicted, a Public Health crisis where we are up to three times more likely to die of the coronavirus and an economic crisis where we are twice as likely to be furloughed and 30 more likely to be out of work. Andsenates refusal to act modify the terms of Municipal Liquidity facility have home strong states and cities capacity to manage crises and to provide the necessary support to children and families. Even as chairman powell has repeatedly acknowledged the disproportionate effects of this pandemic on people of color. I am wondering if you could speak to these Racial Disparities and how that shows in that we seee communities of color have disproportionate higher rates of infection, hospitalization and fatalities. I wanted you to speak to the historic budget shortfall and what this will mean for Public Sector employment and what that impact will be on the services they provide. Thank you, congresswoman. I am the last one standing. I think it is appropriate that i do need to answer this because i am a state i am the state where george floyd was killed in front of the world. I think a lot of thoughts we had about ourselves and i am proud of minnesota ranks first in educational and chief your white and last if you are black. The same can be said about homeownership, entertainment and many of those things. Early on when people were saying covid was the great equalizer, you are right. It was not the great equalizer. It exposed Health Disparities and everything else. Anytime you have coming down term whether it was caused by the housing bubble whether it covid,s case because of it is falling disproportionately on those communities and i think we are trying to use this as an opportunity to address those systemic issues, to listen to communities as they craft solutions. That is going to take some resources to be able to do. This is not us asking you to help us fix our problems. We are asking you simultaneously in a system as we address covid to address it in the right way so we can come out the other side of this. I worry and you are right, congresswoman. On the resourcing side of things and acknowledging those Racial Disparities, those Health Disparities, the heroes act also included a significant increase in the federal medicaid matching rate. Briefly could you speak to how increase in your ability to really manage this pandemic . Gov. Walz it is huge. I would like to see the heroes act but in negotiating, please do negotiate it away. That has a huge impact and those on here asking us to be thoughtful and targeted, that target is the most that targets the most vulnerable communities and makes a difference. That is when i would ask you please keep in. Thank you and let me return to another question i had which about have been speaking Public Sector employees with the budget shortfall. Could you speak to what that impact would be on the services they provide . You walz it is huge and heard it on the local level, you are talking about local entities with Public Safety and that is a discussion across the country we are having, how do we we imagine Public Safety where that is our true outcome and it has respect and equity. For us it starts to become a real problem. There are few resources for us to manage that budget. It all keeps coming back to health care and education and those are fundamental tools to the future. They are fundamental tools to our Economic Future as a country and those are what we are worried about. That is my time. Thank you for being the last one standing. Congresswoman presley. That year will recognize congresswoman weston. Thank you, mr. Chairman. Governor walz, listening to you and the other governors about what your states are experiencing, it sounds like what we are experiencing in virginia. We are known for our fiscal responsibility. We have a aaa bond rating. We cannot engage in deficit finance spending. We have a balanced Budget Amendment and everything we do has to be paid for. We had a 300 Million Dollars surplus at the beginning of this year and we are projecting a 2. 7 billion dollars shortfall in the next two years. Our state legislature is doing a special session to sort out the budget and the legislation we passed early this year will have to be put on hold. Things like raising minimum wage Free Community college for in demand fields, affordable housing, expanded access to healthcare and increasing k12 funding which is still funded at previous session levels and i think we are not alone in that our k12 funding has not come back to where it should have been after the Great Recession. Those are just new initiatives. We will have to make cuts to other areas of our budget. It is going to exacerbate the inequalities that have already been made worse by the pandemic. I think you and other governors have done a good job about talking about the austerity and decrease revenues you are experiencing. But i want to talk about some of the new expenses you are having to deal with. In particular dealing with the Public Health response. Very early on in this pandemic the Administration Made a conscious decision not to implement a National Strategy to battle the virus and instead lifted to the states to shoulder the responsibility and cost of doing so. Declined toration invoke the defense production act for things like production, Domestic Production and distribution of ppe, production of test kits and things like that. In virginia our governor has joined with a Bipartisan Coalition with six other governors to buy instant tests and distribute them through the state network. It would have been better to have a National Strategy. Can you speak briefly about what your experience has been in your state having to deal with increased costs and less access to the supplies you need . I think you are muted. Gov. Walz thank you, congresswoman. I am not a complainer. I supervised a High School Lunchroom for 20 years. I just deal with what is in front of me. This whole thing that makes me sad is is i encourage you not to fall into this trap, who did this or that. There are a lot of different responses. What it has done is it has put us in a position where we end up competing next door, we end up working against the best interest of this. Georgiasled that economy is thriving. Having the problem with without having a clear supply chain whenever we have been in these situations, in normal times a Market Competition is a good thing. But if two of you are drowning, it is not good to fight over one wife preserver. Life preserver. What we are dealing with at the state of will, it has been disheartening that it is that attitude. Act, whosent the cares joined together, i think there are concerns about whether it was right or wrong, but it was a bipartisan effort that had good effects. Im asking if we can do that one more time and think about it. I think i speak for the 50 governors, we would all come in front of congress and raise our hands and swear where all of that money went and how we used it was being impacted. It has been a challenge having 50 different ways of doing it, but states have risen up and found out what they had in their state. My fear is this, we are stronger together. This does not do us any good to pit one area against another or to say we did this better cause it is not the way a country gets out of this. Governor, have you experienced challenges with regard to the scarcity of resources and Resources Available being more expensive or at a higher cost . Gov. Walz yes, and it is true today. I am blessed. I am home to the mayo clinic. I can go out there and ask for n95s. This is not about minnesota getting n95s and leaving our neighbors in iowa in virginia on their own. We wanted to make sure everybody had it. With that, i yield back. The chair will not recognize congressman adams for five minutes now recognize. Thank you, mr. Chairman. Can you hear me . Thank you very much. I want to thank all of our governors and the speakers who have been here. Walz for, governor staying with us. I do know that it is good to see grishamgovernor lujan who served with me on the ag committee. I wanted to tell you that the have beenfunds helpful in keeping students connected to their teachers in my district. They have used cares act funding to purchase wifi hotspots for students. And overng is limited 16,000 students in my district still dont have reliable highspeed network connections. Governor has helped me helped lead the charge to aid students with a partnership that provides 40 million in funding to distribute hotspots to students to provide professional development for educators and more. That program was made possible by the cares act funding. Let me ask you about the role that the federal aid played in ensuring that your students can continue to receive high quality education that they need. Gov. Walz thank you, congresswoman and it is good to see you again. It was really helpful. I am looking at my early expenditures out of cares act money, 245 million to schools in the inperson instruction and online learning. This was a smart stuff. I think for all of the work that may be in a major package, there was a lot there and it worked and it is working. I dont know if i can stress enough if we went to the end and there were zero cases of covid and we were throwing the last of i have to plan and we have to plan that our schools may need the support for the next the rest of this year. You cant plan daytoday, you have to look in the long run. It was incredibly helpful. Food assistance, i was at school today loading on buses. The city of st. Paul just delivered their eight millions of meal on buses to children who are hungry. Kids in minnesota got food and had it delivered to them because of the cares act money and the work you all did to get it to them and we are grateful for that. Let me ask you, i am glad to hear all you are doing for schools. Understand budget and what you have to do. What percentage of your students do you think dont have a reliable connection to highspeed internet . That has been mentioned earlier in the hearing and i think that is a problem here in our state and others as well. Yes in ours as well. We are very rural and go up to canada. We have kids going to mcdonalds to try to use their wifi. We were working on it precovid. I would argue those who want to see businesses and have investments, we should make a expansionn broadband border to border in our country and that will benefit us after covid but now is the time to do it. I would say 25 or more. Then, it is the access to the equipment. At the hard drives and things like that. Our Business Community has stepped up. Commitmentade a huge. Number one, its the right thing to do for kids. Number two, its the right thing to do for our economy. Oni want to follow up another congresswomans questions. To ask about the black and brown students and how they are affected in your area. They are disproportionately affected. Parent of aor and a 13yearold, i am proud as a Public School teacher, but we have failed our lack and brown and indigenous students. Covid has made that worse. I want us to use this as an opportunity to quit admiring the problem and actually solve it. This is forcing us to look at new ways of delivering and examining unique needs. State and local governments play an important part for employers. The chairwoman mentioned jobs. We will send that question to you, i hate that my time is up but thank you, i appreciate it. I yield back. Can you hear me . Right away tok the opening comments by the Ranking Member which are puzzling to me. That somehow talking to you government governors and this expert dr. Is a waste of congress is time. I cant think of much more important conversations that we should be having man talking to our governors to find out how you are doing so we can do our job better. I wanted to put that on the record. Start by saying where i am from. I am from pennsylvania and i was a state representative before i became a congresswoman two years ago. I had the opportunity to serve on committees there. On appropriations, i could see each budget season what we were up against, where were our deficits. Chairmanto the current of appropriations and got an update on pennsylvania. I wonder governor if this sounds familiar to you. We have an estimated 5. 5 billion budget deficit. You forh cares, i thank championing, the good work that cares has done for states and families and workers. 0. 33 billion that pennsylvania has from cares, we still have a budget shortfall of almost 4. 5 billion. To see what that feels like on the ground. We hear from some of our republican colleagues that the state have not spent their cares money so we shouldnt send you anymore. I fear that from our republican senator here. These are the same people who argue that for businesses to be stable, they need certainty and predictability yet they want governors to spend down your budget to the last time before they will send you another. I dont understand that. Undisputed is is that the state and local governments need relief. Also, facts and data to open safely as the doctor has talked about. Governor, i wanted to ask you when legislation extending the deadline for state, local and tribal governments to spend their funds, would that help you in your state . Yes, it would. Why do you need that flexibility . We have contracts for testing. We have contracts leasing buildings for overflow of icu beds. This would be easier if everything were done, but suddenly you have a hotspot and an overflow, you need to be prepared. Extending it out gives us more time. Is the governor of guam still you, would may i ask you also appreciate flexibility and greater support obviously . Unfortunately, two other governors were unable to remain with us. Thats fine, thank you much. I care about the kids. I have three grandchildren. My granddaughter started third grade yesterday virtually at home. I wanted to ask you, given your experiences in your state, how can we best send Additional Support to schools . What flexibility is needed . What is the current projection for the Financial Health of Public Schools in your state . Yes there are things you can do. I would go back to representative porter. I dont want to be a downer, but i carried that bill in 07 so good luck to you. The status of our kids is they are ok right now. They are ok because teachers, communities, parents have gone out of their way to make sure they are there. It has been expensive. It has been hard. If the money that went to schools, i hear people across the aisle talking about it. If we cant get the full heroes act, the ability for us to take care of critical services, that would help. Our School Budgets are going to be tough. We have not made up from the last time we had cuts. My time is expired. At thank you for the opportunity to be with you. Last, minnesota takes the stage. You are recognized for five minutes. It is good to see your seniority at work. [laughter] i have to tell you how poetic that it comes down to you and me at the very end. I am grateful to you and the others who appeared earlier and for your experience and dedication in congress and now to our state. I am a lucky man to consider you my mentor. Thank you. Ofm proud of our state minnesota. The way our budget has been handled since the Great Recession through bipartisan cooperation and fiscal responsibility that led us to have the largest Rainy Day Fund that we have had in our States History as we enter this year. Because of covid, that 1. 5 billion surplus is now 82 . 3 billion deficit. Refused to help desk help states like ours saying they have been mismanaged. I disagree and i think we have been a shining example of a state that has been an exemplary fiduciary through this crisis and putting the safety of our citizens first. I wish my colleague from minnesota felt the same about the need for federal resources being directed to minnesota. I am also disappointed that the federal the president has failed to use his authority to secure medical supplies that would have potentially saved thousands of lives. I am working on legislation right now that would allow governors to use the defense and production act for critical goods and Services Provided they are produced within the states borders or finished within the states borders to provide for emergencies. You would coordinate with agencies and demonstrate there is a clear need for it that could not otherwise be addressed. My question is, could you speak about how you might use such authority and how it would impact our state and if there are any obstacles we should be aware of if we were to pursue it . Inc. You, congressman. I always appreciate your insights. About the 50 state strategy as it has forced us to be creative. I appreciate you thinking about this. I never would have believed i would have to become a manager of a massive Testing Program between the mayo clinic and university of minnesota and implementing that to get 20,000 tests per day to our folks. I do think there is some capacity if we could help to do that. Is, if thiscern becomes every state on their own survival of the fittest, i worry about that. Ethically, when the ventilator and mask situation, i was lucky because most of them were made here in minnesota between medtronic and 3m. I think if the capacity to let us do that as long as we are not interfering where some others were, it might be helpful. This has been a challenge. We are six months in and i wish i could tell you i have all the ppe i need but it is a challenge. I wish i could tell you i have all the testing i need to keep things open. The way we keep things open is, every teacher has a saliva test in their pocket that they can use at any time and mail it and get a result in 24 hours. If i get one hot teacher who tests positive, i dont want to send down a whole district. The way you are thinking is the way we will probably need to. It will probably be better on the National Level if we could do that. If that doesnt happen on the National Level, states need some authority to do that. I appreciate your concerns about interstate competition and states that may not have the same resources. At the legislation i am considering would allow them to share with one another to prevent that. It governor, you have been generous with your time. I am grateful to you and to all the governors who never could have anticipated the circumstances in which you find yourselves. I think about democratic and republican governors who have done yeomans work to keep our citizens safe. I want to thank you. I also know you wanted to enter into the record expenditures. I asked for unanimous consent to submit to the record the Minnesota State expenditures offered by the governor. Without objection so ordered. I yield back the seconds left of my time. I wish you well and much gratitude. If i could use the last 10 seconds, i would encourage your colleagues in all the committees to ask governors to come on. Emma kratz and republicans. There is very little separation between us on these issues. I would like to testify in front of other committees because all of them are related. Thank you all for sticking with this and thank you for having me. Inc. You, governor. I would like to thank the who made it a priority to come speak to us today. For yourk you participation and for sticking with us to the end. That, all members will have five legislative days to submit questions to the chair which will be forwarded to the witnesses for their response. I asked the witnesses to please respond as promptly as you are able. Have fivell extraneous