Transcripts For CSPAN2 House Hearing On COVID-19 Aid For States 20240712

Required by the regulation accompanying House Resolution 965 which establish the framework over the proceedings. First, i would ask all members on the webex platform to keep them so the muted when they [inaudible] this will minimize disturbances while members asking questions of our witnesses. Members on webex platform are responsible for muting and unmuting themselves. I suppose you just heard that. The staff is been instructed not to meet members except when a member is not being recognized and there is inadvertent background noise. Members on webex platform are reminded that they may only attend one remote viewing at a time. So if youre participating today, please remain with us during the hearing. Members should try to avoid coming in at out of the meeting particularly during the question treatment. If members wish to recognize the chair recommends members identify themselves. I would also ask members to be patient as the chair proceeds given the nature of the Online Platform of the committee. This hearing is entitled the need for Financial Aid to americas states and territories during the pandemic come supporting First Responders, assisting schools in their efforts to safely educate, and preventing mass layoffs. I now recognize myself for four minutes to give an opening statement. The coronavirus pandemic crisis continues to cause terrible harm across the nation. Over 189,000 people have lost their lives to the virus in the United States, and there had been over 6. 3 million cases nationwide. Last week the job numbers showed Unemployment Rate still over 10 of black, hispanic and asian workers and millions of families are in danger of being evicted from their homes as they struggle just to make ends meet. Today we will be discussing the urgent need for congress to provide Financial Relief to them nation state and territory during this crisis. It wouldve been interesting to hear the perspective of governors at todays hearing. Unfortunately the minority opted not to invite any nevertheless, i look forward to hearing from governor kelly, governor grisham, governor guerrero and governor walz. As described in the Committee Rules this committee has jurisdiction over Financial Aid for all sectors and elements within the economy which directly relates to the efforts of states and territories to navigate this pandemic. After all, state and Territory Government on the front line of the response come to the crisis. Many states purchase personal protective equipment and other critical medical supplies and ensure a Robust Public Health response to the crisis. States and territories governments are also working to tackle the challenge of Remote Learning [inaudible] according to the National Conference of state legislatures, state houses have proved over 3. 5 billion in not anticipated expenditures to combat the virus. [inaudible] states and territories are expecting steep declines. One estimate based off of Congressional Budget Office protections shows the total budget shortfall to states and local governments next year will near 1 trillion. We learned during the Great Recession that budget cuts are not the solution to the shortfalls. Cuts in state spending exacerbate and lesson [inaudible] as a result of this crisis states and territories need additional Financial Support to allow First Responders to assist schools and prevent layoffs. While Congress Passed 150 billion in state aid in the cares act, the National Governors association which represent republicans and democratic governors have lapse, quickly called on congress for much more help. Recognizing the urgent need to provide additional covid19 relief, House Democrats passed the heroes act on may 15 which was 118 days ago, among other things the legislation would provide 915 going to state and local territories create assistant and home owner assistance so a second round of economic stimulus payments to most families extend Unemployment Benefits until january 2021. The heroes act would provide significantly more funny to cities and towns and also would clarify Treasury Department guidance that currently prevent State Governments for using refund to avoid layoffs. Mitch mcconnell and some republicans have blocked this critical aid in their alternative bills provide zero balance to states, zero balance. This is to add insult to injury, claws back hundreds of billions of dollars that could be used to support governments. In addition the present himself hasin made reckless threats to t off funding to states. He does not like the protests against racism and Police Brutality occurring in the streets of many communities. They must stop playing games while families across the country star, past the urgently needed relief in the use act so i look forward to hang from the witnesses about the challenges there facing and response that is needed from the federal government among the special crisis. I now recognize the Ranking Member of the committee the gentleman from North Carolina mr. Mchenry for four minutes. I think the chairwoman for yielding. And here we are again we are having a about the bill the house passed months ago that has no chance of becoming a law. Committee is being used to prioritize democrat priorities that are not going to become law. The chairwoman wanted gop governors to attend she could have given uss more than one witness that is provided for. Our witnesses they would be able to speak to the Economic Issues facing the State Governments and the relative position that the State Governments are in. So look, this is also not our committees jurisdiction. If you want to appropriate money to the state, there is an appropriations committee. We are the Financial Services committee within our jurisdiction youmi a muchneeded lending that is being given the states through the Municipal Bond market and the Federal Reserve. That is lending not spending. What i think we need is a reasonable compromise to support workers, smallll businesses, and make sure we can get people back on the feet begin to make sure we have a better healthcare response and testing machine so we can get our economy open and kids in school again. Back in the spring republicans and democrats had a great compromise in the cares act. We provided 2. 6 trillion in reliefef funds an approximate 1 trillion in direct and indirect state aid and locality aid. That bipartisanship was also reflected in this committee. We had an understanding for hearings there would be no more than four witnesses, we would keep this brief so members could engage and that good questions, but today this is out of control because of how many witnesses we have. But that is the case, were getting close to november andly things become far less bipartisan and much more likely wacky around congress. So here we are. Democrats are using this hearing to claim that states are struggling but it isnt is it a lack of funding. In fact, of the 150 billion in direct aid provided for by the cares act thevi Congressional Research service that that as a june 30, stated only use 25 of their distribution. Republicans believe any Additional Support should be based on data and directly related to covid. But to date state to get to identify how they are using the care money and were additional funding to address covid may be needed. We should all agree one of the best ways to support state and local governments during this pandemic is through strong state and locality economies and economies in those communities. So the way to create a stronger economy is by supporting local businesses, and the employees in those businesses. Thriving Small Businesses generate revenue by country to state and local tax basis when people are working, they can support their local and State Governments. Unfortunately democrats, democrats and partisanship prevents Small Businesses from processing that support right now. I want to begin and end where we should all alle industry as a Federal Reserve chairman jay powell said back in june, quote, a tight job market is probably the best single thing the fed can do to support gains but all low and moderate income communities and the good for minority communities that are heavily represented of these groups. Everything were doing is trying to get the labor market back to where it was in february, end quote. We should take that approach. Not waste members time reading democratic congressman from congress to ask for money. There are bigger issues that we should focus on in getting people back to my kids back in school and our economy reopened again. With that i yield back and i yield expert thank you. Thank you very much. [inaudible] i now recognize the chair of the subcommittee on national security. Thank you, madam chair. Thank you, madam chair. Im sorry, i hope i am in. Have i gotten in . M. O. I. Unmute am i unmute . Is mr. Cleaver unmuted . You are doing great. Can you hear me now . Yes, we can you use for i apologize, im sorry. Let me begin by welcoming my nextdoor neighbor. Madam chair, im in kansas city where i servedan two terms as mayor, andd i know this city ad its systems quite well. I can say with absolute certainty that kansas city, ikey other cities, is experiencing unprecedented stress during this pandemic. Every municipality and county in the nation are being financially slapped around from dwindling revenues and exploding expenditures. Now, dont take my word for i. Im a a progressive democrat d im a methodist. But the conservative American Enterprise institute on tuesday released a report saying while revenues have declined for the First Time Since the great quote, the and i worst is still too, thereve been a lot of discussion in recent months about defunding the police. But if we dont get this deal funded we will be defunding the police and the Fire Department around the country. Thank you. Thankry you. I now recognize the gentleman from minnesota, mr. Emmert, for one minute. Thank you, madam chairwoman. As the recommended mint chinned the bipartisan work of the cares act provided trillions in the longterm assistance to First Responders, educators and Small Business owners. It is because of congress and this administration took actions that are economy has begun to regain its footing. Efforts by the majority to use as individuals today as ponce to justify billions in new spending for State Governments is uncalled for, especially in states like mine have yet to use hundreds of millions in relief money given to them. Governor walz, we served together in the we got our disagreements weve worked on t several occasions toal help minnesotans. Since you chose to appear before this committee on eache of another extension of your emergency authority, i look for to learning how you intend to empower not penalize Business Owners, School Administrators and families with the information they need to drive for economic come back instead of digging our children and grandchildren deeper into debt. Thank you. Nd i look forward to everyones testimony today. Thank you very much. I want to welcome our distinguished panel of witnesses. The honorable laura kelly, the governor of kansas she was elected to the Kansas Senate in 2004 serving as Ranking Member of the ways and Means Committee from 2007 at throughout the Great Recession the till for election as governor. Welcome. The honorable lou leon guerrero, the government of guam. After a career in the Health Sector she would serve for ten years in the guam legislature. She held ceo, president and chairwoman of the board of the bank of guam. I must note governor guerrero contracted covid19 last month. Governor, it is so good to see you and recovering. Thank you for being here. The honorable Michelle Lujan grisham,m, the governor of new mexico, she previously represented new mexico right here in the u. S. House of representatives, and served as cabinet secretary of newne mexicos department of health, and its department of agents and longtime services. Good to see. The honorable tim walz, the governor of minnesota, a veteran of the Minnesota National guard and a former High School Teacher and coach of a state football champion. He also represented minnesota in this house for over ten years. And finally, dr. Douglas holtzeakin who served as director of the Congressional Budget Office from 20032009. Mr. Eakin holds mr. Holtzeakin served in the george w. Bush of administration in the field of economics. Without objection or written statements will be made part of the record. Each of you will have five minutes to summarize your testimony. That time will go off at the end of your time. I wouldld ask you to wrap up yor testimony so we can be respectful of other witnesses and Committee Members time. Governor kelly, you are now recognized for five minutes to present your oral testimony. [inaudible] iss governor kelly muted . One day i will get this. Let me begin again. Chairwoman waters, Ranking Member mchenry, and members of the committee, 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 over, 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 with 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 or forced to furlough employees or even shutt the doors completely. Through all off these challengs my administration has worked to keep kansas families safe and healthy. I would also like to thank congresswoman davis for being a strong advocate for kansas Small Businesses during the pandemic. Introducing legislation requiring transparency around relief funds to make sure theyre getting too small kansas businesses. E however, we wanted significantly more support from our federal partners to protect our institutions from drastic and damaging cuts. Kansas is uniquely suited to address a looming budget crisis during these unprecedented times because weve already overcome one this decade. Albeit, selfinflicted rather than an act of god. In 2012 my predecessor governor brownback signed into law one of the most draconian tax cuts in our States History. The consequences were profound come as a 14 member of the state senate i i watched in dismay as other states recovered and grew in the wake of the 2008 recession while kansas instead moved backward. State revenues plummeted by 900 million, School Funding was drastically cut come Infrastructure Spending was decimated and critical programs like medicaid and temporary assistance foror needy families and foster care were gutted. Kansas bond rating wasas downgraded twice our agencies were hollowed out, our state highway and healthcare funds were robbed. Are so many more examples but the bottom line is that years of austerity hurt our businesss owners, our farmers and children, our teachers and essential workers and our families. Before the pandemic by administrations budget was crafted to get chances back on sound financial footing, process we expected would take years of responsible governance. We have prioritizeke rebuilding our states fiscal foundation. We reestablish Economic Development tools within our department of commerce, critical to ensuring kansas can compete on a global scale. We passed historic tenure transportation plan, fully funded Public Education for the first time in years here thankfully, in 2017 a Bipartisan Group of legislators came together to undo the tax cuts implemented in 2012 and begin the uphill climb of closing the budget deficit. Unfortunately just as wet were writing the ship we were hit with the worst of the kelp pandemic in a century. This pandemic is different and ethics isnt as simple as just heightening our belt buckle. Our federal partners must step in and help. I know firsthand that cutting local and State Government funding with 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. Government that cant provide essential services and investments this country was built upon, good schools, stable infrastructure, a solid social safety net and a robust economy. I had a front row seat to the worst budget crisisur in our States History, edinburgh it hit the most vulnerable among us the heart is pure weenie continued investment at the c local and state level to allow for decision that best respond to individual community needs. We need support for Strategic Investments to stop the spread of the virus, enhance the states ability to respond, protector schools and provide needed economic assistance to Small Businesses. We need the federal government to support states and support kansans who are struggling. Needsu a coherent topdown strategy that will reassure businesses and americans that our government has a a plan to keep our economy stable until a vaccine isva available. I thank you for the opportunity to speak with you this morning and look forward to question. Questions. [inaudible] you are now recognized for five minutes to present your oral testimony. Thank en you. Chairwoman waters, Ranking Member mchenry, vice chairman and members of this decision committee, hello from the people of guam. Iq for this virtual opportunity to appear before you. Throughout guam sister, the island the sense of the nation has been strategic decision in the western pacific. From Andersen Air Force base guam and naval base guam, america is able to project power or humanitarian assistance at a moments notice on a global skill. Indeed, no one is no stranger to the impacts of global conflict or the unity that must rise to meet it. Prior to the pandemic glamis Tourism Industry was our economic cornerstone, breaking on a nearly monthly basis. 88 of our 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, that this congress is established. Madam chair, i think you and your colleagues for guams inclusion in the affirmation programs. E your actions help people yous. Y never meet and in ways you may never know. Additionallywe we contain the spread of covid19 from march june, our positive case numbers rose as our economy reopened. To preserve life and contain issued a second state dont ordera that remains in effect today. Now government revenues which rose up in physically 2019 to cut our deficit in half may see a 7. 2 decline in fiscal year 2021. 2 this means dangerous cuts to guams Public Healthic operatio, drastic cuts to Public Safety and potentially severe cuts to education. In this story is being told in every state and territory throughout the country and is why both congressional action ir required. Congress took serious bipartisan steps forward early on in the pandemic, but these are temper economic backstops that have already begin to stay. We are good stewards of the aid we have received. Wewe have worked to follow all federal guidance in relation to federal money. At every juncture we have tried to match earnestness speed trying to never integrity and use of these funds. Accordingly, we welcome the review by guams office of public accountability, of independent reviewers, and our federal partners. As you act in the weeks ahead, i asked that you treatek your felw citizens residing in our nations territories with continued fairness. One, we are included equitably in every federal relief package. Two, this package contains direct employment assistance to guamto and the territories and removes any cost sharing during this recession caused by the pandemic. Three, the direct aid to Small Businesses the essential component of any relief package along with rental and homeowners assistance. Four, that a program be committed to provide grants to assist jurisdiction to economy that rely primarily on tourism. And five, at states and territories be allowed the flexibilities they use fines for budget shortfall. While the steps will help guam, we also know that existing problems require new policy solutions to enable us to make real economic progress. This includes addressing federal coverage of the 16 million in annual our income tax credit payments that comes directly from guams coffers, and an hp to policy that recognizes qualms civilian construction demand. Finally, i and supportive of securing eligibility for guam to participate in the Municipal Liquidity Facility Program as a safety net. 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, american states and territories and now weve simply become the. Thank you. Thank you very much. Governor, i would like to know that the successes youve been able to realize all across, and i want you to know that your congressional representative here has done a fabulous job in recognizing your territory. Thank you very much. Next, we will hear from governor recognized for five minutes to present your oral testimony. Thank you. Good morning honorable chairwoman waters. Lovely to see you again. Ranking member mchenry and of course our other distinguished Committee Members. I thank you very much for the opportunity and the time. As you know, the pandemic has unleashed economic devastation in states across the country. The wave of financial pain threatens to swamp states like new mexico, despite our healthy physical 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. Much of 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 pandemicrelated budget shortfall, but a collapse in the global oil market. These duty crisis has created a gap that threatened to swallow everything. Child welfare to Health Care Services and more. The fiscal impact of the pandemic is three fold. 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. We face indirect costs as state agencies and businesses adapt to a covid positive world and these costs for kpublic 12 schools alone total more than 520 million and we face the exponential loss of revenue due to the economic down turn which compound the other two. These three expenses are tied together and we cannot emphasize one over another. And let me be clear, these are not static data points. The pandemic is ongoing, the storm is raging, and those winds of fiscal damage are not dying down. In all, new mexico faces a nearly 20 decline in general Fund Revenues year over year. A 4 million 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 satisfied in reserve, the fiscal crisis threatens to touch new mexicans 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 proactive measures that blunt the fred of covid19 and using federal assistance to replace and backfill lost revenues or else make drastic cuts to services. Our effective life saving response to the pandemic cannot be left as a millstone around the necks of new mexico workers, families, local governments and Small Business owners who have already given and lost so much. Small Business Revenue in our state is down 21 this year, many have furloughed or laid off workers and of course, some have closed their doors for good. Our Small Businesses skew smalleren than the National Average and more effective for loans. My state along with legislature has delivered 400 million for Small Business support, programs sustaining hundreds of jobs and still businesses and workers needing more. We were one of the seven states in the u. S. To operate emergency funding stream made available and delivered more than two billion in assistance and this has depleted our trust fund and we will need help in sustaining these life lines. We all know, and i know, that tightening our belts in the coming months and years is critical and some including new mexico, we already have. But these will not be enough to weather the storm and an umbrella is not enough protection in a hurricane and the rubber will meet the road in homes across states like mine where families, children and workers may be left without. State and local governments need more funding and flexibility. Already this year, new mexico has demonstrated how expeditiously we would use and provide funding that need it, and refill it. The health and economic crisis battering new mexico and the United States require all hands on deck approach. Thank you very much, governor. Lujan grisham. We appreciate your presence here today so much. Next we will ask governor walsh to present. You will be recognized for five minutes. Chairwoman waters, Ranking Member, members of the committee, thank you. Im tim walsh shall the governor of m inmin and for many of you, im a former colleague. I want to thank you for the opportunity to the critical needs and where our state is at. I want to acknowledge my minnesota colleagues on this, whether its representatives phillips work on the paycheck protection program, flexibility act or representative unique and ip no va tiff advocacy, mib min is minnesota is lucky to have you. I am not here to ask or complain. Im here humbly and deeply grateful for the work that the cares act did. It did make a difference. It did impact. Were grateful for the congress for what it did and 92 of our cares act money is obligated and we have to look at an openended pandemic to deal with that. But please know we care, it made a difference. Thats why were asking here humbly that you continue this assistance that made a difference not just in the safety and health of my constituents and fellow minnesotans, but it helped businesses get back on their feet and thats why were asking in a bipartisan way for the National Governors association as you negotiate, please keep states in mind. I came to this job like many of my colleagues 19 long months ago. At times it feels like yesterday and at times a lifetime. And we did investing in housing and in a state with one of the few bipartisan split legislatures and we did it together and we were able to make that fiscal discipline work and make sure that we came together to get things down. For the first time in 40 years a governor did not issue a veto. And theres a lot of talk abo about minnesotas house has been in good order because of cooperation. After volatile 2000s, we went from deficits to surpluses. You dont have to take my word for it, the triplea bond rating tells us minnesota in february of 2020 was in strong control over revenues and spending that leaves the state wellpositioned. As recently as 2020, we had a 1. 5 billion dollar surplus and then covid19 hit. And we saw the states in one week 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 youd say that the revenue fall off for states would be variable. Changes inio economic condition so, right. So, our current financial conditions, the state and local governments a true indicator of the current economic environment . No, i think theyre doing better at least from the a aggregate data. The Economic Conditions in the quarter were bad. If you look at the gdp release, it was doing remarkably well, income taxes were down by 100 million, 1 10 of a billion. It was better than you might expect in those circumstances. Okay. So, doing better, and the federal government is spending a whole lot more. As i mentioned in my opening statement. Only 25 of the fund set aside for state support al evaluated as of june 30th. 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 . Id say two things, first, its been the performance of the treasury in using the, essentially half a trillion back stop the facilities, including the facility that seems underutilized to my eye and i dont understand why that hasnt happened. Thats something that can and should be more aggressively used. My own Research Suggests that if you pretended that the state budgets tracked exact the economy, then using the cbos forecasted economy, the entire state and local sector would be short by 380 billion over two years. Weve provided 150 so thats another 230 over two years and seems to me the upper bounds given we expect to perform better for the economy than what i mentioned. Services are heavily taxed and interest at the upper end. Those are going to contribute to better performance. 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 opened . Arente those the Stronger Economic motivators that would then benefit state and local governments . Ments no question. But the foundation for success is growth. And you know, we need to get the capacity to go back to work and its about getting kid back to school, it has to be improved and we have to be able to operate in the presence of this virus. I think its very instructive that in 20082009 employment in the states and localities didnt decline for nearly two years, held right in there, and after growth things started dropping off and we doesnt want bad growth. Thank you, dr. Holtzeakin. Thank you very much. I will now turn over the gavel to the vice chair of this committee, [inaudible] need for us to the circumstances [inaudible] the Services Committee in the hearing with that, madam chair the intent of 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 Depression Great 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. It happens to be a virus, it happens to be a virus not the soviet union and the federal government is the only entity that can step in to a breach like this and i know people are saying the states are not well run. The fact is weve given more federal money that we havent got back to these states that complainant we are being helped in some unfortunate way the truth of the matter is we need science and i once asked my friend shes still on, senator grisham if youre still on, theres been this question of obligated versus extent money and when you clarify that because i think thats a bigdeal. Are you still here . I am, congressman i am still here. I dont see you but good to hear you. You and i have matching hair colors these days. All stressrelated due to covid but its an important question and it gives us a chance to answer it again. Take mexico, a lot of the cares act money we received over just over 1 billion. This is how that money is spent and allocated. 100 million to local governments except our largest city and county weve got money from the federal government. 50 million to Small Businesses, 28 million to tribal governments, 139 million we have spent so far on covid related expenses like testing and ppe which is still required. We only have an average seven day supply for responders and now schools are wanting filled ration systems and they deserve it and they need more ppe and then 750 million to make sure all our other expenditures and expenses can be met but we dont have guidance, clarity, flexibility or anything else from the federal government to do that. All allocated, much of it directly spent but without that clarification states are going to be hardpressed to if you will, this is a technical term, 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 avits still out there and no one spending it. The difference is its all been allocated, it may not has been spent and theres the technical issues of what can and cant you do with it and we need more flexibility. I know my time is running out but id have to also say thank you. I know you sent a number of your firefighters to our state, to the northern part and thank you very much. This is how we should act as a nation, as one when we have these problems. Weve always feltthe nation when we need it and its time for us to act as one. Iq. Thank you Mister Vargas and the chair will recognize Mister Davidson for five minutes. Thank you chairman and i thank all of the governors and other guests that came as witnesses and i think really my colleagues for participating in this, i look forward to seeing many of you. Its great to see many of you if only as an image on the screen but i miss working with many of youand as Mister Vargashighlighted , there is not america. Of science in but i am concerned that sometimes masks have become partisan as well. So as we talk about the math behind the spending refund we lose sight of the money as the debt has accumulated for our country, its been done in a different sort of way. Its not money thats truly borrowed because when you borrow money theres a lender. Theres no lender here. We just print it. Granted some people think you can print money since you have a sovereign currency and you can do it in an unconstrainedway. I think they have a plan to actually collapse our economy and collapse our currency and the reality is you print money destroys, it inherently destroys the evalue of all the other dollars in existence and the idea that weve been able to get away with this so far is a huge moral hazard so before we print more money which we are divided on , not entirely on partisan lines where divided even amongst ourselves in terms of what the exact right number. Where divided by state and localitys on whats the right number of additional funds but theres a great amount of consensus on the need for flexibility and clarity on the dollarsthat were already spent. Governor nsLujan Grisham you highlighted d out of the 1 billion that you had over 700 million of those dollars you would really have benefited if you had more on flexibility and thats the same sort of thing that i heard from my governor, governor dewine in ohio and i heard from my treasurer and state legislators and i spoke with all the local government officials around my district whether a 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 could put them to use more swiftly and then okay, if you run out of more money ab there would be more consensus in terms of whether to spend money and on what but right now this money is sitting there in reserve because the clarity isnt there that so many governors arelooking for. So i introduced back in the early may, june timeframe the flexibility for states and localities act and it would be great to see that move because theres really not a big divide on providing that flexibility. Th it would provide maximum amount of discretion consistent with federal law to spend money for states and localities so once the state had these funds they could allocate to their counties, to their smaller municipalities and what have you , and it wouldnt come with the type Strings Attached that are there today. So we had support not just from elected officials but from the Township Association and the Ohio Municipal League and numerous individual government agents in our district and around our state. So without objection i asked permission to enterthose into the record. Hopefully chairman we can do that. And i guess mister holtzeakin, we created the sound money caucus recently to deal with the printing of money and i guess what concern do you have about the tradeoff of flexibility now money thats already in circulation versus the moral hazard of bigger deficits and more really not borrowedmoney but printed money. Certainly i think the Federal Reserve has done a tremendous job of stabilizing Financial Markets but thats the easy part as weve seen around the exit from that will prove to be the hard part and thats how do you get out of this without harming Financial Markets but injuring the money in the future so thats going to be there job but the thing that concerns me the most about the federal budget aspects of this is that we answer the pandemic on anunsustainable trajectory. Money isnt spent and we have a higher level of debt and we will be on an unsustainable trajectory. Theres a lot of fancy theories about how you can have higher debt and its no big deal and dont worry about it but even in that theory presumes that the nation has relative gdp and its just lower and we have not donethat in the 21st century. We have not stopped the unsustainability ever. And thats a terrible position for our country. My time is expired and thanks to everyone who participated today. Thank you Mister Davidson, your motion will be carried without objection. The chair will recognize mister golf for five minutes. Thank you so much mister chairman, i appreciate that and thank you for the time area i want to thank the panelists for being here today. The covid19 pandemic caused the crisis as you all know and as are all experiencing firsthand the pandemic is attacking state budgets from both sides of the Balance Sheet and the response has had led to a significantly higher response for State Governments while at the same time statesare facing revenue shortfalls. Governor murphy stated recently without federal assistance he believes the state will and could have to cut half of its state and local Government Employees. Ive heard the same deep concerns from our mayors across my district, these cuts of course affect our educators, firefighters, First Responders. And i know your states are facing similar challenges and its clear local governments are struggling as im sure you know as well through no fault of their own and it could be our cops and firefighters and teachers who could pay the price if theyre left holding the bag so if i can ask the governors starting with governor walz would you the effects that each of the essential Government Services will have on your states local economy and who you believe will feel the brunt of these cuts . And its good to see you governor. Good to see you congressman and i want to echo congressman davidson, for many of you being a member of the committee for responsible federal budgeting , im concerned about it but theres a time when austerity can have a drawdown to and i think recommended, that point is going to be left to that. If youre of the mindset that these employees dontadd anything to the economy , that may make sense. But even if you take that into consideration they are paying mortgages. Theyre paying car payments. Theyre doing the things that drive the economy. I think the case all these employees are providing valuable services but we have very few tools and what im most fearful of our two biggest expenditures fall into healthcare and education and at a time when most of the two things that are in most need, those are going to fall obviously most heavily on those least fortunate, those least able to and unfortunately the way our system is set up and going to hit communities of color harder. So were doing everything we can to shield them from that and everything we can to think about this and this is not a theoretical exercise of the governor. We are obligated by law to come up with these things and implement them there is no deficit spending, no cr, there is simply either its there or its not and thats what were up against so i just want to say this talk about aryour flexibility and longer time, wonderful. But its that plus what goes on further. We have to maintain our vigilance until this is over, nauntran4a situation is over. If we cant our businesses will close, our schools will close and it gets worse. Are you facing budgetholes because of this . 4. 7 billion in the biennium of a 50 billion budget. You can start to do the math around that. Any of those are obligated if we need to. Some of the work you did around the map increases are incredibly helpful in those target populations are needed so i just want to be clear from the governors perspective. I am grateful for everything youve done but covid is not over and those bills are coming due. Its great to see you. I also can turn to governor gresham from new mexico and cannot ask a similar question as well of what youre facing and what youre seeing and the strain its going to place on your essential workers. Absolutely, nice to see you congressman. Governor walz go live ponder onmedicaid but where the infantry in dealing with the pandemic. Who do you think is doing the testing of the Public Health workers . Whos delivering meals to students and showing up online aseducators . Who is it that assisting us with containment strategies . Nd outbreaks and quarantine its the National Guard and our First Responders so we have already done hiring freezes, reduce our class sizes for police officers, reduced our budgets by just to give that perspective i got a additional 2 billion shortfall going into the next fiscal year. My total operating budget is just over 7 billion so no raises, no investments, no hiring. Reducing costs, asking everyone to take anadditional five percent budget hit , no investments in infrastructure. We cant keep doing it. Going to need all of the above when were tackling the pirates and i appreciate the ability to answer. Thank you so much and i yield back. I really appreciate. The chair will now recognize Mister Kristof for five minutes. Thanks mister chairman and ithink the witnesses for remaining in the meeting today. Governor walz mikey review is tounrelated questions. Youve talked several times about the money that youve received. My question really is money that you have now, i know that some of the guidance youve gotten from already from the treasury may be ambiguous in terms of whether its related or not related. If anybody from the Treasury Department is on today what would you ask them in terms of giving you specificity in terms of what is related and hawhats not. Or specifically what do you want to know is related that could be used to thatpurpose . Thank you Mister Kristof and i just give you a real world example on this. And its not ironic that especially for mister nicholas, broadband. Broadband connection impacted and we felt like we could make a direct connection to telemedicine is up 14 percent, pioneered by the mayo clinic in our district makes sense and in education, making sure our students no matter where they were had access to this. It was hard to get clarification on that but the one thing they were clear about is we have to have the money spent and obligated done by december 31 and my state of not allow me to pay for contracts until the work is done. Its those types of things i think would have been helpful and theres numerous of those. I get it to. I sit in your chair. You should ask where every penny of that going and you should have accountability and youd better make sure its being used for what you ask it toyobe. Many of you what im hearing is you want us to use this wisely and get it moving. You want things to start again and weve been held down so im not critical of treasury other than to say we never got good answers and were running out of time. Heres the thing, i know you have to work on this knon the calendar years but the virus does not work on and the calendar years and open and this would nreally help us. Iq governor and this is unrelated but in your state youve got a Major Airline hub operating their. What do you hear from Delta Airlines in terms of rotravel will resume or what do they think six months, 12 months out what with their levels be certainly in minnesota. There nervous and youve seen some of the cuts s from the other airlines of projected layoffs t. What i hear from them and i hear this from people who travel and im here in the state and i have not gone in since march but theyve got this down pretty well they figured it out back to our dilemma again it doesnt matter if theres a restriction or a mandate if people dont feel safe, theyre not going to go back and what theyre worried about is if we have all of these different ideas, all of these different places where a plane takes off and where atlantas different requirements, masking d requirements and all that, they just want what all of us want and im not sure the virus will ever give us that, some predictability of where that but there nervous but th for many of you yourefeeling it the same way my constituents are feeling. Im flying especially when we get into january and fl minnesota im going to visit Mister Vargas and get out of here. Those are the things we want to do and i think i would just close with i think all of you are thinking about this. Theres going to be a realignment of our economy and i cant imagine is this travel ever resuming to the point that it was and were going to have to think about that. And doctor holtzeakin if i can follow up on that. If there is another package, if theres a consideration for travel specifically for the airlines, if travel is not going to return for some time easy to print catches whether its 2022, 2023 or whatever, what are the implications if congress does approve more money for airlines, those out 6 to 8 months. What are the implications for the airlines if we dont approve that . First i would note for the record that treasury was given in the care act money for airline loans and so far left less than 1 billion has gone out to the treasuries performance continues to mystify me but theres a clear need and they can step up and meetit and i dont know why sutheyre not. In giving any further systems airlines, i think you have to make the case they deserve it. There are critical part of the supply chain and i dont think this is some recreation, this is making sure medicines and all the other things getdelivered. And you have to make sure ak that people only take it if theyre going to be viable. That means loans, not grants and on generous terms that allow them. Thank you. I yield back. Thank you Mister Kristof. The chair will notrecognize himself for five minutes. I wanted to begin by thanking my governor for making the time to join us. She literally 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 shes been with us all the way through 3 am guam time while she still has to wake up and manage a pandemic that is sadly growing inscope on our island. One of the things that i wanted to open with his first acknowledging the fact that this committees inclusion of guam as a member, the inclusion of guam as a vice chair, the inclusion of diversity and inclusion of the guam governor in this very critical hearing has demonstrated in the most purest of forms the fact that this committee is looking out for every american. All across the country in all of our territories in both hemispheres of the world. Thats one of the reasons why we are gathering today to discuss the heroes at and to discuss the circumstances that wouldimpact because it absolutely as jurisdictional basis. If for no other reason the fact that providing revenues to our states and territories would be critical in order for us to make sure that rctheir financial circumstances dont deteriorate and as such. The capacity for debt service e and deteriorate the capacity to maintain their bond ratings. As i wanted to open quickly for question to all of our governors to begin with governor guerrero, if we dont provide funding for states and territories is the rest that our bond ratings within our states and territories could deteriorate . Absolutely, there is that risk because we have to have the revenues to provide that service. So if we can get those assistance so that we can bring back our tourism or even bi think we should have some Economic Diversity and we have to adapt and we have to 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 canmeet. So it would definitely impact our Credit Rating because of course, what is our capacity and ability to pay those debt servicesdown. Thank you governor and could i pose a question to governor Lujan Gresham. Easy answer, yes. Weve worked hard to improve. We spent eight years in a former administration after the Great Recession. We never climbed out of new mexico and we work and on austerity basis, bond ratings were lowered and we were working diligently to correct that and were on our way. We accomplished pension reform, record highs on our reserve fund and investments in infrastructure and all of that is now sold as a result of not pensions but that is also because of the covid and our bondratings will in fact suffer. Thank you governor Lujan Gresham, governor walz. I would associate myself with governor gresham, we put ourselves in Strong Financial position but this looks at that risk. Thanks to the governor for sharing that successfully because that is a serious implication and a serious responsibility of this committee. It is absolutely a jurisdictional issue for us to ensure we are providing the capital necessary or in these ripandemic times for states and territories do not be suffering needlessly Credit Rating damage and potentially even Debt Service Risk as a result of these pandemic revenue circumstances so id like to just highlight not for my colleague as we consider the discussions because as our governors are faced with difficult choices of whether to fund, education, debt and etc. , the bond rating agencies are going to be looking at the revenue circumstances and adjusting their risk profiles accordingly and that would not only have an impact on the ability for our states and territories to trust your pure capital on an ongoing basis but it would provide circumstances where their longterm prospects will be adversely affected because of the credit impacts so as the Financial Committee we are have a responsibility to our states and territories to be able to provide them with the capital facilities they need in order to make sure that we do not have these kind of credit impacts. So i wanted to close with thanking the governors for joining us today and i want to begin my governor for her participation and for staying with us during this Early Morning our in her constituency. I now would yield back to the committee and recognize mister gonzales, representativegonzalez for five minutes. Chair, thank you to our governors and doctor holtzeakin for being on today. I want to echo my thanks to governor guerrero for being honest at such an early hour and i appreciate your testimony, were going to join in an initiative to help at the sub level with respect to accessing the treasury facility because its fo important for you all and i see no reason why you shouldnt have access to it. I appreciate yourtestimony on that. I want to try to get a sense again of what the right title is for the aid because im somebody who believes we probably do need to provide Additional Support but i want to make sure that its the right size. So i want to start first with a question of doctor holtzeakin. I want you to state again, budgets at the state level should track whats happening in the broader economy so if the economy directionally, its not going to be direct but if the economy drops by three percent you should expect similar declines on the budget, is that fair west and mark. Expect revenues to go down and my point is it would be a little bit different. Different but directionally thats going to be accurate. So im going to start with governor walz and also Lujan Gresham eventually. My staff looked this up, correct me if im wrong, budget for the state of minnesota e 12. 9 roughly area you are on mute. I apologize, that is correct. Were roughly now at 48 billion. Okay. And in terms of care act dollars or the eight so far, 2. 18 billion has been allocated to the states. Now, granted that for fiscal year 20 but if i just use the 19 number, thats nine percent. Thats nine percent roughly of what you lost. If i could we moved five percent of that hundred 41,000,002 local because we have the way the state work as we managePublic Health , counties implement it. So on that that did not come out of my budget, itmoved down to the local. That was 800. 841 out of that completely moved to local. So probably than six percent roughly at the state level. Thats correct. I guess ill startthere. Do you expect the economy to drop yearoveryear six percent, maybe doctor holtzeakin isthat an expectation . Thats a big drop bigger drop in most peopleexpect. Cdc have had has it at four over the year. We have the added expense we did not budget into our fighting trend for covid. Governor, same line of questioning. Roughly 7 billion this all year 19 for the state budget, 1. 25 billion has been allocated. I dont know how much has gone local that actually 17. 7 percent, pretty sizable. Again, it feels like it should be enough. Maybe you can walk through why its not. Thank you and a couple of things and i appreciate that governor walz, states to operate their Public Health systems differently. We are a centralized Public Health system and everything happens at the state level. Its are responsible responsibility for all those deliverables and direct Services Related to covid so we got 1. 67, 1 billion and he got allocated in the following way. Hundred billion to local governments, 80 million to Small Businesses, 28 million to tribalgovernments. 139 million is what weve expended so far without having clarity on the federal government. If i could use my time briefly because im running low. Do you see where im coming from . We get 17. 7 percent of the full budget to your state and where expecting four percent decline in gdp and its just again, i want to help. Imsomebody that you would find would be willing to chip in here for sure. But its hard frankly to wrap my head around certainly the trillion dollar number thats Speaker Pelosi has turned out to be and i cant imagine you could come up with that but my time is up an ideal back, thank you. The chairwoman now recognizes miss lofton for five minutes. Thank you and ive seen this committee and thank chairwoman waters and Ranking Member mchenry for posting this hearing today. And my question centers around i think erto all of the members on this committee and my two colleagues of the house, its wonderful to see you all there. This country has to provide housing for rents even though , for renters even though any renters are not able to o pay for the rent. Thats significant and in florida. This will not work . Can you hear me . And we have all members mute please. July 16 through the 21st one third of adults in florida are struggling to cover julys rent and were expected to have trouble paying august and september. However access to stable housing is vital especially during this pandemic and yet we have done well so far to support landlords. The heroes act included 100 billion in emergency rental assistance that would be paid directly to landlords once it has qualified for assistance and each of you, can each of you talk about what you are hearing from the small mom and pops landlords in your state and why the emergency rental assistance . Congressman, ill jump in. We are woefully illprepared here without Additional Support to deal with those Small Businesses and individual protections for mortgages and rental assistance and given that new mexico has the highest per capita women of color owned businesses, we also know that women owned businesses and women of color have far less equity up in their businesses. Far less access to credit. Their ability to continue to negotiate with landlords also are paying mortgages on Large Properties that the trickle effect here means that theyre going into further debt. Ur providing nongrant released to them m for mortgage assistance doesnt quite work and not having that Small Business arm in our state meaning we have slower economic recovery and much larger gaps in our ability to move face needs so we are hearing an earful from local businesses, independent Business Owners, mall businesses across the board about they are that clip and the money we provided so far is insufficient for them, particularly going through the end of this current or the beginning, all the way through the end of this current fiscal year. To see you congressman lawson and i appreciate this committee and i want to echo. I think congressman runs all is questions are very fair to ask, what were doing with the money and how were e spending it and one of the things i can tell you philosophically you can have a difference. We asked people to stay home to protect Public Health. That started a cascade of things where they couldnt pay their rent andlandlords couldnt pay. Were extremely worried, we put 100 million in into rental assistance and id be interested to hear and again its your time Mister Lawson but weve got an economist, the one who understands this with doctor holtzeakin. Im fearing the clip where some of these things are going to come due and they may not look like theyre in a state budget but what happens when 27 percent of renters are able to pay back rent on the end of the year and how do we address that and how does the market, if you dont believe the support that were getting for the help that were putting in is the way to go how will that work itself out as im worried about so congressman if its an issue its impacting us and we are worried. Missed caroline. Governor candace has no longer joinus, we can move on to governor guerrero. We definitely have homeowners assistance is going to go a long way in our island. We are very fragile ayisland. Our revenues are very limited and of course our economy is very dedicated to tourism so im afraid about increasing homelessness and im concern about increased in businesses being shut down is going to definitely affectour economy. Thank you. Thank you Mister Lawson and the chair will recognizel mister stiles for five minutes. Thank you chairman and i appreciate you recognizing me but ive got to say youre here again eating valuable Committee Time to talk about ideas that they feel are going to become law. Discuss ideas that dont have jurisdiction in this committee that are connected to reality. But think about where we started on this area address provided 765 billion through the tears act to support states and local governments. That includes funding for schools, hospitals, Unemployment Benefits, transit and other critical programs. Cares gave under 50 billion directly to state and large municipalities through the Coronavirus Relief. Recipients had brought discretion on how they could spend the rf resources and like many of my colleagues i supported the cash infusion and hope to get state and local governments and resources they need provided we can get the money out the door quickly and meet the urgent need. Where months later now, billions and billions of dollars of this has remained unspent. It would be a worthwhile time to sit down and figure out why that money like so many states has been spent to help people in need. But instead were talking dive in. Re money so lets according to the department of the treasury inspector, general release early this summer at the end of quarter two, where now in quarter three in quarter two, a few examples in the midwest. Illinois 14. 4 percent of its money of the crf resources. Michigan three percent, new jersey 2. 1 red wisconsin my home state only actually spent 3. 8 percent of the money had some of these states will point out allocated more of their crf money to different purposes even if those funds are left in the bank account but simply youre marking the money doesnt put the money to work to the hardworking men and women who needed relief. It doesnt kiipp your market, doesnt treat addiction and Mental Illness to your market and it didnt get our kids back to School Safely which is absolutely critical when you look like wisconsin that have only spent 3. 8 percent to the end of q2 and our state doesnt give us an e update, its where those additional funds are. Weve been told state and local governments are in crisis and billions are needed. No questions asked but we need to ask the hard questions. Is the situation so urgent why hasnt the money been spent . Where are states Rainy Day Funds for moments just like this and how much tax revenue is actually gone down mark in my home state of wisconsin , tax collection has gone up this fiscal year and only slightly miss free coronavirus projections and i think in large part next to the highquality work former Governor Scott walker putting money in the bank and giving us a cushion to navigate our way through, wisconsin did it the right way. My colleagues want to spend another trillion dollars in state and local government to spend on pretty much anything they want read that means hr 6100 are asking constituents and folks here, hardworking folks in awisconsin to pay for fiscal mismanagement of states like illinois thats a complete fiscal disaster. I am adamant and ive been from the beginning that wisconsinites should pay for irresponsible spending decisions made by our neighbors to the south. I want to emphasize that im going against, im not going to get providing additional assistance in targeted matters but this broadbrush approach that weve done for the funds to states like wisconsin havent even been sent needs to be called into question and we should be spending our time on Committee Asking those tough questions rather than just having a conversation on how we spend additional money to states without asking any of these states to make some of our fiscal decisions that are so desperately needed and in particular states. In illinois where i sit in wisconsin or overall we got a pretty darn good job. Thats why targeted relief, thats why introduced legislation to provide state and local governments with grants in particular to address the rising addiction and Mental Health needs and challenges that are associated with the coronavirus we need specific targeted relief, not this broadbrush trillion dollar approach we see time and again discussed here in this committee. But we cant use 1 trillion blank check especially when the facts mdont match the story that were being told. Weve gotto do better. This committee needs to remain focused and disciplined. I find this Committee Hearing incredibly unproductive on the topic that we should be on something far more relevant where diving into the shbroad brush strokes that were seeing here today. I just yelled that. Thank you. The chair will recognize muslim in the league for five minutes. You chairman and i can tell you as a person comes from the city made history and the largest municipal bankruptcy in the nation, i can tell you making sure that our local governments and pay their pension responsibilities, making sure they can provide for our residents and showing up for our residents i think is a critical issue for our nation. I actually if look at the bbillions of dollars, its close to 3 billion that we use to bail out millionaires and billionaires, to look it up in the care zach i wish we could pull some of those corporations and millionaires and billionaires before the committee announcement. Where is it going because the one thing that i like is when we expend this money to our local and State Governments remains inthe public hands. Its transparent and we know wherecits going. The late mayor young , mayor of the city of detroit said that when the nation cold detroit gets pneumonia. Thats sadly true even during this period many of us, all of us have been hurt in frontline communities and organizations that work within a lot of our city but many of them are very small. Open are challenged in districts like chairman san nicolass district which is one of the hardest hit was but one of the things during this crisis when i look at the numbers of close to 1500 detroiters especially who died of covid, close to 15,000, i know that a lot of the reliance on stopping the spread of covid lays on the state and local governments always, the federal government, it is the state and local governments on the front line so i for many of the governors dont know, which strongly that the fed, Federal Reserve not only offer support for state and local governments adjust their lending facilities to make the program or approachable for states to use. However, the feds have kind of undermined impacts of the one thing that the Federal Reserve has directly in its power is dealing with the s municipal mls program and i know somebody had mentioned it earlier in the Committee Hearing that functionality excludes about 97 percent of states. This is the same, Federal Reserve banks bailed out banks, did it quickly with a sense ofurgency. All these kinds of things but were not doing the same or states, cities and counties i believe would have been a tremendous help and let for the city of detroit which left so many of our City Employees that work for us for decades lost so much of their pension because of the bankruptcy so my question is you know, as doctor holtzeakin has mentioned is that the program is being underutilized. Which each of the governors comment on whether you use the facility if you have, how has this affected your assessment of whether or not we need to be changing it, whether or not you think that is something that again, could be reformed or modified so that it can be acceptable to all of you and i can start with i think its mayor walz, i can start with you but you can go first. You congresswoman. You must manot be talking to as many as you should. Before i answer id like to ask chairman dan nicholas if i can submit to the record are expenditures for the state of minnesota, mister stijl asks he doesnt know where its being spent and i can show him where every dollars being spent and 92 percent of that is obligated and out there. Im going to continue to answer this. Just as the person i know im pretty new, please know that the money is in the public hands. Its transparent. You have to go through a process on the state level for that. We dont know where the billions of dollars, we spend more money for billionaires and millionaires and even on the stimulus payment that we gave our neighbors across the nation. I knew youre submitting for the record but id really like to talk more about my questions. Heres what i would say on the mls congresswoman. Shortterm borrowing tool on cash flow issues, this time we dont have a cash flow issue. They are not that different in thisconversation. We are not that far off unless you believe we should be addressing covid at all, unless you believe its over. If you think those things are there theres room in there the nlf at some point depending on the entities would be a useful tool. For us it simply doesnt work because the cash flow issue is not where. I think i ran out of time chairman. Unfortunately you have congresswoman. Only the other questions to the other governors but i want to talk about this even beyond the overflow reedit even to carry the debt so you can respond to covid is important, even to unfolded would be affected so thank you very much chairman. Thank you congresswoman and the witnesses are advised the panelists, the governors that they may submit written testimony in response to any questions that were posed by any members and also to transmit any documentation they feel is relevant to the nature of the conversation. The chair will not recognize congresswoman raskin for five minutes. Thank you chairman and thank you all the witnesses for being here today. This is an important topic but i appreciate you taking the time. As somebody who spent a decade in State Government under product and republican administrations i know how important this is and certainly some of the comments ive heard today and in the past t, why people dont want to support a and local funding dont sit well with me. Every state in this great nation of ours as some type of balanced budget requirements and so do municipalities within those states so theres requirements on almost every part of this y country where theres a balanced budget. Doctor not people out there spending willynilly trying to limit opportunities for their constituents by not keeping a good budgetin place. So from somebody whos been there for work on the reinvestment and recovery act funding under president obama i know how important it is to support our states and local municipalities. Governor walz, its great exto see somebody right next ldoor to me on this hearing so im going to start with you. Just for a little background i know congress provided hundred 50 billion to stay in the care that to cover these increased costs and thats been helpful. You mentioned that earlier but t isnt it true that the bigger problem for your budget right now is loss in revenue . Woman, thank you. That is correct and i hear doctor holtzeakin and i hope these predictions are right if we get a rebound and were starting to see the some encouraging numbers. That doesnt do us any good in the present because those revenues dropped off during the quarters ahead and we have to make our budgets balance as you said, were obligated constitutionally so that is the biggest problem and i think the questions are valid, however you sending it but as you said if youve worked in local government you get how this works sothat is the problem right now. For that and you talk about local governments, this is even more exacerbated for so many of our municipalities. Im in the des moines area and were estimating losing 10 million a month rent is it been since we first started out, 10 million a month so this is going to be a huge expense or essay that doesnt have the opportunity to show up these revenues and in talking to my small town mayors , theyre trying to figure out other going, with figuring out how theyre going to show up funding for a milliondollar oil thats been created which is a lot when you think about some of the small rural towns in this country and meanwhile in iowa unfortunately you weeks ago we had the duration which was an extreme storm went through rc. Our cities are trying to figure out how theyre 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 covid and these municipalities all have these revenues they need to shore up and take care of many otherissues. Governor walz, i know youve been trying to hold off on making budget cuts for a long time could you kind of just walk us through some of those key cuts look for for your state ifyou had to do this . Congressman, ive asked my agencies to start preparing and you have to be across the wholespectrum. It needs to be budget reductions and then i asked them to look at revenues and many of us, i share the economic belief that its hard to ask for revenue increases at a time when you have economic downturn. With that said its hard for me to balance my budget and some people think that rid of. Tate government if i am limited the entirety of State Governments at about 10 percent so what that means is where having to look our those places that are the most impactful and the biggest part of our budget by far is healthcare and education. Especially k12 and at a time when we know where our students need to get caught back up and we need to get innovative excellent becoming challenging and i agree with everybody, were all trying to find creative ways to deal with this is just the necessity of this for a state to be able to balance their budget of this severity of the downturn, it is going to be very heavily dependent on those cuts to the most important things that i would argue need to grow up in the future and so thats why were again, this is different because we asked people to stay home to protect Public Health and the only entity that can help is the federal government in this case unless we choose to collapse our Education System or collapse our Healthcare System at the time when we dont believe that the right way to go so weve not made those decisions yet but when you look at all the different scenarios, theres not a real good one. You for that and we now have economists estimating that we stand to lose four or 5 million jobs if we dont provide that support which takes me back. I want to turn to the recovery on the Global Financial crisis that we had in the past. I think its important n. We all knew that was a painfully slow recovery and as i mentioned i was a part of that in our State Government. Its established by economists including the International Monetary fund at job losses of state and local governments was a key issue for our recession and the difficulty in coming back. Governor Lujan Grisham its good to see you. During that time you were just becoming a county commissioner having lots of state rule when we were recovering from the last recession, is that correct about a decade ago . Is she on . She may not be on. I wanted to touch base with the governor because as i mentioned, having been a part of that recovery process, it was very difficult in determining what the state were planning on doing to make sure they could meet those Economic Issues that they were facing and we had very difficult issues here in iowa and i hope to not see it again. I want to just close this i think this is such an important subject and im glad you are here and its why i set forward a a bipartisan bill five months ago to make up for the lost revenue as a state and local and we need to get this done to ensure that those essential services that are provided, that the governor continues to flow so we can educate our kids keep their economies moving and also protect the healthof our constituents. Thank you congresswoman and the chair would now recognize congresswoman but for five minutes. Doctor holtzeakin its goodto see you again, thanks for being on. Former colleague governor walz as well. The states and localities either directly or indirectly have been recipients of about 1trillion in relief funding. Today only 25 percent of those funds have been used i state and local governments. The situation doesnt appear to be a funding problem but more of a portability issue and thats why i introduced along with a brandnew poly Warren Davidson we introduce hr 7094 and thats called the flexibility for states and localities. The bill gives states greater discretion over how to spend funds allocated to them by the federal government. So in your opinion what are additional steps we should be taking to make it easier for states and localities to utilize these funds . I think theres legislative provisions, you know more about that and i do. Theres also the administrative, this is coming from the agency, the money has to flow through federal agencies. Thats not always a smooth process and often where a lot of theambiguities come in. Theres rulemaking takes the place of the treasury for example an faq gets updated and now you have two pieces of direction and pretty soon got a lot of confusion on the ground and i think probably the biggest quick improvement would be to clarify the agencys roles in getting the rulemaking and guidance cleaned up and that wouldhelp a lot. Again, back to you so in my home state of North Carolina about nine percent of the federally allocated funds have been used and according to the National League of cities 32 states are withholding funds from their local governments and North Carolina has provided funding to county governments but excluding city and local governments. Are these vesome of the reasons the majority arof federally allocated funds are going untouched . Presumably, its not an economically rational thing and there must be an administrative reason for these decisions but the care that was designed with speed as the paramount issue. The highest point at an extraordinary rate the government steps in and congress provided an extraordinary amount of taxpayer backing to get in there quickly and stop that fall. Its frustrating to see in many ways that it didnt happen with the speed that was intended and finding out why its important. Thank you and the third question is multipart. So doctor holtzeakin again, what is the best way to support state and local government . Is it through anotherfederal bailout . Ill go back to the nuts and bolts of this. You cannot do anything better than to get the economy going again and getting the tax base growing again. Osthat is the lifeblood of those funding streams. People often harken back to the Great Recession but if you look at the data for the country as a whole, states and localities did notlay anyone off for the first 2 years. Layoffs came late and it was due to the fact that there was very poor recovery and very slow recovery and those tax bases did not grow the way they were anticipated to and should have and that means whats happening now is of paramount importance, adding the economy back to as high a level as possible quickly so you dont leave that legacy the second time around. The other part of the question, whats the best way to support low and moderate income workers. I think the best way for those who have a job is to enhance the return to work. We havent in earned income tax credit and if greater support is needed thats the vehicle. Were working wherever possible and for those out of work, Overall Economic growth is the fastest way to get people back into jobs. There will be i think a class of workers who will be the subject of brake restructuring in this economy. It will be the same in the years ahead as it does right now and finding opportunities to get those jobs is something that were thinking hard about in this moment. Can we help these low and moderate income workers through helping businesses . That was the ppp. It wasnt loaned to businesses, that was the best check writing machine in the world, the payroll function so keep that infrastructure in place and make sure the workers have their regular paycheck to support their families. That was a good design. I know theres a lot of morning quarterbacking on that but i think the 500 billion that went out is a great accomplishment in fighting this. We really dont have to. Governor, im sure youre familiar with the i. D. E. A. But for the folks at home the individuals with disabilities educations act, i. D. E. A. Is the federal law that requires schools to provide services to children with disabilities. The federal government as you know splits of this funding with the states. When the i. D. E. A. Was asked the federal government promised to find 40 , yet the closest we have gotten in recent years in 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 states with the big shortfall. In california last year we underfunded this program by about 22 billion nationally, and so has minnesota ever got full funding from the federal government for the i. D. E. A. . We have not. Would it help you if you did . It certainly would. I could say part of the recovery act of 2009 2009 was taking up i. D. E. A. Funding above 20 , had a longterm impact both in terms of economic as well as learning. Last year we underfunded kids with special needs by 22 billion. Do you know how much money in cs secretary mnuchin negotiated for the big banks for processing no risk tpp loans . I do not. Thats okay, i do. The big banks got 18 billion for processing tpp loans. Almost enough to have covered the cost of fully funding the i. D. E. A. , in this issue, this pattern continues as a look at it. Lets look at another example. Do you know how much thou set aside in heroes act to deliver for teacher training, making school personnel, do you know how much thee house allocated in heroes act which the senate has not take up . We do and it is substantial. Its 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 airlines during Coronavirus Relief . I do not have the total. Guess what . It just happens to be 58 billion. 17 billion of which went to defense contractors like lockheed martin. The senate will not even vote on the heroes act to give our kids that 58 billion. Do do you know how much we spend nationally on salaries, wages and benefits for School Employees in a year . Know the total. Okay. Its about 511 billion. Thats how we spend to fund all of our schools. Do you know how much secretary mnuchin negotiated for Corporate America . If i i had to guess i would y 511 billion but i do not know. Pretty close. 500 billion. Youre youre really good at this, governor. 500 billion, and yet weve all use a little over 15 of that money. So when it comes to our kids though and a a special needs ki, currently we are out of touch. Governor walz come with the state budget cuts how much could your schools potentially lose this year . Its a substantial amount. As a submittal have a lot of places to turn to. Its health care and education. And without the support do you stop paying for teaching . Well you could buy the implications of that are dramatic in terms of your longterm sustainability as well as the ethical issues. Under federal law can you stop educating children with disabilities . You cannot. We are obligated to fallujah are best and maintained that effort. Even though the federal government has never kept its promise of delivering you 40 of the cost. This issue is personal for me. You wouldnt know it for him which i love to talk now in hearings, but without my speech therapist, i spent five years in Speech Therapy in Elementary School and an important those services are to allow a kids to fulfill their potential. We have the cash to educate all children including schools come true with disabilities and hope we step up and deliver that relief that minnesota and other states including california. Thank you. I yield back. Thank you, congresswoman for it. The chair will now recognize congressman for five minutes. Thank you very much. Pleasure to see you all. Governor walz, i had all sorts of homework i had done for governor Dewine Grisham and so one but i will try to have to take it with you. Wonder if you can just go through numbers assume the stuff weve been talking about. How much was added cost your state had just specific to covid . Could you estimate how much i know you have . Right in the beginning we put 550 million inches to fight covid. The budget hole has blown, we had 1. 5 billion surplus, and in the next year, that turned into 2. 5 billion deficit and are deficit is 4. 7. My guess is they it will grow r than that. Our revenue dropped off about 8. 1 billion. 8. 1 billion revenue dropped versus 500 billion in added, so factor of what, 16 difference between the revenue loss and your higher cost x in the cares act and, of course, become the covid costs, were you able to recoup most of those high cost from covid . Did we match it relatively well . We received 2 billion roughy from that. We put out about 1 billion of that went directly either to our largest two counties, cities and 841 to localities. We had a billion out of that. If we dont pass heroes you guys, you have a big hole. With added expense and the notice, i would just like to quickly come when people ask about the spending ofab why its not spit out, counties are managing disparate we had counties with digital cases, and the representative from i will understand this. Then all of a sudden we rocketed into the top contenders in the nation because of our poultry and are protein processing plants. Those counties went from having no expenses expenses that were bigger than their entire badges. One of the things is unpredictable and thats what were having as a state. I have got to maintain my testing regimen. As far as i i know for the next 1218 months, and thats at 177 billion so thats billion dollars so thats one of our problems. I did it and look, thank you for doing it and i apologize that you that you and the president decide to let states lead. This is what happens when you have no leadership from the top. I apologize for it. You said a couple of times helprin education is the bulk of your budget. On a percentage basis, about how big is it . Aboutbo 80 is what insat amounting to. But for all practical purposes, are you subject to balance budget rules in your state . We are. I cannot deficit spent. If you do not get money from the federal government do you have any choice but to make taccone cuts in your Healthcare Education Program . Thats a very difficult one. Probably not and im in a divided legislature which is both good and bad and women have to come too an agreement. 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 somehow a waste of congress is tight. I cant think of much more important conversation that we should be having the talking to our governors to find out how you are faring, tiger states are faring so that we can do our job better. Start by sayingnted to 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. With with that, without objection all members will five legislative days within which to submit additional written questions for questions was reported for the response to i asked eyewitnesses to please respond as promptly as you are able. Without objection all members one of five legislative days within which to submit extraneous material to the chair forr inclusion in the record. Without any objections this hearing is adjourned. The Senate Returns at 3 00 eastern to continue work on judicial nominations with a vote at 5 30 30 p. M. Eastern to advance the nominee for federal claims court. This week lawmakers will work on executive nominations including three position of the equal Employment Opportunity commission. Watch the senate live on cspan2 beginning at 3 p. M. Eastern. Next come hearing on Mental Health care and Suicide Prevention for veterans. The Senate Veterans Affairs Committee heard from representative of veterans