McConnell Says Local Budget Offices Are Hoarding Cash. They Say: Malarkey

It was one of those comments that stops Washington insiders cold in their tracks. On Saturday, Senate Majority Leader Mitch McConnell was telling an interviewer that his home state of Kentucky — among the worst at responsible budgeting — had only spent about 6% of the money Congress had sent it to deal with the economic pressures of the coronavirus pandemic. McConnell was trying to make the point that Congress should wait until states spend what they have in their pockets before shoveling more cash to help local budgets in the next aid package.

It seemed an impossible claim. But sure enough, the Senate’s top Republican was right: very little of the emergency dollars meant to help his or other states has been going out the door, according to a July 23 Treasury Department document. And Kentucky isn’t alone in sitting on its piece of the $150 billion highly-conditioned bailout.

Just as jaw-dropping as McConnell’s assertion was its fast dismissal from outside the Beltway. In all, seven bipartisan associations representing governors, state fiscal officers, mayors and local elected leaders started a systemic and clear-eyed rejection of McConnell’s claim that states didn’t need more money to stay afloat. Within a day of McConnell’s interview, which aired on Greta Van Sustern’s Sunday show on Gray Television, the joint lobbying effort got a second wind to bail out state and local governments. The advocates’ goal? A cool $1 trillion.

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Whether or not Treasury should send another bailout to local governments is the latest faultline to emerge as Congress is trying to marshal a response to the coronavirus pandemic that has tanked one-third of the U.S. economy, sent tens of millions of Americans onto unemployment rolls and shattered stability for all sectors of the country. For weeks, Washington has been deadlocked over just how red the latest budget will glow in debt-based spending. Unions and advocacy groups have been blanketing the airwaves with ads urging Congress to pony up for public health workers, teachers and civil servants, whose paychecks are all cut at the local level.

Most states have to run balanced budgets. Legally, they cannot go into debt when times get tough. Local governments like counties, cities and townships have a little more leeway, but not a ton; they can borrow cash but banks aren’t rushing to lend a lot of these places cash as they confront their own dodgy ledgers. Which means Washington is local commissioners’ funder of last resort.

To that end, Congress set aside $150 billion in emergency aid for state and local governments during the most recent round of pandemic help, but it hasn’t been flowing freely for a couple of reasons. The first round of cash went out in late April for $110 billion, but much of it got trapped in bureaucratic inaction. Because most budgets start fresh on July 1, their writers held off on any major changes until then. The Treasury Department document cited by McConnell and his allies account only for cash through June 30.

At the same time, many states set into motion a system whereby cities, counties and tribes would be reimbursed for programs — and it’s not like many of these local governments had robust accounting offices ready to file forms for pandemic relief. Spend now, seek reimbursement later, in other words. The IOUs simply haven’t come in yet. On top of all of that, the Treasury Department has not been clear in its rules for spending this money; at first it was only meant to be used to cover health costs and not to patch budgets, but that seems to have shifted and McConnell has hinted that local and state governments may use the money how they wish going forward.

The timing of McConnell’s assertion, though, is one of those rare moments of serendipity where the local leader may have a shot to force Washington to listen to what’s really needed. On Wednesday, more than 40 governors are expected to join a remote summit of the National Governors Association. Its head at the moment, Republican Gov. Larry Hogan of Maryland, is no lapdog to Trump. At the same time, local officials are hardly hiding their own pique. In a survey of members of the International City/ County Management Association, 55% of respondents said they hadn’t yet received the promised aid. Add onto this an expiration of a $600 federal supplement to state unemployment insurance and the end of an eviction moratorium, the pressure cannot be ignored. Congress may not like it, but America is not eager to see its streets full of homeless, jobless and sick neighbors. Accounting spreadsheets cannot justify that tableau.

A version of this article first appeared in The DC Brief, TIME’s politics newsletter. Sign up here to get stories like this sent to your inbox every weekday.

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Write to Philip Elliott at philip.elliott@time.com.