Inauguration Day: What states want from President Joe Biden, and how it affects your wallet
When President-elect Joe Biden takes office, there will be plenty of anticipation over the first days of his administration.
Perhaps few are more anxious than state governments.
Facing burgeoning deficits and growing impatience over the distribution of a COVID-19 vaccine, states are urging Biden to help their troubled plight.
"More funding is needed for restaurants and bars, as well as the service industry more broadly," Pennsylvania Gov. Tom Wolf said Dec. 22.
"More funding is needed for direct payments to individuals and families. More funding is needed for state and local governments and the critical services they provide."
Many states' fiscal future relies on a bailout from Biden and the incoming Democratic-controlled Congress. Without it, they warn of financial ruin that could lead to higher taxes and deep cuts to local governments, schools and services.
Biden and his administration are proposing to help, both in direct aid and to bolster stalled infrastructure projects, such as the Gateway tunnel project between New York and New Jersey.
Last week, the Democratic president proposed a $1.9 trillion plan includes $20 billion for a national vaccination program, $1,400 stimulus checks for income-eligible Americans and raising the minimum wage to $15 per hour. It also includes $350 billion for state and local governments.
"During this pandemic, millions of Americans through no fault of their own, have lost the dignity and respect that comes with a job and a paycheck," Biden said Jan. 14.
"There is real pain, overwhelming the real economy."
A financial bailout for states
None of the COVID stimulus package approved by Trump and Congress last year included specific aid to help state finances — despite providing billions of dollars for schools and COVID relief.
But governors might find a more willing partner with Biden and Democrats in control of the Senate, which had been held by Republicans.
New Jersey Gov. Phil Murphy has said repeatedly that his state’s largest need is direct federal aid, estimating as much as $20 billion is needed to cover lost revenues and future expenses related to the pandemic.
Late last month, Murphy said he and his top administration officials “fully expect that we can do a lot more, particularly with regard to the state and local aid,” once Biden takes office.
Murphy said Biden's $1.9 trillion would go a long way toward addressing some of the needs in New Jersey.
“This plan meets every need with a real lifeline to American families, real support for state and local governments and for our vaccination efforts, and a real vision for our post-pandemic economic future,” Murphy said in a statement.
Perhaps no state is hanging its future on the federal more than New York.
Gov. Andrew Cuomo on Tuesday presented his $193 billion budget plan based on two different scenarios: one with $6 billion in federal aid and one with $15 billion to close a $15 billion deficit over the next two years.
The $6 billion aid plan would come with higher taxes on the wealthy and a delay in new middle class tax cuts. The $15 billion plan would not raise taxes and keep the modest middle-class tax cut.
A governor's budget address is technically an appeal to the state Legislature to support a spending plan. Cuomo's speech on Tuesday was instead a plea to Washington.
"I believe Washington will be fair. President-elect Joe Biden I've known for many, many years. This is a good man. This is a competent man," Cuomo said.
"This is a man who loves New York."
Still, some fiscal experts criticized the federal handouts sought by states, saying it would be one-shot revenue that would only provide temporary relief for states' structural problems.
"Once all the temporary federal COVID-19 relief is gone in another year or two, there will be a bigger state budget hole to fill," wrote E.J. McMahon, who heads the Empire Center, a fiscally conservative think tank in Albany.
Tax reform also on state's agenda
Another major goal for Northeastern states is a repeal of a $10,000 cap on state and local tax deductions that the Republican-led Congress and Trump installed in 2017.
The measure hurts the wealthiest states and their richest residents by limiting their income tax deductions — which are especially critical in high-tax states like New Jersey and New York.
Cuomo is urging Congress and Biden to end the so-called SALT cap, which the Democratic governor on Tuesday called "one of the single worst federal actions to befall the State of New York."
Cuomo and other Democratic governors will have a better chance of the repeal with Biden and fellow New Yorker Sen. Chuck Schumer as majority leader.
Schumer has supported ending the SALT cap and providing a bailout to states.
"With the new Senate majority, we will finally be able to prioritize state and local aid in the next COVID relief bill," Schumer said last week, saying "staving off disastrous layoffs and tax hikes" will be one of his top priorities.
Maryland Gov. Larry Hogan is set to present a balanced budget with no tax increases to the Maryland Legislature on Wednesday.
Though Hogan on Tuesday declined to provide details, including the overall budget total, he said the state had walked back from "near fiscal Armageddon" that financial forecasters predicted early in the pandemic.
Hogan credited the state's economic strength to early budget cuts, a freeze on non-emergency spending and COVID-19 relief from the federal government.
Hogan praised the federal government for providing the help that has arrived, but said additional direct aid to state and local governments would be welcome.
"The Biden team says they're going to push for that, so we're looking forward to some direct help," Hogan said Tuesday.
Delaware Gov. John Carney, a Democrat, offered a similar assessment. While Delaware’s economy has suffered during the pandemic, the state is not in a budget crisis because it was able to dip into an emergency savings account while also leaning heavily on federal aid funding last year.
However, more federal aid will be needed this year if the state wants to continue avoiding a budget shortfall.
A push for infrastructure in 2021
The inauguration of Biden, a frequent rider of Amtrak as a senator, could also renew promise of construction of two new tunnels through the Hudson River connecting New Jersey and New York.
Murphy has spoken with Biden and Biden’s transportation secretary nominee Pete Buttigieg about the Gateway project and said he is “extremely hopeful that this project will move under President Biden’s administration.”
So there is great optimism that the stalled $30 billion project for the new tunnels and to fix the aging and decaying ones already there will finally get done — and quickly.
Another transportation-related plan that found itself stuck in Washington during the Trump administration was the congestion pricing program.
The plan, which was approved by New York lawmakers in 2019 and hoped to be put in place this year, proposes to toll drivers who enter Manhattan’s busiest area below 60th Street, which could help reduce traffic and fund capital projects for the Metropolitan Transportation Authority.
The plan, which required federal approval but doesn’t require federal money, has been held up for the last year, and Democrat called it yet another vindictive move made by Trump against the New York metropolitan region, despite Trump being a native New Yorker.
Former New York City transportation commissioner Polly Trottenberg was named deputy transportation secretary for the Biden administration and will be at the table when both of these programs come under review.
"Washington has delayed these tunnels, called the Gateway Project for years and they must finally move forward," Cuomo said Jan. 14 during one of his State of State addresses.
"New York State stands ready to help in an equitable Gateway venture, but New York has neither the resources, nor the patience to partner in more wasteful bureaucracy."
Joseph Spector is the Government and Politics Editor for the USA TODAY Network's Atlantic Group, overseeing coverage in New York, New Jersey, Pennsylvania, Maryland and Delaware. He can be reached at JSPECTOR@Gannett.com or followed on Twitter: @GannettAlbany
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