The Need for Federal Aid to the States: A Statement

Marc Stier |

Marc Stier delivered the following remarks at a press event held by Senator Bob Casey.

Thank you, Senator Casey, for inviting me to speak today and for your advocacy for our state and its people.

Pennsylvania, like every state in the country, desperately needs new covid-19 relief measures from the federal government

The Pennsylvania economy needs it.

Pennsylvanians who are suffering from the economic crisis created by the pandemic need it, especially those who are unemployed or who are facing a housing crisis.

And these are disproportionately people of color and women.

And all of us who rely on a functioning state government need it.

After a welcome, if only partial, economic recovery thanks to the impact of the CARES Act, the economy of Pennsylvania has been slowly slipping back into a deeper recession since September.

With limited restrictions on business activity, small business revenues have been falling. On July 1, small business revenues had recovered to the point that they were was only 12.8% below the January 2020 level. By September 22 they had declined 18.5% below the January level. As of today, they have fallen almost another ten points, down to 28.7% below the January level.

By October, consumer spending had almost recovered to the January 2020 level. Since then, it has fallen to 13.7% below that level. In low-income communities, consumer spending has fallen by 25% since early October.

There are two reasons for the recent decline in economic activity. The first is the continuing impact of the pandemic itself. Even as the state loosened restrictions on businesses, many of them did not fully recover. People, understandably, remain worried about becoming infected with COVID-19 and spreading the disease to friends and family. And as COVID-19 cases and deaths have risen, business activity continued to decline.

The second factor leading to economic decline is the reduction in federal support as CARES Act funding especially for the $600 per week additional unemployment insurance payments has ended. At one point, this program was bringing $1 billion a week into the PA economy. But it is gone now.

Not only the economy as a whole but individual Pennsylvanians desperately need relief. We don’t have precise PA data but our estimate is that 160,000 Pennsylvanians have already exhausted their unemployment benefits and that without a further extension in benefits weeks, another half-million are at risk of doing so soon. While the unemployment rate remains stagnant that is only because hundreds of thousands of people have left the job market because of their inability to find work.

Based on census data we estimate that more than 1 million Pennsylvanians are at risk of losing their homes if and when a moratorium on evictions ends.

The impact of the pandemic-created recession on the state budget remains deeply troubling. The General Assembly enacted a precariously balanced budget for the second half of the year in November.

The budget left many needs unmet. It used $1.3 billion of CARES Act funding to backfill state revenues instead of providing desperately needed for small businesses, those who may lose their homes, frontline workers, and those who need help securing food or health care,

The budget passed already assumes that the state will receive an additional $2 billion in enhanced support for the Medicaid program. Without it, we will need to cut spending by that amount.

In total, the budget relies on $5 billion in one-time revenues and projections of state revenues based on an economic recovery that has reversed. Without substantial new federal aid—in the $4-$5 billion range—we are likely to see budget cuts in education, higher education, and human services that far exceed those enacted by Governor Corbett. Pre-K, K-12, and college students will suffer. Those who need childcare will be out of luck. People who rely on government support for mental health care and employment services or to help with family members who are intellectually disabled will lose them.

Even that will not be enough to balance the budget. Yet budget cuts at this level will not just hurt students and people who rely on state services but will lead to tens of thousands of job losses and will knock the Pennsylvania economy down further.

Our economy, our people, and our state government all desperately need help from the federal government as soon as possible. Frankly, we need it yesterday.

Again, I thank Senator Casey for his leadership in securing it today and every day.