State and local leaders have expressed concern over inadequate funding. The CARES Act passed in March was insufficient to meet the growing needs that the pandemic has caused amid the unanticipated costs of shuttering and reopening communities and small businesses across the Northeast states. The shutdown fundamentally reduced or eliminated revenue sources from sales taxes and other income for state and local governments, potentially leading to further cuts and layoffs, especially for essential services like first responders or sanitation workers. In New York, Governor Cuomo has indicated that 20% across the board cuts will be necessary without additional federal assistance.
At this time, it remains unclear what economic recovery will look like in the coming months as lawmakers on Capitol Hill continue to battle over their partisan differences. The House passed the HEROEs Act in May mostly along party lines, however some leading Senate Republicans and senior White House officials remain skeptical of sending additional checks while suddenly expressing concern about the impact of new spending against the deficit. The debate continues of whether to renew the fiscal-aid measures approved for the millions of Americans who lost their jobs as a result of COVID-19 and shutting down. The expanded unemployment insurance payments of $600 a week is set to expire on July 31. Majority Leader Mitch McConnell said, “if the Senate decides to start work on a second stimulus package, it will be in July, and any measure would be narrowly focused and not exceed $1 trillion.” He also noted this would be the last coronavirus stimulus package Congress passes.
Boston Federal Reserve President Eric Rosengren said he expects that many more borrowers will likely need funds if the coronavirus pandemic worsens over the next few months. At a recent House Financial Services Committee hearing, Federal Reserve Chairman Jerome Powell said “I would think that it would be a concern if Congress were to pull back from the support that it’s providing too quickly.”