Reed: Negotiations Going On, to Help PPP

April 19, 2020
From Congressman Tom Reed:

Today, Rep. Tom Reed commented on the ongoing negotiations to replenish the Paycheck Protection Program (PPP) and provide states with additional financial assistance.

“It is readily apparent state aid will not be able to get into the Paycheck Protection Program bill now being negotiated by Treasury Secretary Mnuchin and Speaker Pelosi. Congress is not in D.C. legislating and leadership will not allow virtual participation by legislators. As a result, passing the Paycheck Protection bill requires complete agreement among every Senator and House member, which makes including state and local aid in the replenishment bill impossible,” Reed said. “However, the success gained in Speaker Pelosi and Minority Leader Schumer agreeing on a revised formula for the distribution of state and local direct aid will help us protect local governments in the upcoming phase four negotiations. I applaud Pelosi and Schumer on these efforts.”

Going into these phase four negotiations, Reed has been tireless in demanding both state-level aid and fair, direct funding to our local governments. Reed has repeatedly insisted that any state assistance must protect local governments from governors’ age-old “bait and switch tactics.” This includes stopping states from reducing their budget allocations for local government assistance programs by the amount equal to the “new” federal dollars they receive.

Often in the past, when a local government receives $1 in direct federal aid, governors would cut state assistance programs to local governments equally by one dollar. This means the local government does not come through the budget process more secure but rather breaks even since 100% of direct federal aid ends up benefiting the state. In New York, regular local government assistance budget lines, like AIM funding or CHIPS local road assistance funds, are constantly reduced by the governor in Albany when direct federal aid to municipalities is secured.

“As a former mayor who speaks regularly with leaders in our communities, I clearly hear and know local governments need critical financial relief in this crisis. However, we must learn from the lessons of the past and agree this can’t be an opportunity for Albany to engage in traditional bait and switch tactics that only benefit the state’s coffers,” Reed continued. “I am ‘all in’ on demanding the President and Republican leadership accept these state and local aid provisions, and demand Schumer and Pelosi agree that their revised funding proposals should include language protecting our local governments from the tactics that deprive them of the funding they deserve.”

By adding provisions to prevent the state from cutting traditional county aid, the country’s capacity to tackle the COVID-19 crisis can be boosted.
Reed recently spearheaded a bipartisan letter with Rep. Suozzi and other members of the New York Congressional delegation regarding the importance of local aid. As the letter noted, Congress must provide local governments with direct assistance over top of what they would receive from the state, rather than in lieu of traditional state support.