New York, New Jersey Among Four States Seeking $100 Billion Aid

(Bloomberg) --

The governors of New Jersey, New York, Connecticut and Pennsylvania urged the federal government to consider a fiscal stimulus of at least $100 billion in direct cash to all four states to help cover costs related to coronavirus response operations.

They made the request Friday in a letter to President Donald Trump and congressional leaders in both parties.

Together, the four states represent 16% of the U.S. economy. After closing schools and nonessential businesses, the governors are forecasting billions of dollars in lost revenue from sales taxes and other sources.

“We have dramatically increased spending to protect our residents from this virus and to provide critical relief for individuals whose livelihoods are threatened or upended by our response,” they wrote.

Without at least $100 billion immediately, “we will be forced to make incredibly difficult choices,” including laying off public employees, cutting funding for education and transportation, and “substantially” reducing critical services just as they are needed the most, said the governors, who are Democrats.

The announcement came as New Jersey Governor Phil Murphy said the state now had 890 confirmed Covid-19 cases, up from 742 a day earlier. Two more people died, for a total of 11.

Restrictions on business activities and public assembly have already begun to affect states’ revenue and costs. The market has priced in the impact of the slump, leading to the worst muni-bond rout since 1984 and prompting desperate calls for federal support.

New York Governor Andrew Cuomo and New York City Mayor Bill de Blasio had already asked for aid. State officials estimate New York could lose anywhere from $4 billion to $7 billion in tax revenue out of the $87.9 billion projected for next year’s budget. The city will lose $3.2 billion in revenue over the next six months, Comptroller Scott Stringer estimated.

During a Thursday morning briefing, Cuomo drove home the dire needs: “We have to run a government. We need the health-care system up and running. We need police. We need fire fighters. We need bus drivers. We need daycare workers. All these functions have to continue.”

Transit agencies were among the first to seek federal lifelines. Steep ridership declines in New York led the nation’s largest transit system, the Metropolitan Transportation Authority, to request $4 billion in aid Wednesday. On Thursday, New Jersey Transit requested $1.25 billion after ridership fell 88% since March 9. That evening, it reduced its service to weekend levels until further notice.

During the 2008 financial crisis, the federal government stepped in with infrastructure funding through the Build America Bond program, as well as increases in the Medicaid matching rate, which injected billions of dollars into state coffers. Analysts predict similar measures this time.

Since early March, the federal government already has injected nearly $1 billion in direct public-health aid for state and local governments, provided $40 billion in disaster relief and provided billions more through an increase in the matching rate, according to Fitch Ratings.

©2020 Bloomberg L.P.

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