Local and State Elected Officials call on Congress to Provide Financial Assistance

Dear Members of Congress,

We write to you as elected representatives of states and municipalities across the country.

The Coronavirus pandemic is an unprecedented global crisis. In cities and states across the country, families are facing a double threat: hundreds of thousands are sick or performing essential services that elevate their exposure to the virus; millions more have been laid off or forced to close non-essential businesses, cutting off cash flow needed to cover basic expenses. Just as our front-line healthcare workers are uniquely vulnerable to contracting COVID-19 at a time when their work is needed most, so are our local and state municipalities most vulnerable to financial hardship from lost tax revenue just as our residents most need our support.

In this critical moment, the federal government’s unique constitutional power of the purse, which includes the power to coin money, is essential for ensuring our communities are able to survive and thrive. We, the undersigned, call on the federal government to take necessary action (described in greater detail here) to address these deficiencies, and ensure that state and local governments have the financial confidence and support they need in this time of crisis. These include but are not limited to providing direct fiscal grants to state and local governments, strengthening the next relief bill to instruct the Federal Reserve to directly purchase state and local debt, directing the Federal Reserve to refinance existing state and local debt to alleviate the burden of financing costs, and directing the Fed to support state or municipal governments that issue their own currencies or other tax-receivable obligations via currency swap lines, similar to those currently being provided to over a dozen foreign countries. 

Experts agree that this is both possible and necessary. Federal Reserve Chairman Jerome Powell recently committed the Federal Reserve to “step in” to provide loans “wherever … credit is not flowing,” and clarified that the Fed was “not going to run out of ammunition. That doesn’t happen.” Additionally, on March 22, fourteen state treasurers signed a joint letter to Chairman Powell and Treasury Secretary Mnuchin, in which they argued that in order for “state governments to do their part in mitigating the associated economic and social costs” in the current crisis, “they need to have confidence that they will continue to have access to financing.” Similarly, on March 27th, President Trump noted that the federal government could “handle…easily” the $6.2 trillion dollar price tag of the recent relief package, because it was “our money, our currency.”

The Federal Reserve has provided over $1.5 trillion of financing at 0% interest to the private finance sector due to the impending recession with a commitment to finance further if needed. It is unjust that the Federal Reserve has yet to make such a commitment to the public sector though it has the means to do so. State and local budgets deserve at least the same access to Federal Reserve financing as the private sector, our peoples lives in our cities and states depend upon it.

This is a moment for action, and not to be timid. We implore the federal government to use its unique constitutional powers and financial capacity to provide support to state and local governments, who serve as the front line responders to the very worst of this crisis, in our hour of need.

Signed,