The Republican plan also would give states and municipalities more flexibility on how to use unspent portions of the $150 billion provided in the virus relief bill passed in March.

The GOP language would block any of the money going to state pension funds. Republicans insist that generous deals struck over the years by Democratic mayors and governors with public employee unions have caused their fiscal woes, and don’t intend to plug what in some cases are huge funding holes.

“Democrats think they smell an opening they have wanted for years, to make Uncle Sam bail out decades of mismanagement and broken policies in places like New York, New Jersey and California,” McConnell said this week, citing three solidly Democratic states.

In negotiations last week, Treasury Secretary Steven Mnuchin offered an additional $150 billion for state and local aid.

Pelosi rejected that as insufficient. She said that she and Senate Democratic Leader Chuck Schumer are willing to meet Republicans at some “middle ground,” but that, “it’s no use sitting in a room and let them tell us that states should go bankrupt.”

$915 Billion
The Democratic plan passed by the House in May would provide $915 billion in state and local aid. More than half would go to states and Washington D.C, with the first portion awarded within 30 days of enactment and the rest no later than May 3.

Local governments would get $375 billion. Of that, $131.25 billion would be for cities that have a population greater than 50,000 or are the principal city of a metropolitan statistical area; $56.25 billion for local governments other than counties or parishes; and $187.5 billion for counties based on population. There is also $20 billion for U.S. territories and $20 billion for tribal governments.

The National Governors Association has made a plea for $500 billion in unrestricted aid just for states. The organization in a statement Thursday said that a failure by Congress to take action “would lead to massive cuts to the very services that are sustaining millions of Americans during the pandemic and recession, and that are necessary for a rapid and sustainable recovery.”

To that point, a Moody’s Analytics report released June 25 said without more assistance, state and local governments will be forced to make budget cuts that could shave as much as 3 percentage points from the pace of economic growth and result in the loss of about 4 million jobs.

Pittsburgh’s Democratic mayor, Bill Peduto, said during the mayor’s conference call that his city is facing a shortfall this year of about $100 million with few ways to make it up.