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Massive Layoffs And Pay Cuts Heading To State And Local Governments As Federal Aid Goes Elsewhere

Massive Layoffs And Pay Cuts Heading To State And Local Governments As Federal Aid Goes Elsewhere

State and local governments have cautioned they will have to do massive pay cuts and layoffs since they’re not included in the new stimulus package. FILE – In this May 26, 2011 file photo, Cleveland firefighters rally outside City Hall in Cleveland, in protest of the impending layoff of 51 firefighters due to cuts in the city budget. The U.S. economy is moving ahead, however fitfully. Yet state and local governments are still stuck in recession. Short of cash, they cut 30,000 jobs in May, the seventh straight month they’ve shed workers. Rather than add to U.S. economic growth, they’re subtracting from it. (AP Photo/Amy Sancetta)

Several state and local governments have cautioned they will have to do massive pay cuts and layoffs since they won’t receive funding from the new federal coronavirus stimulus package, reported CNBC.

Los Angeles, Detroit and Ohio are among the places where the expected layoffs and/or pay cuts will happen. In L.A., it is projected the city’s budget will drop by $600 million due to the coronavirus pandemic, while Detroit may have to let go 200 workers and furlough thousands of others, the report stated.

While state and local governments received aid in the original CARES Act, Republicans rejected Democrats proposal to include more aid for them in the upcoming relief package.

The new stimulus bill has already passed the U.S. Senate unanimously and the House will vote today. It is largely focused on providing more funding to small businesses the initial relief funding for small businesses ran out after some of it was given to big businesses.


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Senate Minority Leader Chuck Schumer said he would continue to fight for aid for the state and local governments, the report said.

“The people who are on the front lines, they should get extra money, and at the top of the list is a robust state and local plan,” Schumer said. “We’re going to fight for that and many more things” in the next aid bill. It “will soon be upon us because the nation will demand it.”

Efficient management and oversight by state and local governments are critical to recovering from the pandemic. Without relief, experts say state and local governments’ budget crises can further harm the economy and lead to a greater financial crisis.

“The approaching state budget cuts … will cause the U.S. economy to contract further — making the economic downturn deeper and more protracted, causing many more people to lose their jobs, and magnifying the serious hardship we already see,” said Robert Greenstein, president of the Center on Budget and Policy Priorities.

“We are really struggling,” said Commissioner Denise Driehaus of Ohio’s Hamilton County. She has taken a 10 percent pay cut.