Giving Compass' Take:

• With rising unemployment and demand for relief programs affecting each state and local government differently, Mark Muro offers suggestions for the next federal aid bill.

• Why is it important to adjust federal relief equitably for states and local governments in the most need? What can we do today to support localities in need of COVID-19 relief?

• Find resources to fund coronavirus relief efforts, like those supporting improved federal relief to local governments.

All of us argue that while the most heart-rending costs of the recession are the human ones, some of the most insidious pain will emanate from a coming crisis within state and local governments: collapsing revenues, increased demand for safety net programs like Medicaid, and the direct costs of leading the COVID-19 response. In that vein, all of us estimate that states and localities will face revenue shortfalls in the hundreds of billions of dollars by the end of 2021, which will force them to make deep cuts in public services.

Only massive federal aid to states and localities—to the tune of $700 billion to $1 trillion over the next 18 months—will be sufficient to blunt the coming service cuts and layoffs as well as keep regional fiscal contractions from deepening the crisis and slowing the recovery.

But there is still more to consider here. Without excessively overcomplicating the bill’s design, it is imperative that any aid package be crafted to respond to the likely large variations among states’ economic conditions as the recession deepens. The simple fact is that the pain of recessions does not hit all areas equally.

In fact, over 100 of the country’s 383 metropolitan areas still had not matched their pre-2007 employment level when the COVID-19 crisis struck. Many of these places will now be damaged once again, underscoring that the nation is accumulating more and more distinct, distressed communities that drag on states as semi-permanent traps of underdevelopment—traps that embody impediments on the nation’s vitality.

All of which argues for introducing into any coming state and local government aid a provision for adjusting aid-sharing to local needs, as manifested by the severity of local unemployment conditions.

Read the full article about local governments and federal relief by Mark Muro at Brookings.