WASHINGTON—Today, Congresswoman Rashida Tlaib (MI-13) and Congressman Joe Neguse (CO-02) introduced the Uplifting Our Local Communities Act, which would expand access to CARES Act funding to state and local governments. The bill would make critically needed changes to a Federal Reserve-administered emergency lending program intended to provide vital assistance to financially struggling state and local governments and their residents through the COVID-19 pandemic by requiring the Fed to adjust the restrictive Municipal Liquidity Facility (MLF).
Access to the $500 billion lending program the MLF supports is currently limited to states, cities with populations exceeding one million residents, and counties with populations exceeding two million residents. That and other restrictvive MLF terms have left out a whopping 97 percent of states, cities, and counties from the critical aid program. State and local government leaders have previously said they could need as much as three-quarters of a trillion dollars as the pandemic dries their tax revenue, layoff or furlough workers, and impose drastic budget cuts. It’s that dire need that Reps. Tlaib and Neguse hope to address by introducing this bill that would include such changes as:
- Bringing the population threshold for eligible issuers down to 50,000 residents.
- Requiring the inclusion of territories as eligible issuers of debt.
- Bringing interest rates down on bonds purchased by the MLF, avoiding the “penalty rate” states and cities have to pay under current terms.
“We can’t allow our local communities to go bankrupt. Just like the Federal Reserve Bank aggressively helps bail out big banks and airlines, they must equally help our cities, townships and states thrust into survival mode by the pandemic,” said Congresswoman Tlaib. “Our federal government has a responsibility to ensure they are not left to anguish over how or whether they’ll even be able to survive the financial strain this pandemic has placed them under. Our local communities are literally on the fronline of stopping the spread of COVID-19—but they were already struggling before this pandemic. It’s time to grant them adequate relief aid.”
“Communities throughout Colorado and throughout the country are struggling with the public health consequences and economic impacts of COVID-19. We must ensure that every one of them has the resources they need to survive, no matter their size. Like their larger neighbors, smaller counties, cities, and towns have faced enormous costs while responding to the COVID-19 pandemic, rapidly activating emergency operations to keep their communities safe. ” said Congressman Neguse. “The Uplifting Local Communities Act will lift unnecessary restrictions that are keeping valuable resources out of the hands of rural counties and mountain cities, and ensure every community can continue to pay first responders, health care providers and continue the needed emergency services during this pandemic. I am proud to introduce this critical bill alongside Representative Tlaib.”
The Uplifting Our Local Communities Act is co-sponsored by 14 other congressmembers. It has also received the endorsements of such advocacy groups as Americans for Financial Reform (AFR) and The Center for Popular Democracy (CPD).
“Credit from the Federal Reserve is an important part of managing the looming state and local budget crisis and avoiding massive layoffs and cuts in services,” AFR Policy Director Marcus Stanley said. “But the Federal Reserve has set unjustifiably restrictive conditions on lending to public entities that make it difficult or impossible for states and localities to access loans. This legislation would change those conditions to make critically needed credit accessible to communities across the country.”
Earlier today, the House Committee on Financial Services took up the Uplifting Our Local Communities Act as part of a hearing titled “Oversight of the Treasury Department’s and Federal Reserve’s Pandemic Response”.
The full text of the bill can be read here.