Hawaii Has Huge Stake In Negotiations Over Federal COVID-19 Aid

When negotiations over the next pandemic relief bill begin in earnest this week between President Trump and members of Congress, perhaps the most pressing issue for Hawaii will be a Senate GOP proposal to reduce the $600-per-week federal “plus-up” payments for unemployed workers to $200 per week or less.

Members of the Hawaii congressional delegation say some basic features of what will be the next federal COVID-19 relief bill are beginning to emerge, and predict there will be more funding to support coronavirus testing in the new bill as well as extra help for schools.

But Senate Republican Majority Leader Mitch McConnell has proposed dramatically reducing the federal unemployment payments, and seems dead-set against any budget bailouts for the state and local governments that saw their tax collections crash during the pandemic, said Hawaii U.S. Sen. Brian Schatz.

Hawaii has a huge stake in those negotiations over federal support, which is expected to include another round of $1,200 individual cash stimulus payments.

The extra $600-per-week unemployment payments have been a critical lifeline for thousands of laid off hotel, restaurant and other workers as the Hawaii tourism industry shut down.

However, U.S. Rep. Ed Case said he has heard comments “pretty frequently” from members of his own caucus as well as “major concerns” from some Hawaii employers that the payments have become a disincentive to work.

Case said he thinks the $600 plus-up was necessary for Hawaii workers, but “I think there are parts of the country that do not believe that we need to have as much of a federal plus-up going to as many people for as long a period.”

In the end, Case said the size of the unemployment benefit will likely depend on the overall size of the relief bill. Senate Republicans have proposed a $1 trillion package, while the so-called HEROES Act passed by the Democratic-held U.S. House in mid-May totaled $3 trillion.

A relief package that moves out a larger amount of federal funding will obviously have more room for a more generous plus-up benefit, Case said. The negotiations between Democrats and Republicans over the relief bill have been pushed back to this week because of divisions within the GOP over what ought to be in the final bill.

An earlier GOP proposal called for reducing the plus-up payment to $100 per week, but Schatz said the adjustment of unemployment payments should be tied to what is actually happening with the pandemic and the national economy.

“I think there’s some openness to a ratcheting down of that dollar amount if and when the economy shows signs of life, but the current proposal is to drop that amount from $600 to $100 a week, and people just won’t be able to survive on that dollar amount, so we will fight to make sure that to the extent that the economy is not fully functional, that people are able to meet their basic needs,” Schatz said in a recent interview.

The Washington Post reported Monday that an earlier Republican proposal to reduce the plus-up payments to a basic $100 per week will be modified to temporarily increase the weekly federal benefit to $200. The GOP plan is to provide the $200-per-week benefit until states can devise systems for paying jobless workers 70% of what they would have made if they were working.

Will Feds Stop Aid To State, Local Governments?

Another issue that is critically important for Hawaii is whether the federal government will provide more aid to states, cities and counties. Schatz said McConnell’s plan to exclude any additional aid for states and municipalities to help them balance their budgets is “not tenable for Democrats and for governors on both sides of the aisle.”

“As we try to get through this, both in terms of public health and the economy, there’s just no way we can handle the pandemic if state and county governments are forced to do layoffs in the fall,” Schatz said.

Hawaii state government is now confronting a budget shortfall on the order of $2.3 billion, and Gov. David Ige has said public worker pay cuts or furloughs are inevitable unless the state gets more help from the federal government, or is given greater flexibility to use CARES Act funding to plug the enormous state budget hole.

The CARES Act is a major COVID relief bill passed by Congress in March. As of mid-July Hawaii had received an estimated $7.7 billion in CARES Act funding, according to Case, who represents urban Honolulu.

Hundreds of millions of dollars of that CARES Act funding for Hawaii remains unspent, and Ige said in an interview last week he needs to know more about the federal aid package before he can finalize the state financial plan, including exactly how the CARES money will be used.

State lawmakers earmarked much of the unspent CARES Act money earlier this month in Senate Bill 126 for programs to supplement rent and mortgage payments for lower income families, to provide food aid, to buy additional personal protective gear and for other initiatives.

But Ige said he is watching the negotiations in Congress closely in the hope that Congress might provide more cash assistance to the states, or reverse itself and allow states to use CARES Act funding to cover the cost of operating state government, including payroll costs.

“I’m just concerned that they’re not going to provide additional funds, and that the CARES Act funds are the only funds we’re going to get,” Ige said.

If no additional federal aid for state government is forthcoming, “that really would not be a good place for the state of Hawaii, for sure,” he said.

Case guessed that the final version of the new relief bill will include some additional bailout funding for state and local governments — which he called a “no-brainer” — but it may not be enough.

There is a sense among some in Congress that the states did not do enough to build up their cash reserves in the wake of the last major recession, and should not be rewarded for that failure with a federal bailout, Case said.

Money For COVID Testing?

Yet another issue hanging in the balance is additional support for COVID testing, which Schatz said is also critical now that testing backlogs are causing delays in test results.

“Our ability to get tests done quickly depends on the supply chain on the mainland.,” Schatz said. “We’re downstream from some of these testing challenges, and so it behooves Hawaii to make sure there are not testing shortages on the mainland.”

Ige has outlined plans to allow tourists to skip Hawaii’s mandatory 14-quarantine for arriving trans-Pacific passengers if the visitors have been tested for COVID-19 in the last 72 hours, and Schatz said that “certainly, if we anticipate being able to reopen tourism, it’s going to be challenging to do so in places where it takes three to 10 days to get a result.”

And if the testing shortages continue, public health agencies will understandably prioritize public health needs over the needs of tourism, he said.

The Senate is scheduled to remain in session until Aug. 7, and members of the House have been told to be available during the same time frame, and Schatz said he expects the negotiations will continue until almost the last minute.

It’s difficult to guess what components will be in the final package based on the public statements by President Trump the Congressional leaders, Case said.

“Right now, everybody is negotiating in public, so it’s all posturing,” and that posturing is profoundly influenced by election-year politics, Case said.