Home > Uncategorized > Boring, Arcane, But Extremely Important News About Emergency Loans

Boring, Arcane, But Extremely Important News About Emergency Loans

November 10, 2020

Today’s NYTimes features an article on the front page of the B section titled “Federal Reserves Loan Program at the Center of Political Fight“. Written by Jeanna Smialek and Alan Rappaport, the article describes an ongoing debate of the extension of emergency loans for municipalities and small businesses, which are going to expire on December 31 unless action is taken. Why is this a big deal for schools? Because IF the Senate remains in the control of the GOP the passage of any kind of federal relief for stressed state and local budgets is unlikely:

Some Democrats had begun eyeing the municipal program as a backup option in the event that state and local government relief proved hard to pass through Congress. While the program’s terms are unattractive now, they could in theory be sweetened under a Biden administration Treasury Department. Taking that program off the table would leave Democrats with fewer options — and give Republicans another bargaining chip in stimulus negotiations.

Bottom line: if this “back-up option” is off the table State and local governments will be unable to avail themselves of bond sales to forestall local and state tax increases and, as a result, state and local governments AND public schools will face some deep cuts as they prepare their 2021-22 AND 2022-23 budgets…. because I know from my experiences with recessions that the worst years are the out years when taxpayers are weary and deferred spending can wait no more. 


%d bloggers like this: