A new coronavirus relief bill could give municipalities like Nassau and Suffolk access to a federal lending program in 2021, after a similar one is set to expire, according to Senate Minority Leader Chuck Schumer's office.
The $900-billion package, passed by Congress Monday night, allows federal officials to create a new Municipal Liquidity Facility to help municipalities cover cash-flow shortages caused by the coronavirus and related reduced economic activity, by purchasing municipal debt, said the office of Schumer, a Democrat from New York.
The existing $500-billion program created by the U.S. CARES Act and run by the Federal Reserve, is set to expire Dec. 31.
Schumer's office said it pushed to include the new option in the spending bill for Nassau and Suffolk.
While Nassau officials said they don't plan to use the federal program, Suffolk officials have said it will be critical.
They had urged U.S. Treasury Secretary Steve Mnuchin to extend the Municipal Liquidity Facility into 2021. Without access to the program, "the consequences for a county such as ours could be dire," Democratic Suffolk County Executive Steve Bellone and Republican county Comptroller John M. Kennedy Jr. wrote in a joint letter to Mnuchin this month.
Bellone successfully lobbied for access to the program in the spring after it initially excluded counties of Suffolk's size.
Suffolk has not borrowed directly from the program because market rates are lower and investors in the regular market purchased all of the county's short-term bond notes this year, Kennedy said. But the program is "almost like insurance" because it would buy bonds, which finance county operations, if needed.
Suffolk, which is expected to face looming revenue shortfalls and receive less federal aid in 2021, would likely rely on such a program more next year, especially if it has any future bond-rating downgrades, Kennedy said.
Nassau has not participated in the federal program because it "came with a penalty rate" and the county found funding in the regular market, spokeswoman Christine Geed said. But Nassau officials support municipalities having an opportunity to access it in the future, Geed said
Officials with the U.S. Treasury did not respond to a request for comment.