U.S. Rep. Sylvia Garcia of Texas predicts cities and local governments could be facing bankruptcy

Mike Chiari The Texas Tribune

As wary Texans deal with a struggling economy, U.S. Rep. Sylvia Garcia is predicting the next Great Depression.

Garcia, a Democrat from Houston, told The Texas Tribune in a broadcast interview on Friday that she thinks the country is already in the middle of a historic economic depression, citing record unemployment numbers and the number of small businesses that have had to shut down permanently after weeks of closure.

“No one’s actually declared it yet, but if you look at the numbers of unemployment … companies are already beginning to do major layoffs,” Garcia said. “I’m waiting for the bankruptcies to start.”

Included in that toll might be local governments or smaller cities, Garcia said, which are struggling after the federal coronavirus stimulus bill known as the CARES Act placed high restrictions on which municipalities could receive emergency funding. Within a state, only “units of local governments” with populations that exceed 500,000 are eligible to receive direct funding from the federal government as a portion of the state’s allocation, according to the United States Conference of Mayors.

“They’ve had to step in, and it’s stretching their budgets. Do we let small governments go bankrupt?” Garcia said.

Garcia said she predicts a second CARES Act will be forthcoming. She previously criticized Texas Gov. Greg Abbott‘s decision to reopen the Texas economy earlier this week, calling it “baffling.”

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