A pair of U.S. senators – Democrat Robert Menendez from New Jersey and Republican Bill Cassidy from Louisiana – unveiled the rough outline for a $500 billion federal bailout to help plug gaping holes that the COVID-19 pandemic has left in state and local tax revenues.

The proposal would likely be the fourth COVID-19 relief bill. Another related bill agreed to over the weekend calls for $150 billion in aid to hospitals, and $300 billion more toward the federal Paycheck Protection Program, which stopped accepting applications last week.

A third of the money – more than $166 billion – would go to states based on their percentage of the total U.S. population. Each state would get at least $1.25 billion, and towns with at least 50,000 residents – down from 500,000 residents under the CARES Act – would get additional funding.

Another third of the money would go toward states based on their share of the country’s total number of COVID-19 cases. The remaining third would go to states based on their loss of revenue as a result of the pandemic, government response and ensuing loss of tax revenue.

“As a former mayor, I understand the incredible toll fighting this pandemic is having on cities, towns and states on the frontlines to both wage this war and continue to support their local health departments, pay teachers and first responders, fix the roads and maintain the parks,” Menendez said in a statement over the weekend.

Only 34 of New Jersey’s 565 municipalities have more than 50,000 residents, meaning that the remaining cities and towns would be left out of the additional funding, which Menendez admitted was a shortfall.

“This is what was possible to get bipartisan support,” he said at a Monday morning press call with Cassidy.

Gov. Phil Murphy over the past month has ordered mass business closures, banned public gatherings and issued stay-at-home orders to halt the spread of the virus. The move has slammed the breaks on state and national economic activity, and led to record-number unemployment.

The extent of the impact on New Jersey’s main source of revenue – the sales, income and corporate business taxes, and property taxes for local towns – will not be evident until the summer.

But what is clear is that the state has seen a drop in billions of dollars in tax revenue. New Jersey will need either federal aid to make up that difference, or to borrow money from the Federal Reserve.

This is what was possible to get bipartisan support.

The $2.2 trillion congressional aid package, which U.S. President Donald Trump signed on March 27, included just $150 billion of aid and $3.3 billion for New Jersey. Even then, most of the money was obligated to be spent on COVID-19 response like testing and hospitalization—meaning it could not be used to help shore up state finances.

Both New Jersey and New York’s congressional Democrat and Republican representatives are seeking a combined $40 billion to be included in the next federal COVID-19 relief bill, to split between the two states.

“We will have layoffs that will be historic,” Murphy warned on Saturday, if both plans fall through. “[F]olks should assume we’re going to have to gut programs,” he also said last week.

To buy more time for state residents to file their taxes, and for the state to gauge just how much federal aid it will receive, Murphy signed a bill this month that would extend the current budget from June 30 to Sept. 30.

As part of that bill, he will have to present a new budget address by Aug. 25, a month after the delayed federal and state July 15 tax filing deadlines.

Moody’s Investors Services revised the state’s A3 rating from stable to negative on April 14, signaling it could spell a credit downgrade down the line, combined with its “significantly reduced liquidity level,” if federal aid does not pan out and the state has to borrow money.

“Before this becomes any law, if a state feels that it cannot meet its obligations or it needs revenue, and it seeks to borrow, that would be the state’s individual decision,” Menendez said. “Murphy feels that he needs to do that in the midst of incredibly shrinking or very little revenue in the state.”

“Once this is part of the law and those revenues flow in, hopefully it helps the states”