New York CNN Business  — 

Employers added 3.1 million jobs in May, giving an unexpected boost to the labor market battered by the Covid-19 pandemic. But state and local governments are still cutting jobs, and it is expected to get worse very quickly.

Even as businesses reopened and started calling back workers, those two levels of government slashed 571,000 jobs in May. That was on top of the 964,000 jobs that disappeared from those sectors in April. These are by far the worst two months for job cuts in either sector according to data dating back to 1955.

And with the end of most state fiscal years only weeks away, many more job cuts are likely unless Congress and the administration agree to some kind of relief package.

Moody’s Analytics estimates that 3 million state and local jobs could be at risk in coming months, not only at public schools and state colleges but also among first responders, social services, sanitation, health care and services that improve quality of life, such as parks departments and libraries.

“This is a nationwide problem. Every state will suffer sizable budget shortfalls. It’s not a red or blue problem,” said Mark Zandi, chief economist with Moody’s Analytics. “It’s not obvious how they respond other than cut jobs, which is their biggest expense. They’ll have to cut back on basic services. Anything that isn’t vitally critical will be at risk.”

State and local governments are the largest employers in the nation, with 19.8 million workers before the current crisis – more jobs than found at all the nation’s retailers, factories, construction sites, hospitals, banks and financial firms, restaurants and bars.

And the 3 million jobs at risk in the sector don’t even include positions that could be lost because they are funded by state and local government revenue – private workers who provide janitorial services in public buildings and caregivers who work at publicly-funded day care, for instance.

Revenue sources for state and local governments have been decimated by the crisis. The plunge in retail sales has cut deeply into state and local sales taxes, and record job losses and the worst unemployment levels since the Great Depression have slashed state income tax revenue. Many people are unable to make property tax payments, either because of job losses or because they are landlords whose renters can’t pay their rent, which also cuts into state and local tax revenue.

“There’s no question, the tax base is crumbling,” said Lee Saunders, president of the American Federation of State, County and Municipal Employees, which with 1.4 million members is one of the nation’s largest unions. “If we don’t get aid, there’s going to be huge losses. Essential public services will be cut. And in past recessions, a number of public service jobs that were eliminated then were never brought back.”

The sectors are responsible for jobs in every corner and community of the country, many of them good-paying, middle income professional jobs. About 30% of state employees are unionized, as are 40% of local government employees. That compares to only 6% of private sector workers.

One of those public sector employees who lost their job is Ashley Sims, a library assistant making $19.50 an hour working for the Louisville Free Public Library System. Even when the libraries first closed in March, she and other library workers stayed on the job doing tasks they don’t normally have time for. But she and most of the staff were furloughed on May 1, and Sims worries when – or if – she’ll get her job back.

“The city isn’t getting the income tax it expected and they couldn’t afford to keep us on the payroll,” she said. “It makes you feel very anxious to be in this situation. It’s hard not to expect layoffs when we’re thinking about a budget as a whole.”

Sims, 29, said she has wanted to be a librarian since she was a girl. The job has been even more fulfilling than she imagined, and she said it will be a real loss for the community, and not just her household budget, if she loses it.

“We need to be there for the kids in the community, for elderly who might not talk to anyone else other than one of us each day,” she said. “People need our help getting on computers they might not have access to at home. Being that community hub is really exciting sometimes.”

In the past, Congress has been willing to help state and local governments through a recession to help rescue many of the jobs at risk, said Zandi. But so far, Republican leaders in Congress and the Trump administration have shown little willingness to support the fiscal rescue packages put forward by Democrats.

Moody’s Zandi said he’s worried that the unexpectedly good jobs report on Friday could make passing the necessary financial support for state and local governments more difficult.

“I fear that lawmakers will take the wrong message from this jobs report,” he said “If they make that mistake of thinking the economy is back, there will be a price to pay on the other side of Labor Day when many of these job losses will hit, particularly in education.”

Not to mention the loss of spending power by the 3 million public sector employees who could lose their jobs, which would be yet another drag on the economic recovery.

“They’re bound to create other job losses elsewhere in the economy,” he said.