Red and blue
Democrats and Republicans plead for federal help
It’s not just Democratic states asking for help amid plunging tax revenue and a stuttering economy. Plenty of Gop-led states feeling pain, too./
No “blue state bailout” is a rallying cry for many congressional Republicans as attempts to provide more federal aid to a nation stricken by an everworsening coronavirus pandemic remain stuck in neutral.
Yet it’s not just Democratic states asking for help amid plunging tax revenue, rising joblessness and a stuttering economy. Plenty of Republican-led states are feeling the pain, too.
Just this past week, five GOP governors made a joint statement calling for Congress to pass a relief package to help their states deal with the fallout from the fast-spreading pandemic.
“The people in our states continue to pay a high price for Congress’ inaction,” said the statement from the Republican governors of Arkansas, Maryland, Massachusetts, New Hampshire and Vermont. “There is no more room for partisan positioning and political gamesmanship.”
Alaska, Florida and Texas are among other Republican-led states where tax revenue has taken a hit.
Sending tens of billions in unrestricted aid to state and local governments has been a key sticking point for congressional Republicans, including Senate Majority Leader Mitch Mcconnell.
The Democratic-controlled House passed a relief bill late last spring that included about $900 billion in direct aid to governments. One of the latest compromise proposals has that amount down to $160 billion, but even that appears too much for many Republican lawmakers.
“Under no circumstance should American taxpayers be responsible for the excesses of wasteful states like New York and California,” said Republican Sen. Rick Scott of Florida.
While New York had a $6 billion budget deficit before the pandemic hit, in large part because of rising Medicaid costs, California’s economy was roaring. The state had record tax revenue and had built up $21 billion in reserves.
Scott noted that state and local government revenue is stronger now than it was projected to be in the spring, when swaths of the economy and stock markets were in freefall. That’s largely because federal stimulus measures earlier in the spring boosted the economy, which in turn kept taxes flowing, said Shelby Kerns, executive director on the National Association of State Budget Officers.
She said the coronavirus outbreak has affected the economy of virtually every state, no matter which party is in control.
“We have not seen it be a red state-blue state problem,” Kerns said.
As much as congressional Democrats want money directed to state and local governments, many Republicans are dead set against it. Mcconnell warned in April against using federal aid “to bail out state pensions by borrowing money from future generations.”
It’s true that some big Democratic states, most notably Illinois and New Jersey, have massive unfunded pension liabilities for public-sector workers. For years, those liabilities have forced leaders to decide between tax increases and program cuts as they try to put more money into the systems.
Mcconnell’s own state, Kentucky, has the thirdworst unfunded pension liability. Republicans have controlled the legislature there for years, and a Republican was in the governor’s office until a year ago.