The budget cost of the virus is hitting both Democrat-led GOP-led states


The “blue state rescue” is not a shout out to many congressional Republicans, as further federal aid attempts by a nation plagued by a worsening coronavirus epidemic remain neutral.

Yet it is not just democracies asking for help amid falling tax revenues, rising unemployment and a stuttering economy. Plenty of Republican-led states also feel the pain.

Just last week, five GOP governors issued a joint statement calling on Congress to adopt an aid package to help their states deal with the rapid spread of the pandemic.

“The people of our states continue to pay a high price for congressional inaction,” the Republican governor of Arkansas, Maryland, Massachusetts, New Hampshire and Vermont said in a statement. “There is no more room for partisan positions and political playfulness.”

Alaska, Florida and Texas are among other Republican-led states where tax revenues have been a success.

For congressional Republicans, including Mitch McConnell, the head of the Senate majority, it was a key point to send tens of billions of unlimited aid to state and local governments. The Democratic-controlled House passed a relief bill last spring that included some $ 900 billion in direct aid to governments. One of the latest compromise proposals kicks in at $ 160 billion, but even that seems like a lot to Republican lawmakers.

“Under no circumstances can U.S. taxpayers be held responsible for exaggerating wasteful states like New York and California,” Republican Senator Rick Scott of Florida said.

While New York had a $ 6 billion budget deficit before the pandemic, largely due to rising Medicaid costs, California’s economy roared. The state had record tax revenues and amassed $ 21 billion in reserves.

Scott noted that state and local government revenues are stronger than predicted in the spring, when the economy and stock markets were in a big wave. This is largely because federal stimulus measures boosted the economy earlier in the spring, which in turn steadily flowed through taxes, said Shelby Kerns, executive director of the National Association of State Budget Officials.

According to him, the coronavirus epidemic affected the economies of virtually every state, regardless of which party controlled it.

“We haven’t seen this as a red state-blue state problem,” Kerns said.

States have been hit particularly hard by tourism, including Republican-led Florida and Democrat-led Hawaii and Nevada, or energy. This group includes Alaska, North Dakota and Wyoming, all led by Republican governors and legislators.

The Moody’s Analytics report in September revealed all with above-average revenue losses. Florida’s situation is less severe because the state does not tax income, but government officials still expect $ 5.4 billion in revenue over the next year and a half than before the epidemic.

The bipartisan National Governing Alliance is demanding $ 500 billion over three years to stabilize public finances. According to the group, the infusion is needed because otherwise deep government austerity would worsen the entire economy.

As much as Congressional Democrats want money for state and local governments, many Republicans are dead dead. McConnell warned in April not to use federal aid “to save state pensions by borrowing money from future generations”.

It is true that in some large democracies, notably Illinois and New Jersey, there is a huge, unsecured pension obligation on those working in the public sector. For years, these commitments have forced managers to choose between tax increases and program cuts while trying to get more money into the system.

McConnell’s own state, Kentucky, has the third worst unsecured pension liability. Republicans have been in control of the legislature there for years, and a Republican was in the office of governor until a year ago. The Pew Charitable Trusts report found that as of 2018, the most recent year for which national data are available, only about 45% of Kentucky’s pension fund had the amount needed to meet its obligations, leaving $ 28 billion. Of the other eight states with a pension base below 60%, only South Carolina is under full GOP control.

Overall, states are still performing worse financially than a year ago, even though their revenue forecasts are better than expected after the virus hit U.S. Kerns, a group of state budget officials said states are facing another uncertain time. . whereas extended unemployment benefits, support for small businesses and other federal benefits will expire by the end of the year, even as COVID-19 cases and deaths skyrocket nationwide.

“When we talk about the states that beat these projections,” Kerns said, “better than Armageddon isn’t necessarily good.”

The Moody’s September report found that states and cities will have a $ 450 billion collective deficit over the next two years if no further federal exemption is created. According to a survey released by members of the National League of Cities this month, cities fell by an average of 21% on revenue, while spending rose 17%.

Across the country, deficits have meant cuts in government staff salaries, postponed road projects and the cancellation of law enforcement classes. Hawaiian Governor David Ige announced last week that it plans to hire 40,000 public workers next year, despite the savings covering less than a quarter of the state’s $ 1.4 billion budget gap.

While states like Idaho and South Carolina have performed relatively well financially during the pandemic, some GOP-controlled states are struggling with fiscal problems. In Mississippi, lawmakers this week proposed a budget for the next fiscal year that will include cuts to universities, community colleges, prisons, mental health and child protection services.

Texas projected a $ 4.6 billion deficit at the end of 2019 from a $ 3 billion surplus forecast for the summer. In Alaska, Governor Mike Dunleavy is proposing an extraordinary response to reviving Alaska’s economy, including direct payments of about $ 5,000 from the state’s oil fund to each resident and an infrastructure plan for job creation. The state’s economy was battered by the COVID-19 epidemic, which depressed demand for oil and led to a sharp decline in tourism.

In Kansas, where Republicans are overseeing the legislature, Democratic Governor Laura Kelly told lawmakers Friday that the state will only have to pay $ eight million for its own expanded coronavirus testing program for eight weeks if it doesn’t get more federal states. aid.

Even though Congress provides some help to state and local governments, some governors have said it is only seen as an advance.

“It’s like a 90-day aid,” said Republican Maryland Governor Larry Hogan. “We need to get back to get the big aid package we’ve been pushing for since April.”

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Mulvihill reported from Davenport, Iowa. Follow him at http://www.twitter.com/geoffmulvihill.

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Associated Press writers, John Hanna, Topeka, Kansas; Audrey McAvoy in Honolulu; and Brian Witte, of Annapolis, Maryland, contributed to this report.