Virus budget sacrifices hit both Democratic and Republican-led states

For many Congressional Republicans, the “blue state bailout” is a rallying cry, as attempts to provide more federal aid to countries struck by the ever-deteriorating coronavirus pandemic remain neutral. There is none.

Still, the Democratic Party isn’t the only one seeking help in the face of plummeting tax revenues, rising unemployment and economic stuttering. Many Republican-led states are also in pain.

Just last week, five Republican governors issued a joint statement calling on Congress to pass a bailout package.

“People in our state continue to pay a high price for parliamentary negligence,” said a statement by Republican governors in Arkansas, Maine, Maryland, Massachusetts, and New Hampshire. “There is no room for partisan positioning and political gamemanship anymore.”

Alaska, Florida, and Texas are among the other Republican-led states whose tax revenues have been hit.

Sending tens of billions of dollars in unlimited aid to state and local governments was an important issue for Congressional Republicans, including Senate leader Mitch McConnell. The Democratic-controlled House of Representatives passed a bailout bill late last spring, including about $ 900 billion in direct aid to the government. One of the latest compromises, which has fallen to $ 160 billion, still seems too much for many Republicans.

“Under any circumstances, US taxpayers should not be liable for the excess of wasteful states like New York and California,” said Republican Senator Rick Scott of Florida.

New York had a $ 6 billion budget deficit before the pandemic, but California’s economy was skyrocketing, primarily due to rising costs of Medicaid. The state had record tax revenues and had a reserve of $ 21 billion.

Scott said state and local government revenues are now stronger than expected in the spring when the economic and stock market bands fell free. This was largely due to federal stimulus boosting the economy in early spring, which in turn maintained tax flows, said Shelby Kerns, secretary-general of the National Budget Offices Association.

She said the outbreak of the coronavirus affected the economies of virtually every state, regardless of which party controlled it.

“We don’t see it as a red-blue state issue,” Kerns said.

States are particularly hit when they rely on tourism and energy, such as Republican-led Florida, Democrat-led Hawaii, and Nevada. The group includes Alaska, North Dakota, and Wyoming, all led by the Republican Governor and Parliament.

A September Moody’s Analytics report found that they all showed above-average revenue losses. The situation in Florida isn’t too dire, as Florida doesn’t tax income, but state officials expect revenues to be $ 5.4 billion less next year and a half than they were before the pandemic.

The bipartisan National Governors Association is demanding $ 500 billion over three years to stabilize the government’s finances. The group says injections are needed because deep government cuts that would otherwise occur would worsen the economy as a whole.

As many Republicans are against it as Democrats in Congress want money for state and local governments. McConnell warned in April of using federal aid “to bail out state pensions by borrowing money from future generations.”

It’s true that some large Democratic states, especially Illinois and New Jersey, have huge unfunded pension debt to public sector workers. For years, these debts have forced leaders to decide between tax increases and program reductions as they seek to invest more money in the system.

McConnell’s own state, Kentucky, has the third worst underfunded pension debt. The Republicans have been in control of the legislature there for years, and the Republicans were in the governor’s office until a year ago. As of 2018 (the latest year of national data availability), Kentucky’s pension funds are only about 45% of what they need to meet their obligations, a $ 28 billion shortage, according to a Pew Charitable Trusts report. doing.Of the other eight states with less than 60% pension funds, only South Carolina is fully GOP control.

Overall, the state is still financially worse than it was a year ago, even if their earnings forecasts were better than expected after the virus struck U.S. Kerns, a group of state budget officials. As an extension of the unemployment allowance that said it was facing another uncertain time, support for SMEs and others, despite the nationwide surge in COVID-19 cases and deaths. Federal aid is expected to expire by the end of the year.

“When we talk about states that exceed these expectations, they are not always better than Armageddon,” Kerns said.

According to the Moody’s Analytics report in September, states and cities will face a total shortage of $ 450 billion over the next two years if no further federal bailouts are made. A National Urban League survey of members released this month found that cities averaged a 21% decrease in income and a 17% increase in spending.

Nationally, shortages mean wage cuts for some civil servants, delays in road projects, and cancellation of police academy classes. Last week, Hawaii Governor David Ige announced plans to dismiss 40,000 state workers next year, despite saving less than a quarter of the state’s $ 1.4 billion budget gap. ..

While states such as Idaho and South Carolina are doing relatively well through the pandemic, some Republican-controlled states face budgetary problems. In Mississippi, lawmakers have proposed this week a budget for next year, including reductions in colleges, community colleges, prisons, mental health and child protection services.

Texas expected a $ 4.6 billion shortfall by the summer, with a $ 3 billion surplus forecast in late 2019. In Alaska, Governor Mike Dunleby is proposing extraordinary steps to revive Alaska’s economy, including direct payments of about $ 5,000 from the state’s oil fund to residents and infrastructure plans to create jobs. .. The state economy was hit by the COVID-19 pandemic. This curtailed oil demand and led to a sharp decline in tourism.

In Kansas, where Republicans dominate the legislature, Democratic Governor Laura Kelly will be the legislative leader on Friday, and if the state doesn’t increase the federal government, the state will have its own extended coronavirus testing program. Assistance that said it would have to pay $ 120 million a week.

Even if Congress provided some assistance to state and local governments, some governors said they would only consider it a down payment.

“It’s like a 90-day band-aid,” said Republican Governor of Maryland, Larry Hogan. “You need to come back to get the main relief packages that we have been promoting since April.”


Mulvihill reported from Davenport, Iowa. Follow him on


Associated Press writer John Hannah in Topeka, Kansas. Audrey McAvoy in Honolulu. Brian Witte of Annapolis, Maryland contributed to this report.

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Virus budget sacrifices hit both Democratic and Republican-led states

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