Consider a recent New York Times article, "With Washington Deadlocked on Aid, States Face Dire Fiscal Crisis." The report tells us: "Alaska chopped resources for public broadcasting. New York City gutted a nascent composting program that could have kept tons of food waste out of landfills.In Maryland, the Baltimore Symphony Orchestra will lose a $1.6 million state subsidy."
Under measures such as the Coronavirus Aid, Relief, and Economic Security Act, they've hauled in $280 billion for various pandemic-related expenses and another $150 billion for more flexible "Needs." The Federal Reserve also set up a $500 billion program to facilitate short-term borrowing by state and local governments.
As the Cato Institute's Chris Edwards noted in a September blog post, conflating state and local government tax revenue paints a misleading picture of the situation.
"While state income and sales tax revenues have dipped, local governments raise 72 percent of their tax dollars from property taxes, which are rising," Edwards writes.
The Times reports that New York state "Has been sent about $2.9 billion that it can't put toward other uses." As of June 30, the OIG report says, New York state had spent just 53 percent of its federal bailout funds.
It's one thing for state and local governments to ask the federal government for help covering unforeseen expenditures related to the pandemic.
The shaky case for bailouts depends in part on the idea, as the Times put it, that "State spending reductions could prolong the downturn by shaking the confidence of residents, whose day-to-day lives depend heavily on state and local services." But this claim springs from fiscal myopia.
https://reason.com/2020/11/30/the-shaky-case-for-state-bailouts/#
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