(OpEd By Jim Waters, who is president and CEO of the Bluegrass Institute for Public Policy Solutions, Kentucky’s free-market think tank. Read previous columns at www.bipps.org. He can be reached at email@example.com and @bipps on Twitter.)
“Walking in a COVID Spending-Land” (to the tune of “Winter Wonderland”)
Spending grows, are you ready?
To try and keep your business steady?
Big-government types are happy tonight,
Walking in a COVID spending land.
The only thing heavier in Washington than Santa’s toy bag this COVID-decorated Christmas season is the list of goodies congressional big spenders want included in a virus-relief package.
While Senate Majority Leader Mitch McConnell has tried to shorten that list and target dollars where they’re most needed while holding the line on spending, politicians on the aisle’s left side are treating the crisis as an opportunity to repay key political constituencies by bailing out states instead of helping small businesses which have borne the brunt of government’s response to the pandemic.
So far, Senate Minority Leader Chuck Schumer’s bag has been so heavy he can’t get the sleigh off the ground as conservative senators have refused to go along with Santa Schumer’s wish list that has nothing to do with addressing issues caused by the coronavirus.
Good for them. Hold the line.
Leftists charge that McConnell, by refusing to go along with hundreds of millions in coronavirus-relief funding to states, refuses to acknowledge the seriousness of the impact the coronavirus is having on state and municipal budgets.
Chicago Mayor Lori Lightfoot accused McConnell of being “short-sighted” for turning his back on state and local governments “at a time when we are hemorrhaging and looking at severe service cuts, putting people out on the streets.”
But while Lightfoot’s city continues to struggle with large budget deficits and tax increases – fallout from years of fiscal mismanagement magnified by coronavirus-related mandates – the evidence simply doesn’t support her assertion that state governments are “hemorrhaging.”
In fact, most states’ revenue projections now exceed pre-coronavirus prognoses.
Even big-spending New York and California are projecting revenues will surpass previous estimates.
In Kentucky, the 10-member independent Consensus Forecasting Group (CFG) recently offered a rosier assessment of state revenues over the next 18 months than it did in December 2019 – three months before COVID-19’s arrival.
Kentucky Today reports the CFG forecasts the commonwealth’s General Fund receipts will grow by $17 million during the current 2021 budget year – which began on July 1 – and another $53 million in Fiscal 2022.
Kentucky lawmakers will have right at $12 billion for the one-year General Fund budget they will debate and pass upon returning to Frankfort in January.
Factor in the coronavirus relief money previously appropriated and the Federal Reserve fund states can borrow from and the bottom line is state and local governments don’t need more coronavirus funding from Washington, certainly not more than front-line businesses and workers.
Progressive groups want bailout money to fill holes dug by poorly mismanaged states through decisions unrelated to the pandemic.
They would much rather the feds bail out Kentucky’s underwater pension system than insisting on Frankfort making the politically difficult decisions needed to right the state’s retirement systems’ ships.
Some on McConnell’s side in the Senate are trying to find a way to both send more coronavirus funding to states and limit how those governments may spend it.
But money is fungible, so even though funds come with restrictions on how they can be used, state governments will still likely find ways to move the money around.
Washington would do better by offering state and local governments more flexibility in how they use previous coronavirus-relief funding.
Why not allow assistance to get to businesses and workers who need it most instead of incentivizing the creation of new programs that will either be eliminated or soak up valuable resources once federal funding dries up?