Virus aid for states: Help with costs but not years of reckless spending
Imagine you are taking 50 kids on a bus trip to Washington, D.C.
They are given an allowance for stuff they might want to buy and told to bring money for meals on the way down and back.
The problem is, at the first stop for gas, Johnny and Jimmy and some of their friends spend all of their allowance in the arcade section of the convenience store. Then the cost of the first meal turns out to be double what they expected.
Johnny and Jimmy come to the group and the trip leaders – most of whom have responsibly kept control of their spending – asking them for money to pay for the meal on the way home. And, by the way, they also want the group to restore their allowances.
We have 50 states in this country and they are like kids – all sizes and shapes, with habits ranging from buttoned-up to recklessly irresponsible. That’s especially true when it comes to spending and taxation and keeping the books balanced. There’s are a lot of Johnnies and Jimmies in the group and the coronavirus meal tab hit them hard.
They are wondering how they are going to pay for the next meal and coming to us for help. And they also want their allowance, which they blew through about a decade ago, restored.
Federal coronavirus funding aid to the states is a hot topic in Congress and, yeah, there’s no doubt the states and their governmental leadership have been hit with a wrecking ball that no one could have foreseen.
But they already received $150 billion for coronavirus expenses in the original stimulus bill.
So before we write them the next blank check, the adults in the room — that’s us — need some answers regarding the spent allowances and the cost of the first meal.
In Pennsylvania, a report a few months back by the Independent Fiscal Office estimated Pennsylvania was on a path to run annual deficits of $1 billion the next five years — before the virus hit.
Various studies in recent years have estimated the state’s pension funds are collectively $1 trillion underfunded. That was before the virus hit.
The pension shortfall in Illinois — created by years of irresponsibility — is even greater.
In New York State, the tax rate is as high as a Manhattan skyscraper. On Dec. 31, 2019, when the dropping ball in Times Square, not coronavirus, was the topic of conversation, the state’s debt stood at $6 billion, up from about a billion dollars five years earlier. The budget proposal did not include significant spending cuts in a single line item.
Again, this is pre-virus.
In the heart of the virus, the state passed a budget carrying a $15 billion debt while including 2 percent pay raises for employees.
Gov. Cuomo is counting on $10 billion from the federal government in the next coronavirus stimulus bill to carry the state through its budget crisis. But the debt going into this year, before the virus hit, was $6 billion.
The governor has been vocal about the billions of dollars he believes New York is entitled to in virus funding aid. His claim is that New York sends more money to the federal government than it receives. That’s deceptive. He is factoring in Social Security payroll taxes paid by New York residents, many of whom move to Florida upon retirement. Given the population of New York City, the pay-in on Social Security alone creates the imbalance. New York State government does not contribute more to the federal government than it receives in funds.
Maybe if New York State wasn’t banning fracking, missing out on the windfall of the natural gas boom, annual tax increases and budget shortfalls of recent years could have been eliminated.
In a number of other states, the reductions in payroll tax revenue could have been much less severe this spring if governors had been less draconian in their shutdown orders. If they had based shutdowns on the diverse realities of their counties and regions, the economic meltdown could have been substantially reduced. Pennsylvania definitely falls into that category.
Gov. Cuomo has had some exemplary moments managing this crisis of a lifetime. And he is not alone. These governors, the 50 kids with unique circumstances to deal with, have for the most part handled their situations as well as can be expected.
But that does not mean the people of this region should have to pay the bar tab some of them have been running up for the past decade or so.
Before the bailout check is written to the states, they should each have to submit a ledger sheet dated March 1. We shouldn’t have to pay for that spending bender.
David F. Troisi is retired as editor of the Sun-Gazette.