Washington — from California To VirginiaFaced with a catastrophic shortage in the depths of the pandemic recession, many states are now full of tax revenues due to economic recovery and soaring stock markets. Lawmakers worried about budget cuts are now spending on school, tax cuts, Direct payment to residents..
The turnaround is partly the product of strong income tax receipts, especially in states that are heavily taxing high-income and high-net-worth individuals in crisis and well-financed. The unexpectedly rosy situation is pressing President Biden to reuse the hundreds of billions of dollars of federal aid approved this year to fund potential bipartisan infrastructure transactions. ..
Last week, Utah Republican Senator Mitt Romney said that Biden and Republican negotiators had “funded funds already sent to the state under the last few bills” to help pay for the deal. Proposed to look at “some”. “They don’t know how to use it,” Romney said. “They can use that money to fund some of the infrastructure associated with roads, bridges and transportation.”
Some economists and budget experts support the push, money could be better spent elsewhere, and state spending plans Risk of rapid inflation Outbreak nationwide. Other researchers and local budget officials say federal aid is helping more devastated cities and states, such as New York City and Hawaii, from the chain of layoffs and spending cuts.
Biden administration officials say they will continue to support the full distribution of the $ 350 billion included in state, local and tribal aid. $ 1.9 trillion financial support package Biden signed in March.They say aid will help ensure that economic recovery is not repeated Year of state and local budget cuts It delayed recovery from the recession following the 2008 financial crisis and helped millions of Americans wait for years to benefit from it.
Gene Sperling, Biden’s senior adviser, said: “Returning from the lost 1.3 million jobs at the state and local levels,” said the person overseeing the implementation of the March support package in an interview.
If the government wants to collect or divert funds, it is unlikely that they will reuse them or make significant changes to their use without Congressional action.
Biden discusses state and local financing An important week of negotiations With Republicans over infrastructure in search of deals, and as he prepares to travel to Cleveland on Thursday to talk about the economy. New spending methods are a major hurdle to negotiations, as Biden is pushing for tax increases for businesses and Republicans prefer to raise user rates, such as the petrol tax.
Diversion of unused funds can help advance the agreement, especially given Republican opposition to financing state aid in previous bailout packages.Democrats pushed hard Includes favorable financial assistance to states, cities and tribes With Mr. Biden’s bailout bill. Republicans have warned that they will fight these efforts and serve as a “bailout” to high-tax, high-spending liberal states. They also quoted a series of predictions from Wall Street businesses and other analysts, suggesting that more states were making much better income than the authorities were afraid of in the early days of the pandemic.
Many liberal states do not appear to be “relieved”, but some No more federal funding needed.. This is especially true for states that do not rely primarily on tourism or the hospitality industry for tax revenues. People with a progressive tax system, such as Silicon Valley moguls, are also making good progress, earning a surge in income from the investment income enjoyed by wealthy residents.
California officials Expect a $ 15 billion surplus This year after fear of a $ 54 billion shortage. Virginia generated nearly $ 2 billion in unexpected revenue.So is Oregon, where there are economists. Recently upgraded state revenue forecasts — Moving from expected deficit to surplus — in a report that surprised and delighted many lawmakers.
“That’s very amazing,” said Oregon economist Mark McMullen.
“Obviously, when the outages first started and these catastrophic job losses were seen, we treated them as normal depressions in our forecasts,” he said.
However, due to the surge in income tax revenues and several federal backings, the state “exceeded pre-pandemic expectations,” McMullen added.
Strong income figures are coming as more federal bailouts are just beginning to open the door. The Treasury began sending funds to the state this month and has distributed more than $ 100 billion to date. This is about half the amount you will be paid immediately. Local governments are expected to receive the rest next year, but states that are still experiencing a sharp rise in unemployment will soon receive a lump sum.
The responsible federal budget committee estimates that state and local governments have received a total of nearly $ 1 trillion in relief over the past year. State and local revenues were about 7% above pre-pandemic levels in the previous quarter. However, it does not include federal assistance received.
Mark Goldwayne, senior policy director for the Commission, said states like Hawaii and Nevada, which are heavily dependent on tourism, clearly need help, but many other states don’t need money. Said that.
For a variety of reasons, Goldwayne said home prices are skyrocketing nationwide, pushing up property taxes. States that were suffering from falling oil prices have seen their prices rising. And consumers are spending on healthy clips thanks to stimulus checks and increased unemployment benefits.
“State and local governments are generally swimming openly on income,” Goldwayne said. “It’s pretty clear to me that we’ve spent a lot of money on states we don’t need.”
Some economists, such as Harvard University’s Lawrence H. Summers (former Treasury Secretary under President Bill Clinton), have given Biden a long-term infrastructure in hopes of mitigating Mr. Summers’ warnings. Accumulation of inflationary pressure that encouraged the reuse of state and local aid for the project.Government officials see high inflation As a much lower risk Than Mr. Summers.
Other analysts have warned that a plunge in the stock market or slowing economic growth could worsen the state’s budget situation. Many cities, such as New York, suffer from low tax revenues and rely on the Commonwealth to avoid further severance.
According to the Independent Citizens Budget Committee, New York expects to receive more than $ 22 billion in federal aid from Covid-19. Despite the funding, the city still anticipates budget gaps in the coming years as a result of reduced revenues such as property taxes.
In retrospect, Lucy Dadayan, a senior researcher at the Tax Policy Center, should include “more targeted funding” for the states and cities that need it most in the March law. Said that.
“I’m doing my best to support state and local governments. Given what we know, there are more local governments than state governments,” Dadayan said.
Treasury officials say the Biden administration will give the state enough resources to cover the immediate costs associated with escaping the pandemic and pay for a wider range of services to help those most hit. I want to be able to do it.
However, many states and cities are looking at storm spending plans that go far beyond safety net repairs. Governor Gavin Newsom of California, a Democrat facing the call election, has proposed a series of spending increases, including a $ 1,100 stimulus check for individuals and a tax credit for filmmakers.
In Florida, the 2021 earnings forecast has been revised upward twice in the past year.State is expected to get now $ 8.8 billion From the federal government. Ben Watkins, director of Florida’s fixed income division, said the state is using relief money to invest in infrastructure and water quality projects, allocating some of its surplus money to prepare for hurricanes.
He described the storm as astounding.
“Having is a good problem, but that doesn’t mean it’s not overkill,” Watkins said.
The state is forbidden to use funds to subsidize tax cuts, but there is plenty of room for how to use the funds.Some Republican-led states Sued the TreasuryClaims that the restrictions violate national sovereignty.
The proceedings do not appear to delay funding.Ohio failed to win an injunction blocking enforcement of regulations this month, and Missouri filed a proceeding Thrown out of court After a federal judge said the state did not prove that the law did harm it.
The Treasury plans to carefully monitor how the money is being spent and whether the state is actually using budget gimmicks to fund tax cuts. Government agencies claim that the federal government has the right to impose conditions on how federal funds are used and that the state is allowed to refuse the funds. Treasury officials said no state had yet indicated that it would refuse the funds.
Meanwhile, income-rich states are pushing their plans forward.Nebraska approved $ 26 million Last week’s corporate tax cut, and lawmakers Talked to Omaha World Herald They believe they comply with the law by keeping federal funds in an account separate from the state’s general financial resources.
Nicholas Funds And Dana Goldstein Contribution report.
Republicans push Biden to divert federal aid to infrastructure
Source link Republicans push Biden to divert federal aid to infrastructure