What State and Local Governments Can Learn From the Coronavirus Crisis

Why should the responsible states bail out the irresponsible ones?


There's no doubt that this pandemic-induced recession is hitting states hard. But that's no reason to bail them out, especially when many failed to prepare for emergencies, which are inevitable.

States today are dealing with a huge mess because of a sudden and steep reduction in their revenues while their pandemic spending is going up. But lost in the lamenting about the states' misfortunes is the fact that politicians in these states spent the last decade bloating their budgets rather that cutting spending to be better prepared for crises.

Stories abound about the sorry condition of state and local government finances. A recent report in The Wall Street Journal explains, "State and local governments from Georgia to California are cutting money for schools, universities and other services as the coronavirus-induced recession wreaks havoc on their finances," and, "Governments have cut 1.5 million jobs since March, mostly in education, and more reductions are likely barring a quick economic recovery."

Yes, recessions are difficult. Millions of employees in the private sector have recently lost their jobs. In fact, traditionally, private sector employees are hit harder by recessions than state and local government employees are. Business owners, too, understand that recessions are terrible for one's bottom line. Millions of them have watched as their livelihoods were pulverized in the span of a few weeks. Yet these business owners, after being allowed to delay their tax payments for a few months, are still on the hook for paying the salaries of government workers.

What's more, these stories about state and local governments being hit hard rarely explain that politicians in those states failed to responsibly budget for crises. Such rainy-day budgeting should not have been that difficult, given that the country was experiencing an unprecedented decade of economic growth when rivers of revenue poured into state and local coffers. More revenue makes it easier to beef up rainy-day funds, which then helps fill in budget gaps. While some states have learned their lessons from the last recession, most states did not.

The Cato Institute's Chris Edwards reports: "After a decade of economic growth, (some states) have saved little or nothing. Illinois and Kansas have completely empty cupboards, while Pennsylvania and New Jersey have rainy day funds of just 1 percent of their budgets. The largest funds are in energy producing states, which build war chests to handle the strong cyclical ups and downs in their economies." If states never learn from their mistakes, why should we now feel sorry for them?

Between recessions, states should reduce their financial exposure in anticipation of the next crisis and learn to operate with fewer employees. In particular, they should reform their public employees' benefits—a great source a fiscal woes. But most of them have done no such thing, especially the ones that needed it the most. Illinois, for instance, shelters its public employees from reductions in benefits while the private sector endures higher taxes and cuts in services.

With few exceptions, states used their boom-time revenue—cash extracted from the private sector—to increase spending and employ more people. Edwards highlights that: "Spending grew during the 2000s, hit $2.4 trillion in 2009 and flatlined for a few years, then began growing again to reach $3.1 trillion by 2019….Real spending spiked in 2009 and then dipped a bit below the pre-recession level. Spending then began growing again and eclipsed the 2009 peak by 2016."

This outcome is good only in a world where investments made by politicians spending other people's money earn higher returns than those made by investors spending their own money. Not likely.

And let's not forget that state and local governments have already received aid from the federal government to the tune of $150 billion for a Coronavirus Relief Fund, $30 billion for an Education Stabilization Fund, $45 billion for the Disaster Relief Fund, $25 billion for public transit systems, an increase in the federal government's share of Medicaid spending, and more.

The call for sympathy for state and local governments' financial hardship is usually followed by a plea to bail them out. While a few states, such as Florida, were relatively fiscally responsible and better prepared to handle this pandemic, many others weren't. Why should the responsible states bail out the irresponsible ones? If these big spenders want a bailout, they should go only to their taxpayers.



NEXT: ABA Issues Formal Opinion on Purpose, Scope, and Application of ABA Model Rule 8.4(g)

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  2. A taxing jurisdiction’s building a surplus is evil. Extracting funds from you that they don’t even need at the moment? Come on!

    1. You can have it defined by law as a percentage and then returning the rest (Colorado does this).

      You also have the issue of states deciding how to tax. High property taxes are going to be fairly stable. High sales taxes are going to have boom/bust cycles requiring reserves.

      Do you want to limit how jurisdictions compete with each other via their taxation schemes?

      1. Sales and income taxes are particularly unstable if they aren’t broad. Tiered income taxes and exempting “necessities” from sales taxes leaves both more susceptible to economic cycles and tax avoidance. Then, for extra fun, add in credits, deductions and exemptions.

        1. Per capita taxes only vary if the population changes. And membership dues are voluntary.

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      2. Giving it back does not erase nor excuse the wholly unnecessary taking.

      3. Colorado, if it has overages of taxes asks the public to allow them to keep it. They just did it recently with cannabis taxes.

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    3. Best way to handle this situation is to rise all taxes 😀

      1. Best way is to lay off all the nonessential government workers.
        In California, 100% of them were deemed essential by Governor Tiresome. He did give everyone a 10% pay cut, but revenues are down over 40%.

    4. That’s just nonsense. Taxing jurisdictions tax because they have things that they are committed to pay for. While some (and there’s a libertarian argument for ‘the overwhelming majority’ rather than ‘some’) of those things are things they *shouldn’t* be committed to paying for, there are others that they *should*.

      It’s also stupid for a taxing jurisdiction to fail to plan for unexpected situations in which the cost of those things sometimes outstrip the taxing jurisdiction’s revenues for this month/quarter/year. “Uh oh, the town [fire department/school/town hall/pick some high ticket item that your libertarian views think a town *should* have] burned down.” Then you have that jurisdiction suddenly out of money, and either having to rely on credit or on sudden, unexpected tax levies (“Surprise! Quintuple taxes for all my friends!”).

      There’s also the issue of *planned* expenditures which outstrip expenditures in an ordinary year. Say the town council of our fair libertarian town realizes the need for new facilities, vehicles, or what-have-you that costs more than their budget for a typical year. Either they can levy it all at once (“Hey guys, guess what, triple taxes this year!”), save for it over a few years (thereby running the surplus you think is evil), or borrow for it (and have taxpayers pay more money to get the same product).

      Having a ‘rainy-day fund’ to be able to cope with the unexpected is just good sense for any individual or organization, which includes governments.

  3. Why should the responsible states bail out the irresponsible ones?

    Because the irresponsible ones are almost exclusively run by leftist elitists who know what’s best for everyone else.

    1. Good intentions should be their own reward, but somehow never are.

      It’s almost as if they do it for the power and nothing but the power.

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  5. Read a history of the Great Depression, FDR’s New Deal, all that massive increase in government and its cupidity. One thing new in it was a discussion of post-WW I federal spending. The war being over, the feds cut spending tremendously, but the Democrats were horrified that Harding, Coolidge, and the Republican Congress used the surplus to pay off the war debt (including some remaining Civil War debt) instead of ramping up all sorts of new and unrequested social spending.

    It’s a real shame Republicans don’t believe in that shit any more. I bet they could win a lot more elections if they had some fiscal responsibility.

    1. No, people are more interested in free stuff. That’s why fewer than 25% have at least 90 days of liquid assets on hand, and millions have massive credit card debt.

      1. McCain lost because he stopped campaigning to fly back to DC to support the TARP bailouts. If he had taken a stand then he may have won.

    2. They’d get my vote if they ever did.

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  8. The People’s Republic of NJ is the ‘Poster Child’ for fiscal irresponsibility and utter insanity. We have a one-party state, with a buffoon (Phailing Phil Murphy) as the Head Progtard, aided by a rubber-stamp Duma (full of Team D Progtards).

    We have not laid off any state workers, yet the bureaucracy has promulgated rules and regs that strangle the economy. The latest brainchild of the Progtards is to float a 10B (yes, ten billion) dollar bond offering. The People’s Republic already has ~30B in bond debt. There is just NFW this level of borrowing will ever end well.

    And oh yes, our public sector unions want pay increases, enhanced retirement benefits, and job protection guarantees. And they want them now! I’m like…what?! We have north of 1.3MM unemployed and you want guarantees? Really?! They (Trenton) are completely disconnected from the reality we are experiencing.

    The People’s Republic should not receive a bailout. This will only reward profligate and irresponsible behavior. The lowly electorate put these assholes into power. Now here is what will happen in the next 5 months.

    Income taxes will go up.
    Sales taxes will go up.
    Property taxes will go up.

    We deserve the representation we elect, and all the glorious consequences that come out of those idiotic decisions. Until we ditch the shitheads running the People’s Republic of NJ, there will be no improvement.

    1. The bond debt scheme seems like the same as the national Republican print more money scheme. Wonder who the USA will turn to for our bailout?

      1. Oops! I have wandered into an alternate universe where the House of Representatives does not control ALL spending bills, as designated in the US Constitution.

        1. Well, aren’t the Republicans in the House the ones demanding even more spending.

          1. Both sides are demanding a few trillion more to be borrowed against our future incomes. But Biden wants to blow two trillion on trying to change the weather.

            1. Some people want to live on the East Coast but have West Coast weather.

      2. The US will turn to debt first, then inflation.

    2. Get out while you can!

      1. Worst case….burn down my house and mail the mortgage company the keys.

        1. I remember all the zombie homes in NJ back in the 2008 recession. I have a feeling that’s going to make a comeback.

          And fuck Governor Goldman Sachs executive Phil Murphy.

          1. You mean Dictator Phil Murphy.

  9. “Governments have cut 1.5 million jobs since March, mostly in education, and more reductions are likely barring a quick economic recovery.”

    Good news!!

  10. Why should the responsible states bail out the irresponsible ones?

    “Because We’re All In This Together™!”

    1. Ain’t none of us getting out of this thing alive.

    2. “Because We’re All In This Together™!”

      I always hear that as a threat.

      1. Thats because it is. Non-voluntary association is backed up by force, as with all non-voluntarism.

        1. “It is not enough to be against racism, we must be actively anti-racist”

      2. Unless you have a spaceship, it’s pretty much a tautology.

  11. Good column, but I take issue here:

    rainy-day budgeting should not have been that difficult

    Budgeting is hard, very hard. It takes discipline and a long term outlook.

    Very few individuals will ever do it.

    Government has virtually no incentive to do it.

    1. Doh, bad blockquote

      1. What’s the issue? History and a look at the finances of the average person today indicate that self-discipline is really hard. Government has no incentive because it isn’t spending its own money and the people running it will never be held personally liable for their terrible decisions.

    2. That last one is the main one – there’s no incentive. Nobody ever got elected by promising to do less for the people. When times are bad, we need more government spending to pick up the slack, when times are good we need more government spending because we can afford it. I can guarantee you if you were to double the government budget tomorrow, there wouldn’t be a single government agency returning the money saying it’s too much and isn’t needed. “More” is always the answer to the question of how much government spending is necessary.

      1. I worked long enough in the government to become familiar with use-or-lose end-of-year spending.

      2. Bureaucracies exist to perpetuate and expand themselves. They aren’t designed to solve problems, but to ensure those problems never get solved.

    3. Budgeting Blockquoting is hard, very hard. It takes discipline and a long term outlook.

  12. “If states never learn from their mistakes, why should we now feel sorry for them?”

    Because in the very core of the bleeding heart liberal, now militarized by modern progressives, is the idea that consequences do not matter, and no amount of stupidity disqualifies people, including states, from infinite amounts of aid and support.

    1. However, “A is A.”

      1. Which is why nations fall

  13. 1. “What State and Local Governments Can Learn From the Coronavirus Crisis”

    2. “There’s no doubt that this pandemic-induced recession is hitting states hard.”

    1. There is no Coronavirus Crisis. There is a kneejerk retard crisis.

    2, There is no pandemic-induced recession. There is a Tyrant-compelled recession.

    1. This. Coronavirus didn’t destroy hundreds of thousands of small businesses and put millions out of work. Government did that. Coronavirus didn’t lock people in their houses for months. Government did that. Coronavirus didn’t increase the national debt by 3 trillion dollars in a three month span. Once again, government did that.

      1. I hear the coronavirus was so powerful that it actually welded people into their homes in China.

    2. And…it is cute how the media keeps explaining that all of these metro areas, in these states, are losing revenue due to the killer virus and that is the only reason (they did mention pensions, which are a bribe for democrat voters). NYC and Chicago, the states of NJ, CT and IL were on the verge of bankruptcy long before this drama, especially looking at debt per capita, which includes CA and the left coast. Productive people are in an exodus rush from these big cities and states and taking the tax revenue with them, its been happening for the past few years. Now rioting, theft and Brazil type violence…the capital flight is working overtime. Wealthier tourists are not going to visit these cities and give their money to the woke arts cancel culture. In other words, “gee, I think I’ll go on vacation to a place that hates me and wants to harm or kill me because of my skin color”.

      1. Yeah. There was an article in The Hill yesterday in which the writer sarcastically thanks De Blasio for defunding the police and saving him the thousands of dollars a year he typically spends taking himself and his family to visit NYC a couple times a year. As a ex-patriot I left not so long ago because I could see where NY was headed and I didnt want to stay for the ride. I’m black and the majority of us who are not criminals remember what the bad old days were like not so long ago when were basically hostages in our own communities. I grew up in the 90s. I have no interest in turning back time.

  14. Don’t the CDC and WHO say not to wear medical masks in public recommending those stupid cloth ones? And even then I don’t think they even believe it.

    1. Originally they recommended NOT wearing masks at all because they wanted the governments to have a chance to hoard masks before individuals could. Not telling how many extra infections and deaths were caused by that lie.

      But I thought they now say any mask is better than none. If they recommend the cloth ones specifically it’s probably just to be “environmentally friendly.”

      1. Sub-N95-grade masks are worthless if you aren’t coughing and aren’t around people who are coughing. Virus particles are so small that they pass right through them is if they weren’t even there. Add to that there are no documented cases of asymptomatic carriers transmitting the disease through casual contact. Asymptomatic transmission is vanishingly rare, statistically insignificant, and only occurs between people in extended close family contact (sharing spoons and having sex and the like). So unless you have a habit of french kissing random people at the grocery store you will not catch COVID-19 from asymptomatic people. If there’s no one around you that’s symptomatic, you’re safe. And even if you do catch it your chances of being seriously harmed are very slim.

        1. Didn’t the WHO back track on that?

          Do you have any cite I can use?

          1. REPOST: Ugh. Reason is a piece of shit with links and ties up my post in moderation if I apply more than one link so here we go in multiple posts.

            The WHO changed it’s stance from saying that asymptomatic transmission doesn’t happen in statistically significant numbers to a mealy-mouthed “We just don’t know”, which you should translate to the same original conclusion because finding no evidence that something is happening is a way of proving that it doesn’t happen.

          2. But enough about talking heads. Let’s consult the WHO’s own website:
            How do you catch coronavirus? When a person with respiratory symptoms opens their pie hole they can eject small droplets of saliva and mucus that carrying infectious amounts of the disease. MASKS (including bandanas and coffee filters and whatever else you want to attach to your face) CAN BLOCK THIS. Masks are not wholly ineffective. They are effective at stopping THIS TYPE OF TRANSMISSION. Notably, people who do not show respiratory symptoms do not eject anywhere near as much infectious material as those who do. I can’t find the link to the study that had the comparative virus particle counts but I can keep looking for it if you absolutely need it. It’s in my wife’s browser history somewhere. A separate Chinese study from May analyzed 455 people who had been in contact with an asymptomatic carrier. None of them acquired COVID-19 from the patient. Not a single one.

            Moving on, is airborne transmission. This follows on the above coughing and sneezing stuff that sick people do. The idea here is the theory that after being sneezed or coughed out of a person the virus can hang about in the ambient air waiting to fly up someone’s nose. Samples of active virus particles floating in the air have been captured but this method of infection has never been conclusively ruled as the only possible explanation for an infection. The above direct coughing and sneezing hypothesis has been valid for ALL cases. It’s also worth pointing out that MASKS ARE USELESS AGAINST THIS EVEN IF IT WERE TRUE. Unless you have an N95-grade mask then, if you can breathe, those virus particles can float right through or around whatever barrier you put over your face and straight into your body.

            Fomite Transmission
            This is where those virus bits you cough or sneeze out land on surfaces and then people touch those surfaces and then touch their eyes, nose, mouth, whatever. This is a well known way to transmit other viruses like colds and the flu but it has never been directly and conclusively demonstrated as the method by which someone contracted COVID-19. Again, masks don’t help with this and gloves don’t help either if you don’t know how to properly remove them. There is no substitute for hand washing. Wash your fucking hands!

            Lastly is presymptomatic transmission, where a person who is definitely sick transmits virus particles before they themselves display symptoms (even if they eventually do display them). The only actual study done on this states that ~6% of infections stem from presymptomatic individuals, meaning that 94% stem from symptomatic individuals who by then already know they are sick and should be taking steps to avoid transmitting the disease to others. Another way of looking at it could be saying that the obviously sick man is easily MORE than 20 times as infectious as the man with no symptoms (yet).

            So there’s your links. I’ll get that one with the virus particle counts later.

            1. Makes sense. All the governors chastising people for not wearing masks outdoors and basically blaming them for the increased cases have obviously not done the required reading for biology 101. If asymptomatic people not wearing a mask outdoors and merely breathing near others or as they pass on the street was such a significant cause of transmission, we’d have never “flattened the curve.” There have been thousands of people on the Schuylkill river trails per day since March walking, running, riding bikes, hanging with friends, having picnics and outdoor dates, playing with kids and dogs, ect. Mostly without MASKS! Some observe the 6 foot rule, most dont.

              Meanwhile I’m wearing a mask inside the grocery store where I have to stand on line for an hour 6 ft apart from a few dozen other people who are being funneled through the same airspace and 2 registers. But it’s all good because we’re all masked up and totally safe.

              I’m very amused by the people who pull the mask down to cough or sneeze.

            2. Thanks.

        2. And you still can’t buy N95 grade masks at Home Depot or Lowe’s, even if you need them for sanding away painted surfaces in your house. They have cheaper less effective (and less safe) alternatives available. These masks used to be commonplace, and you could buy a box of 10 for 20 bucks.

  15. state and local governments *caused* the coronavirus “crisis”.

    1. Yeah, or at the very least seriously aggravated it. I’m sure people would have pulled back on their own to some extent. Previous flu pandemics where people didn’t completely lose their minds also came with economic contractions. But nothing like what we have now.

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  17. A few lessons they should have learned:

    1. Don’t weaponize the elderly by returning them to nursing homes when infected.
    2. Stock up on supplies before everyone panics and hoards them.
    3. Don’t cut off your own tax revenues by keeping young healthy people from working when the virus is dangerous mostly to the elderly and infirm.

    1. 1. Is the biggest, I think. That was a monumental fuckup. Everyone knows respiratory viruses hit old people hard. If we were going to spend a ton of money it should have been to lock down nursing homes and hospitals. Let everyone else get on with life as they see fit and the epidemic is probably over in a couple of months.

      Instead, we completely failed to protect places that need protecting and fucked over everyone.

      1. I thought you people were in favor of opening up society and locking up the elderly in their nursing homes to protect them.

        You think this is the biggest error in this mess because that’s what FOX News wants you to think. Trump dealt with the crisis by holding rallies and encouraging the entire country to be skeptical of masks. Cuomo had the worst outbreak in the world to deal with and has met with nothing but vitriol from people who care more about the poll numbers of the former than about actually saving any lives.

        1. “..I thought you people were in favor of opening up society and locking up the elderly in their nursing homes to protect them…”

          That’s because you’re a fucking ignoramus or a fucking liar.
          Or, most probably, both.

  18. They’re gonna run out of people in other states to tax.

    1. But the future earnings of future people is an unlimited resource, and they can’t vote yet.

  19. Count on star and local governments cutting teachers, fire, police, EMT, and all other services before any serious talk about cutting government pensions.

  20. “What State and Local Governments Can Learn From the Coronavirus Crisis.”

    Well, I don’t know what the state and local governments have learned from the Coronavirus, but I’m willing to be the people of New York State and NYC have learned that Kommissar Cuomo and Comrade De Blasio are a couple of first class fuck ups.


    In a study by Grifoni et al.1, reactivity was detected in 50% of donor blood samples obtained in the USA between 2015 and 2018, before SARS-CoV-2 appeared in the human population.

    Looks like a whole shitload of people are already immune to this ‘novel’ virus because your body doesn’t think it’s novel at all. (Total of 5 studies in the paper, more to come soon I’m guessing)

    The steepest curves are finished.

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  23. “What State and Local Governments Can Learn From the Coronavirus Crisis”

    I’m going to go with nothing, at best. At worst it’s all the wrong lessons and they commit to do even stupider things in the future. You know, with these kind of questions it would be really nice to be wrong once in a great while but politicians are far too predictable.

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  25. This applies to the feds too. These craven politicians spend like drunken sailors on shore leave when times are good (see the last 3 administrations) so there’s no cushion when times are bad. I’ve always been against balanced budget laws but I’m realizing that none of these bastards can be trusted to be responsible.

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  26. “While a few states, such as Florida, were relatively fiscally responsible ”

    Because the bitches get bailed out every year for hurricanes, you cow!

  27. What the can learn is to fuck off.
    The government, prone to failure as it constantly is, has no business ‘helping’ us with medical issues, nor economic ones.
    But they won’t learn that.

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