Coronavirus

States With Post-Pandemic Surpluses Are Still Getting Huge Federal Bailouts

California has a $75 billion budget surplus, but federal taxpayers are about to send the state $27 billion in additional aid.

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As California emerges from the COVID-19 pandemic, the state's coffers are literally overflowing—and now federal taxpayers are about to kick-in another $27 billion.

Gov. Gavin Newsom (D) announced last week that California expects to have a $75 billion budget surplus at the end of the state's current fiscal year. That would be a  staggering total—an amount larger than the entire state budgets of 45 other states—even in the best of times. Coming on the heels of a year that saw state and local governments begging Congress for a bailout, however, it should also raise some serious questions about whether the $350 billion in aid included in the American Rescue Plan is really necessary.

States are going to get that aid whether they need it or not. And California's not the only state that's not exactly in dire straits right now.

In New Jersey, the state treasury anticipates finishing the fiscal year with a $6.8 billion surplus. According to NJ.com, an independent fiscal agency projects that the total will be even higher. Not only does the state not need the federal aid that's coming its way, but state officials are now fretting about having to pay back a $4 billion emergency loan taken out last year in anticipation of a pandemic-related fiscal crisis.

Arizona is sitting on a surplus in excess of $1 billion. "We have so many resources available, it's unprecedented," House Majority Leader Ben Toma (R–Peoria) told the Chamber Business News.

Texas was anticipating a budget deficit of about $1 billion as recently as January. Now, the state expects a $725 million surplus. "Texas remains well-positioned to recover from the COVID outbreak and return to its norm of economic growth in excess of the national rate—if we haven't already," Glenn Hegar, the state's comptroller, told lawmakers at a hearing earlier this month, The Texas Tribune reports.

Everywhere you look, last year's doom-and-gloom predictions of state and city fiscal catastrophes don't seem to be panning out. The Urban Institute, a centrist think tank, estimates that state tax collections in March of this year were 10 percent higher than a year ago, even after federal pandemic aid is excluded from the calculations. Data from the Bureau of Economic Analysis shows that state and local tax collections for the second quarter of 2021 are running 7 percent ahead of the total for the first quarter of 2020—the last full quarter before the pandemic struck.

This is not a crisis.

That is what makes the disconnect between what's happening at the state and federal levels so stunning. On the exact same day that Newsom announced California's massive budget surplus, the U.S. Treasury Department finalized its plan for disbursing the first round of American Recovery Act aid to states. California will get $27 billion; Texas will get more than $15 billion; New Jersey will get more than $6 billion; and Arizona will get more than $4 billion.

Those totals don't include the $130 billion that's earmarked for local governments, the $123 billion set aside for public schools, or the $31 billion reserved for public transit agencies.

"All told, state and local governments are likely to be well over $1 trillion better off as a result of COVID relief legislation," concludes the Committee for a Responsible Federal Budget (CRFB), which had been warning for months that Congress' bailout for state and local governments was likely to be overly generous.

Governments at every level are about to find themselves flush with more cash than they might know what to do with—but they won't be allowed to return that money to taxpayers, thanks to a provision in the American Recovery Act that forbids states from using federal aid to cut taxes or fund tax credit programs. That's a recipe for overspending and growing the size of government, as some states are likely to take the extra federal aid and plow it into new programs that will have to be funded with state tax dollars in future years.

"State and local governments must avoid using these temporary funds to support permanent policy changes that lead to larger future imbalances," the CRFB warns.

In other words, state and local officials need to have a better sense of fiscal restraint than their federal peers. Don't cross your fingers.

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  1. The money is for the immigrants…geez. This article is so racist. Now, when we raising them taxes, gubment obviously needs it people!?!?!

    1. Boehm is so fucking stupid.

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  2. “Texas will get more than $15 trillion; New Jersey will get more than $6 trillion; and Arizona will get more than $4 trillion.” Trillion?!? TF are you smoking today?

    1. Billion, trillion what’s it matter if it its only worth is to wipe my ass with it?

    2. Forget it Jim’s, it’s Boehmtown.

    3. Inflation…

  3. “Texas was anticipating a budget deficit of about $1 billion as recently as January. Now, the state expects a $725 billion surplus”

    Houston we have a problem with the numbers.

    1. Idiot politicians couldn’t run a lemonade stand.

  4. Would an old timey newspaper guy please run over to the treasury and yell, “Stop the presses!” Or would that cost the country more money?

    1. Money printer go brrrrrrr

  5. California has a $75 billion budget surplus

    There is no fucking way California has a $75b surplus.

    1. Newsom saved money by only going to The French Laundry once or twice during lockdown instead of everyday, like he’d prefer?

    2. I doubt they could manage a $75 surplus. And if they did, they’d form a committee to figure out how to spend it rather than save it or give it back to the people.

  6. It is completely nuts how disconnected from reality spending really has become. How are these staggering figures ever going to be paid back?

    1. To think you were saying the infrastructure bill was laid for just a few weeks ago.

    2. Are you willing to agree that perhaps your concern is misplaced and that you don’t completely understand what’s actually happening?

      1. So you don’t think the government over spends?

        1. Buys the bonds if you think they’re such a steal.

        2. I pay attention to innovation, resource scarcity, quality of life and stuff like that.

          1. Do you know what we use as a means to trade resources… hint. It is cash.

      2. I know! I know! Magic Money is allowing lying and thieving politicians and bureaucrats to spend money on their pet projects, send it their cronies’ way, buy votes and get rich in the process!

      3. What am I supposed to understand, that I don’t already know, about what is happening?
        The spending is off the charts crazy, and most of it on borrowed money. This is going to have to be repaid somehow. It will be repaid either via inflation or huge tax increases in the future. Neither one of these things is desirable. It is not too much to ask for the government to live within its means.

        1. And yet you continue to advocate for open borders with a welfare state.

          So you apparently don’t know a lot.

  7. Fuckin deadbeat blue state takers.

  8. Some claim there is no pork in these pandemic relief bills. B.S.
    Here’s a report I saw yesterday about the situation with SEPTA, the public transportation authority in Blue Philly and Purple burbs. Passenger loadings are only 36% of pre-pandemic. This ridership drop led to a loss of about $300 million in the fareboxes in last 12 months. The recently passed Fed bailout is giving SEPTA $800 billion to make up for the loss. More than 2.5 times the loss. Nice work if you can get it.

    1. Let’s divide 300 million into 800 billion again and see what we get the second time, huh? Hint – it’s more than 2.5 times…by a lot. Or is this another million/billion/trillion interchangeability error? How come the Feds never make that kind of mistake on my tax return??

      1. Yep, it’s 800 million. My bad.

        1. Million, billion, trillion…I see a pattern here.

  9. Saying California has a $75b surplus while CalPERS has more than twice that (conservatively) in unfunded liabilities is kind of funny—if that’s your sense of humor, I guess. Luckily, the Democrats would never use the cover of a pandemic as a reason to shuffle money to the unions that support them. I’ve got a good feeling about this.

  10. Here’s a report I saw yesterday about the situation with SEPTA, the public transportation authority in Blue Philly and Purple burbs. Passenger loadings are only 36% of pre-pandemic. This ridership drop led to a loss of about $300 million in the fareboxes in last 12 months. The recently passed Fed bailout is giving SEPTA $800 billion to make up for the loss. More than 2.5 times the loss. Nice work if you can get it.

  11. Why is this so surprising? Anyone who thought it out should have seen this coming. The states still tax the shit out of people but “pandemic lockdown!” the state is in a state of paralysis because of the lockdowns and isn’t doing shit, like spending the money they normally would.

    In short, taking money from citizens doesn’t slow but the outlay essentially stops – who’da thunk there’d be a surplus? Oh, anyone who actually thought about it. It’s the gov’t role – a conman’s gotta con.

  12. As California emerges from the COVID-19 pandemic, the state’s coffers are literally overflowing—and now federal taxpayers are about to kick-in another $27 billion.

    But Wingnut.com and Fat Rush Limbaugh (Praise Be Unto Him) told us that California was broke and couldn’t pay its bills.

    1. So you browse some porn site called wingnut and you once listened to Limbaugh. Based on your past behavior the porn site is probably illegal, and as for the second well that guy passed away so you are probably just hearing voices in your head.

      I guess solitary must have gotten to you.

    2. They are broke. To the tune of probably 3/4 of a trillion dollars.

          1. That is LIABILITIES dude.

            I can see you’ve never taken an accounting class.

            1. We know you don’t understand about paying your bills.

            2. Wow. Way to prove your ignorance….

            3. You also can’t look at the asset side and assume immediate liquidity even if at all. Balance sheet accounting is great and all but there’s a lot left to be said when just counting assets as quick liquid cash to be turned into revenue.

  13. Re:surpluses

    Boy if only the GOP ran the budget in 2020 the way California Democrats did. We’d be ruining surpluses up our arse.

    1. CA surplus is despite, not because of California Democrats. See my comment below.

  14. Insane. And nearly ALL of California’s tax revenue is from tech companies that skim their profits off the rest of the country. Just like New York with the finance industry. The point is not that these industries don’t create value, but their value is dependent on and their profits are derived from every asset and every piece of real estate and every consumer across the country.

  15. That was literally the point. They wanted to flood the states with money for government programs and to pay off state employee pension funds

  16. BLUE States With Post-Pandemic Surpluses Are Still Getting Huge Federal Bailouts
    Everything the Biden administration does is political and designed to divide the nation. Reason supported Biden.

  17. Hey look (article picture); there’s that money bag that represents my 160-hrs of labor last month that never seemed to *earn* me what it should’ve.

    At this rate I’ll be working my entire life for the basics of tent-style shelter, beans and a pedal bike. Sure glad I work so hard for CA politicians…

  18. “That’s a recipe for overspending and growing the size of government,”

    Do I have to say “feature, not bug?” This pandemic has been a golden opportunity, and they are not about to waste it.

  19. Hmmm…what might California spend this on? Here’s a short list

    -Free abortion with purchase of an ounce of weed
    -Gender reassignment surgeries for any child who wants one
    -Electric scooters for all
    -dildos and butt plugs for all

  20. A trillion here, a trillion there, soon it might add up to real money. The only “surpluses” these states have is money stolen from the tax payers and handed out to states like candy from the federal government. Amazing how California has such a great economy in the middle of the recall.

  21. There should have been zero stimulus and beyond a few months early into the pandemic. Other than that, just a government burning money.

    Cripes, they have been fighting over spending trillions of dollars under the veil of “helping Americans” when the unemployment rate, outside of the few months where it was over 10%, was basically at the same rate during much of Obama’s term and this still with some mayors and governors causing the problem. We are now around 6%, which any other time that would be considered great, and they are still wanting to throw money at unemployment?

    WTF ticks in DC?!?

  22. By accepting any of these relief funds, it is ILLEGAL for a state to reduce their taxes. Got to spend their surpluses on something, anything.

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