50 States Get Pandemic Windfall, You Get No Thanks

Inflation & federal spending sprees have always been good to the 50 state coffers & history repeats itself in the WSJ’s “States Are Swimming in Cash Thanks to Booming Tax Revenue & Federal Aid.” But, don’t expect a state tax rate cut anytime soon. As the article notes, “New York, California & Florida are among the states planning big one-time investments in worker bonuses, tax rebates & paying down debt.”

According to a survey by the Urban Institute think tank, for instance, “state revenues between April & November increased 24% from 2020 to 2021.” The National Assn of State Budget Officers add that at least 32 state revenues are ahead of projections. The problem is the bean counters’ mindset. “While spending is going up in some areas, including K-12 and higher education, states are in many cases putting budget surpluses to [those] one-time uses rather than programs with long-term commitments or permanent tax cuts.”

Of course, the reason for the short-term view, the state officials explained, is that the latest pandemic-related federal hand-outs are expected to be “temporary”. No kidding. But, aren’t increasing salaries in a tight labor market (and, therefore, bigger state revenue streams) going to be practically etched in stone as if memorialized in a Minimum Wage Law? Doesn’t history teach us the only thing that’s “permanent” in government thinking is a rising tax burden?

Davd Soul