The overwhelming news from the states is the financial impact COVID-19 is having on their bottom line…and precisely one article on why they shouldn’t be given or take a bailout from the feds!

States should say ‘no thanks’ to a federal bailout

“The Virus Is Vaporizing Tax Revenues, Putting States in a Bind,” “States provide most of America’s public health, education and policing services, and a lot of its highways, mass transit systems and waterworks. Now, sales taxes … have fallen off a cliff as business activity grinds to a halt and consumers stay home. Personal income taxes, usually states’ second-biggest revenue source, started falling in March, when millions lost their paychecks and tax withholding stopped. “April usually brings a big slug of income-tax money, but this year the filing deadlines have been postponed until July. … Even if states are able to stretch their finances temporarily … the economic recovery is expected to be slow. That means tax revenues from tourism, oil and gas drilling, conventions and other activities are probably not going to bounce back.”

WSJ ED BOARD: “Bail Out the States?: Any more federal aid should come with very strict conditions”: “President Trump has signaled he’s open to a state bailout because, well, he’s open to anything these days. But Senate Majority Leader Mitch McConnell caused a stir Wednesday when he said states should consider bankruptcy rather than get a bailout. He cited the Chapter 9 workouts of cities like Detroit. “But some doubt that state bankruptcy is constitutional under the Contracts Clause, and any Chapter 9 filing would be challenged in court. Mr. McConnell’s larger point is that states shouldn’t get more no-strings cash. Private companies that borrow from the Fed and Treasury have to meet stiff conditions, including limits on compensation, and the same should apply to state governments. “Bailout conditions should include cuts in nonessential spending, immediate and permanent reductions in public pension benefits, and other reforms to put states on a path to fiscal recovery. Lawmakers will protest, but they are the ones asking Americans for help. If states want more money, they need to show it won’t merely go to sustain unaccountable, one-party political machines.

It’s basically tough budget times for all 50 states, with plunging revenues expected throughout the country. But a new report from MultiState Associates found that Kentucky and Pennsylvania were most likely to face immediate problems , based on the status of their rainy day funds, their unemployment rates and the fact that neither has finalized a budget for fiscal 2020-21 yet. Arkansas, Hawaii, Illinois, Louisiana, New Jersey, and New York are in better shape, but still at great risk of short-term problems. On the flip side, the group found that states like Alaska, North Dakota and Wyoming are the least at risk for now, because of how reliant they are on severance taxes from drilling oil and natural gas, even as their long-term problems remain.

State governments face financial abyss with coronavirus
State governments are staring at budget shortfalls that will substantially exceed what they faced during the great recession, even before the full scope of the economic damage caused by the coronavirus pandemic is known. Budget analysts, governors and legislative leaders around the country are already holding regular meetings to assess the damage, watching in real time as their revenue estimates fall short of worst-case scenarios mapped for a recession.

“Battered states, cities struggling to pay bills as Congress puts off bailout,”

Will coronavirus prompt fresh exodus from high-tax states?

Kansas had seen revenues rebound since it mostly repealed the tax cuts enacted under former Gov. Sam Brownback. But as The Wichita Eagle reports, a new official state government forecast dropped its projection for income tax revenue this year by $400 million and sales tax revenue by $110 million — all part of an estimated shortfall of some $653 million spurred by a predicted 5 percent contraction of the economy. One potential factor those figures don’t take into account: The potential for enhanced federal aid to states and localities, though it’s still not totally clear where the White House stands on that possibility.

Nashville could be getting a property tax hike.

NJ governor warns of ‘national disaster’ without federal aid to states New Jersey Gov. Phil Murphy (D) warned of a “national disaster” without a boost in federal aid to states to help fight the coronavirus pandemic.


Policy and Taxation Group is your voice in Washington on economic freedom. We advocate for policies that allow American families to fully enjoy the economic liberties and benefits of a robust free market unique to our nation. For over 25 years, we have been the loudest voice in the nation’s capital on eliminating the death tax. This ill-conceived tax has a destructive impact on families, family businesses, job creation, and the national economy.