Misleadingly named the HEROES Act, the bill would give $500 billion in unrestricted funds to state governments and $375 billion to cities.
Let’s dispense with the myth that these bailouts are the best way to help local governments.
Many states and cities don’t need additional tax dollars beyond the direct coronavirus relief the federal government has already given. The federal government has already spent trillions to prop up various sectors of the country and given $200 billion to states alone. Some mayors and governors around the country are claiming it’s not enough — many of these same politicians, of course, have been running billions of dollars in the red for years. The pandemic didn’t cause that, and this bailout won’t solve their long-running deficit spending.
New York City, for instance, had a $198 billion deficit at the end of 2018. Now, the city is expecting a $7.4 billion budget shortfall from the coronavirus, but it’s asking for $17 billion in relief. Meanwhile, the city’s own comptroller says the city could cut government “fat” and balance the budget without layoffs.
As a congressman and proud former mayor of Provo, Utah, and a lifetime conservative grassroots leader, we share an appreciation for well-managed state and local governments. Provo’s net position, a measure of the city’s total financial health, increased by $19 million last year thanks to careful management and hard financial decisions. Provo, and Utah generally, planned ahead and will weather this pandemic far better. Utahns and people around the country know rainy-day funds are important for families and for businesses — governments should be no exception. Places like New York City may have to make cuts now, but it will serve them better in the long term than a Band-Aid bailout would.
Bill de Blasio and Nancy Pelosi want the federal government to tax you, bring the money to Washington, and then, after taking the federal government’s desired share, give it back to your city and state — we don’t think this is a good idea. Of course, some local politicians would love to shift the responsibility for taxes and debt to the federal government. But anyone paying attention knows unaccountable Washington bureaucrats are far worse at fairly distributing money than locally elected leaders closest to the people, such as mayors, city councils, governors, or state legislatures. These federal redistributions almost always come with a haircut and strings attached.
Not only are massive bailouts for cities an unnecessary expense, but they are also a poor policy response that rewards bad behavior and punishes responsibility.
Bailing out failing governments merely incentivizes poor management in the future. If this bailout passes, cities will have no reason to save for a rainy day if they think Uncle Sam will come and save them. While no city wants to cut expenses or go into bankruptcy, it’s important that bad choices have consequences. Further, cities in the worst financial shape rarely have tax problems — they have spending problems. New York City’s high sales, income, and property taxes, as well as fees and other revenue sources, bring in an astounding $90 billion per year. Clearly, the reason for the city’s deficit isn’t a lack of money coming in the door but rather years of irresponsible decisions and no desire to balance the budget.
Bailouts also promote poor management now. The root cause of budget shortfalls is not the coronavirus itself — it’s economic lockdowns. Stay-at-home orders were a necessary response to COVID-19 in some areas early on, though Utah instead issued a “Stay Home, Stay Safe” directive and has been one of the least affected states in the country. But some cities, like New York, have kept their orders in place long after they “flattened the curve.” Overly cautious politicians want to have their cake and eat it too: keeping their cities locked down as long as possible while having the federal government pick up the tab. But every day they don’t take steps to reopen will prolong the road to recovery for the rest of the nation.
Finally, and most importantly, a bailout would unfairly punish responsible cities. Utahns shouldn’t pay extra for Bill de Blasio’s prodigal spending — neither should other cities and states. Cities that saved and acted responsibly shouldn’t pay for the failures of other cities to do so as well.
America was founded as a land of freedom and responsibility. Pelosi’s bill would undermine those ideals, forcing taxpayers around the nation to cover the shortfalls of cities that spent recklessly for decades. Lawmakers should keep that in mind and reject Pelosi’s massive bailout boondoggle.
Rep. John Curtis, a Republican, represents Utah’s 3rd congressional district and is the former mayor of Provo, Utah. Jessica Anderson is Executive Director of Heritage Action for America.