The federal government has doled out well more than $1 trillion in Covid aid to the states over the last two and a half years and, as we pointed out last week, most states with Republican governors used the funds to retire debt and cut taxes. (As we encouraged them to do!)
But four states in particular completely ignored our advice. You can probably guess which four: California, New York, Illinois, and Connecticut.
According to the Wall Street Journal: “Despite sitting on surpluses, these four states allow fees to rise for businesses as they spend money on other [noncovid] programs.”
Where has all the extra money gone? “California, Connecticut, Illinois, and New York have directed surplus funds to social programs and taxpayer rebates, among other causes, leaving unpaid debts to the federal government ranging from tens of millions of dollars to more than $15 billion.”
California is the worst offender. California Governor Gavin Newsom used the federal dollars to pass out “free money” to people – whether they pay taxes or not. California sent out checks as large as $1,225 to each resident (or $5,000 for a family of four). We thought buying votes was illegal! But the Golden State’s highest income, sales, and gas taxes (which actually went up again on July 1) in the nation remain.
Prediction: when these states run out of money during the recession they will come running to Washington tin cups in hand begging for more money. And the fools congress will probably give it to them.