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Direct Relief for State and Local Governments: Bloink and Byrnes Go Thumb to Thumb

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Robert Bloink and William H. Byrnes Robert Bloink and William H. Byrnes

Financial relief for overburdened state and local governments was one item that was missing from the massive year-end stimulus package. Democrats had initially requested about $1 trillion in direct relief for state and local governments and had reduced the request to around $160 billion during negotiations. The provision was excluded entirely from the year-end package, but would have provided federal assistance to help fill budget gaps.

Some state and local government authorities have already announced that they’ll soon be required to make cuts, including job cuts — leading to calls for prioritizing state and local government relief in the next round of stimulus funding.

We asked two professors and authors of ALM’s Tax Facts with opposing political viewpoints to share their opinions about prioritizing financial relief for state and local governments in the next round of COVID-19-related stimulus funding.

Their Votes:

Bloink

Byrnes

Below is a summary of the debate that ensued between the two professors.

Bloink: We need to get aid to struggling state and local governments — this should be a top priority in the next round of stimulus funding. Even the most well-managed state and local governments are facing massive shortfalls. And remember that state and local governments, unlike the federal government, are required to balance their budgets. All of this comes at a time when taxpayers are depending upon state governments to provide assistance more than ever. 

Byrnes: State and local governments are struggling just like everyone else. But prioritizing state and local government stimulus relief isn’t the best way to get the economy back on track. The federal government should prioritize offering assistance to individuals and small businesses. That eases the burden on state and local government resources as more people rely on federal aid. 

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Bloink: Not providing immediate and substantial assistance to state and local governments would be a huge mistake. Giving additional stimulus checks to all Americans, regardless of whether they’re suffering, makes little sense — we’d be better off providing relief to the governments who are in charge of distributing the funds to citizens who are actually suffering.

Byrnes: Prioritizing individual and small-business stimulus relief ensures that we aren’t rewarding state and local governments that have mismanaged their funds during a crisis. Providing flat payments to individuals is an effective, simple solution to the problem. It gets money into the hands of Americans, who in turn use those funds to stimulate the economy —creating jobs and lessening the burden on state and local governments.

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Bloink: When we provided the initial round of individual stimulus funding in the spring, that made sense. We had to get funds to individuals quickly to prevent a domino effect that could have created an even more widespread economic collapse. Now, we need to focus on helping the state and local governments that fund the police, firefighters, and even nurses and other front-line workers who we need to protect. It’s their jobs that are on the line if we fail to prioritize these government entities in the next round of funding. 

Byrnes: State and local government shortfalls will start to decline if we can make real traction in reopening this country and getting people back to work. Higher employment rates mean higher tax revenues across the board. We should focus our efforts on getting the economy running again through a combination of individual/small-business stimulus and assuring business owners that they won’t be exposed to lawsuits for reopening.

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