Even as the latest COVID-19 federal relief/stimulus package was finally signed into law on Dec. 27 after a bizarre cliff-side confrontation triggered by Donald Trump’s ambivalence, the incoming Biden administration was readily acknowledging its inadequacy and promising that additional legislation would be on the table early in 2021. The new package that was approved, valued at just over $900 billion, was significantly watered down from the original HEROES Act approved by the United States House of Representatives in May.
The Kansas Reflector
Although a three-dimensional political chess match over the size of stimulus payments dominated news over the holidays, that was preceded by another significant development in mid-December when a provision to provide a largely unrestricted state and local aid component regrettably was left on the cutting room floor by negotiators — notwithstanding the fact that the Governor’s Council on Tax Reform had formally asked congressional leadership and the Kansas delegation to support its inclusion.
But Senate Majority Leader Mitch McConnell and others in the GOP reportedly were so adamantly opposed to this aid that would backfill certain state/local revenues that collapsed because of the pandemic, they had it stricken in exchange for begrudgingly walking away from certain business liability shield provisions they had supported.
Unfortunately, Kansas (as well as other states, red and blue alike) now faces a nasty cocktail of policy choices in 2021, including budget cuts and sleight-of-hand accounting gimmicks without that relief money. Moreover, many oft-considered state tax cuts ranging from grocery sales tax relief to a smorgasbord of income tax breaks pushed by large multinational corporations will be that much harder to factor into fiscal equations policymakers in Topeka need to solve.
While there apparently was not any direct response from the Kansas delegation to our plea that state/local aid be retained, one statement from (then Rep. and Sen.-elect) Sen. Roger Marshall caught my attention. Discussing his yes vote, he celebrated that the final package “leaves out the unnecessary funding for cities and states and socialist priorities for the left.”
As is sometimes said in political circles, I think I’ll just put Mr. Marshall down as “undecided” and leave it at that.
I cannot say for certain what other “socialist” pieces from the HEROES Act may have been excised down the homestretch in exchange for removal of the liability shield that McConnell and business interests had been pushing, but I have been thinking more broadly about what was in the final legislation — and about the rationale for all of the federal stimulus/relief packages generally acknowledged by most politicians.
What we are really talking about is the taxpayers’ money being returned to them in a variety of ways in the wake of an unforeseen catastrophe. The new law is in fact a massive 5,593-page piece of legislation that contains many hundreds of provisions. And although media coverage focused mainly on the new round of stimulus checks, extension of enhanced unemployment benefits, and restoration of the Paycheck Protection Program, it would seem that an additional $13 billion for agricultural programs, as well as tax breaks for three-martini lunches and racehorse owners also must have passed the smell test and were not deemed as “socialist priorities for the left” by those who voted in favor of the final measure. (Racehorse owners? Kentucky must really enjoy having the Senate majority leader.)
THE REALITY is that without the infusion of federal support for severely stressed state and local government budgets — arguably just another way of returning taxpayer dollars to benefit a presumably broader constituency than racehorse owners — further cuts in those budgets will almost certainly have a contractionary impact on the economy, exacerbate unemployment and imperil the economic recovery.
This remains a critical issue not just here in Kansas, but across the nation. I am optimistic that relatively unrestricted state/local aid will be revisited as part of the next stimulus/relief proposal being developed for consideration early this year.
My hope for the new year is that all members of the Kansas delegation can come to view its inclusion next time around as every bit as important for their constituents and the state’s economy as I am sure the additional agricultural funding must have been in the most recent package.
Chris W. Courtwright, currently a member of Kansas Gov. Laura Kelly’s Council on Tax Reform, retired in July after 34 years as the Kansas Legislature’s Principal Economist and member of the s Consensus Revenue Estimating Group.
