“One of the first things on the agenda this year for Kentucky Republicans was figuring out how to kneecap Democratic Gov. Andy Beshear. They dropped legislation in January that placed new limits on the governor’s emergency executive powers, quickly passed the bill, overrode his veto and then fought him in court.
In the months that have followed, lawmakers across the country — from Maine to California, Oregon to Florida — have proposed and, in many cases, passed similar measures to curtail the sweeping powers bestowed on their state executives.”
“Most governors insisted throughout the crisis that they were being guided by evolving science and trying to navigate uncertain terrain as best they could. But patience appears to have worn out for many legislators consigned to the backseat.”
“In some states, it has been a continuation of philosophical differences that have played out over the course of the still-ongoing pandemic. That dynamic has been particularly evident in places sporting Democratic governors contending with GOP-controlled statehouses like Kentucky, Kansas and Michigan, where conservative outrage over Democratic Gov. Gretchen Whitmer’s pandemic mandates put her in physical danger last year.
But for other governors, it has been members of their own party who have been the ones trying to wrestle back control and deliver emphatic rebukes of their state’s leadership, as was the case in New York and Ohio last month.”
“Generally speaking, however, the GOP has tilted far more toward limiting what governors are allowed to do by law than Democrats to date.”
“In their 2017 tax bill, Republicans partially closed a tax loophole that mainly affected higher-income people in high-tax areas — i.e., relatively well-off people in blue states. They capped the state and local tax deduction (SALT) people can take when calculating their federal income tax at $10,000. People can still deduct state and local taxes from their federal tax bill, but only up to that point.
Many Democrats — namely, those from states such as New York, New Jersey, and California — want to repeal the SALT deduction cap and go back to the old regime, where people could deduct all (or at least more) of their state and local taxes. They argue the cap unfairly drives up their constituents’ tax bills, might keep their states from implementing more progressive tax regimes on high-income people, and was a vindictive move by the GOP in the first place.”
“But some Democrats, Republicans, and economists are saying hold the phone.
“The vast majority of the benefits of repealing the SALT cap would go to the people at the very top. It would also be costly — and for that amount, we could finance much more worthy efforts to support American families and workers. We can say we are for a progressive tax code and for fighting inequality, or we can support the SALT deduction, but it is really hard to do both,” said Sen. Michael Bennet (D-CO) in a statement to Vox. When the Senate took up a vote on whether to repeal the SALT cap in December 2019, he was the only Democrat to vote against it.”
“The state, which has no income tax, pulls about a third of its budget from the federal government, a higher share than many other states, he said. That’s partly due to agricultural assistance and federal aid disbursed after natural disasters, but also because Texas has a large share of enrollees in entitlement programs like Medicaid.”
“Most of these bills are not as aggressive as Georgia’s, but they all undermine localities’ ability to self-rule. In this way, Illinois State University political scientist Lori Riverstone-Newell told FiveThirtyEight, they’re part of an increasing trend of states preempting local government in order to retain power for themselves: Conservative legislatures, in particular, have passed several laws in recent years that limit the types of laws municipalities can pass, including sanctuary-city protections, anti-LGBT discrimination ordinances and minimum-wage increases (especially in the South). These laws can often have what Riverstone-Newell calls a “chilling effect,” where the mere threat of having their power taken away makes local officials afraid to govern as they see fit.”
“Few states have a record as unblemished as Vermont.
The odds could have been stacked against the state. The virus arrived in Vermont during the first wave sweeping the country. It shares borders with some of the hardest-hit states and has the third-oldest population in the country.
But Vermont swiftly flattened its initial wave and has since gone weeks at a time without any new confirmed infections. Fewer than 60 people have died, giving the state the second-fewest deaths per capita behind Alaska, which has seen surging caseloads in recent weeks. If the country as a whole had the same per capita death rate as Vermont, the nationwide death toll would be 30,000 instead of more than 215,000.”
“While health experts say the state has likely benefited from its rural geography, other sparsely populated areas of the country that let their guard down were overwhelmed by the virus this spring and summer. That sense of complacency never took hold in Vermont, where a moderate Republican governor and a Democratic-led Legislature helped defuse partisan tensions that hampered the response elsewhere.
“Any state that’s going to succeed against Covid has got to have the compliance of the population, because every single thing you do is telling people to alter their personal behavior,” Mark Levine, Vermont’s health commissioner, said in an interview.”
“Vermont reopened slowly. The lockdown it put in place in late March is still gradually being lifted, restaurants and bars are still limited to 50 percent indoor capacity and even outdoor gatherings are still subject to a 150-person limit.”
“Local governments have authority to set their own stricter rules. Burlington, the state’s most populous city, reduced its outdoor gathering limit to 25 in late August when college students began returning to nearby campuses.”
“The state is also strict about visitors, requiring a two-week quarantine for people arriving from places with higher infection rates. And it invested early in testing and contact tracing and implemented a state-wide mask mandate early on.”
” Vermont’s experience has some similarities to Alaska, another predominantly rural state that until recent weeks kept the virus at bay through one of the country’s most proactive testing regimes and a strictly enforced quarantine requirement for travelers. But unlike Alaska, Vermont is just a few hours’ drive from New York City, the outbreak’s early epicenter, and that makes its performance even more noteworthy.”
“Washington state shows larger urban centers can mount an effective defense against the virus with rapid coordination and an early focus on vulnerable populations.
“Washington was the tip of the spear,” Riley said. “They were the first and had to make decisions really fast.”
The state in late January reported the nation’s first case of Covid-19, and the pathogen’s tear through a Seattle-area nursing home was the first indication of how thoroughly the facilities would soon be devastated nationwide. But the state quickly got its act together.”
“The state’s success stems from extensive data sharing, which helped health officials better target their response measures once state restrictions and business closures during the initial lockdown were eased. That meant a better view into where the virus was still lurking and knowing where to direct critical resources like testing, protective equipment and hospital surge capacity.”
“Washington health authorities understood early the need to protect the elderly, identifying people living in nursing homes and assisted living communities as particularly vulnerable clusters.
When Congress gave states a 6.2 percent bump to their federal Medicaid funds in March, Washington was among a handful of states that largely used the windfall to provide targeted aid to nursing homes, helping them pay for additional staffing, equipment and hazard pay. New York was not.”
“A report from the National League of Cities in May revealed that the states weren’t very good at getting the money to local governments. Also, a new dataset collected by the Department of the Treasury Office of Inspector General that looks at how much the state and local governments have spent of their coronavirus relief bill funds as of June 30 shows that they have spent much less than you might think.
Some states have spent virtually none of the money allocated by Uncle Sam.
South Carolina, for example, has yet to use its $2 billion in relief. Michigan, which is asking for a bailout, spent only 3 percent of the more than $3 billion it received. New Jersey is also asking for a bailout, yet it has distributed a measly 2.1 percent of its federal funds so far.
The states demanding bailouts may likely argue that what they really need is more flexibility in order to be able to use federal funds to address their revenue shortfalls. As matters stand right now, states must use the bailout money on coronavirus-related expenditures. So, when those actual expenditures are lower than the allocated funds, they can’t spend them.
The flexibility argument doesn’t hold water, in my opinion. It’s one thing for state and local governments to ask the federal government for help to cover expenditures they couldn’t foresee, such as those related to the pandemic. But they shouldn’t be asking federal taxpayers to pay for their routine expenditures, especially when these governments have failed to plan appropriately for revenue shortfalls that inevitably occur, as they’re bound to encounter emergencies. Governments should prepare for them. They should cut spending and, if that’s not enough, they should turn to their own citizens for the funds needed to cover non-coronavirus expenditures. Those funds could be obtained through higher taxes or spending cuts elsewhere. Their routine spending should come from their taxes.
State and local governments are always eager to have the federal government solve their financial problems for them. But they will continue to have financial difficulties as long as Uncle Sam continues to cave. The first step toward having healthier and more responsible state and local governments would be no bailout.”
“Senate Majority Leader Mitch McConnell’s suggestion that maybe states and cities should just go bankrupt amid the coronavirus-induced economic crisis they’re facing has not been particularly well-received. A big part of the issue: As the law stands right now, states can’t declare bankruptcy.
But the controversy points to a broader problem states across the country are facing — their costs have skyrocketed and their revenue has plummeted, and unlike the federal government, they can’t run a deficit. They’ve got to balance their budgets so that they take in what they put out. And right now, a lot of states are sounding the alarm that they’re going to need to make deep spending cuts unless the federal government steps in.
New Hampshire Gov. Chris Sununu, for example, warned his state could need to make $500 million in cuts next year. Missouri Gov. Mike Parson estimated he’ll have to cut $700 million and has already put a pause in $227 million in state funding. Los Angeles Mayor Eric Garcetti has said he plans to furlough thousands of city workers.
The problem — at least with most states and cities — isn’t that they’ve managed their finances particularly poorly. It’s that they’re in the midst of an unprecedented crisis.
“States have balanced budget rules to keep them from doing things that are fiscally imprudent. In practice, when we’ve hit recessions that’s led to difficulty,” explained Kim Rueben, director of the state and local finance initiative at the left-leaning Urban Institute. States are able to raise more tax money when the economy is doing well, not when it’s doing poorly, even though that’s often the time when it needs money for things like unemployment and health care most. Many states have rainy day funds to cover downturns — the 50-state total recently hit $75 billion.
“Not all of the states were good, but on average, they had actually put money away to try and handle what is your normal economic cycle,” Rueben said. “What we are entering into right now is not normal in any way, shape, or form.””
“the first state to put in place a balanced budget amendment in its constitution was Rhode Island in 1842, and other states followed. As of 2015, 46 states plus Washington, DC, have some sort of balanced budget requirement, which basically means they can only spend as much revenue as they’re bringing in. How stringent these requirements are varies by state; some experts say the only state that doesn’t have to balance its budget is Vermont”
“The United States has a system where many of the country’s priorities are handled at the state and local level — the local school systems, colleges and universities, infrastructure, prisons and jails, the health care systems. The federal government is supposed to work in partnership with states and cities by design, the idea being that they’re closer to the ground on understanding the needs and wants of their citizens.
“You want the financing of them to be solid,” Leachman said. “It’s in the national interest to make sure that that happens, and it’s another reason why it should be a no-brainer for the federal government to provide the fiscal relief that states and localities need right now.””
“Unfortunately for the theory, it’s based on some false assumptions.
For one thing, it assumes that there is currently a national marketplace for things like auto and life insurance. There isn’t. In the United States “national” insurance companies like Geico and Progressive are really networks of state-based companies. When you buy insurance, you’re buying it from a company with an office in your state, licensed to do business in your state. If you want a better deal from another state, you have to physically migrate to that state. But the good news is when you do, you can usually transfer your coverage fairly easily. Say you buy auto coverage in Virginia, and then move to Colorado. Geico of Virginia hands you off to Geico of Colorado with a few mouse-clicks. Happily, state legislatures have worked to make these sorts of handoffs seamless, by harmonizing their insurance laws.
Yes, some states have over-regulated their health insurance markets. Badly. So why not allow customers to vote with their keyboards instead of their feet? To understand why that’s not a sound idea, in our system, consider a thought experiment. Imagine if we let people pick their “governing state” with respect to taxes instead of insurance. I could, for example, opt to pay South Dakota’s dirt-cheap tax rates while still living, and using the roads and police, in high-tax New York. Why would New York stand for that? Why should it? Under our Constitution, state sovereignty isn’t a suggestion, it’s the law.
Notice how nobody is clamoring for interstate purchase of auto and life insurance. That’s because those markets work pretty well, and that’s because the coverage is individually owned. Most health insurance, alas, is not. Most Americans don’t actually own their health insurance. They participate in a prepaid group health benefit plan, usually provided through an employer or the federal government. By definition, such a plan isn’t portable because of who owns it (i.e., not you).
Half the U.S. population relies on employer-sponsored group health benefits, not because of state mandates, but because of federal tax subsidies for employer-sponsored group health benefits. End those subsidies, and more Americans will own their health insurance, and it’s a sure bet health insurance will begin to look more like auto and life.”
“Instead of trying to create an unnecessary “national marketplace” in insurance, which only makes Uncle Sam even more of a national insurance commissioner than he already is, states should simply streamline their regulations and promote portability via an interstate agreement approved by Congress.
In fact, such a compact already exists. Its purpose is to facilitate interstate comity in most forms of insurance. It just needs to be updated to cover health insurance. States haven’t bothered to update it because Uncle Sam is sitting on their chest.
So if we want to revive the true insurance market — a competitive, state-based market — we have to get Uncle Sam off the states’ chest and out of their business. And we have to change the tax laws to stop favoring group health benefits over true insurance.
Individual ownership is the holy grail. When most Americans own their insurance, it will be portable and affordable. But there is only one road to the holy grail, and it does not end in Washington. It ends in your state capital.”