Several governors — 21 GOP and one Democrat, Kansas Governor Laura Kelly — are criticizing President Biden’s American Relief Plan as penalizing those who resisted lock downs during the pandemic.
The governors issued a statement over the weekend that accuses Biden’s plan as using a biased formula to calculate each state’s aid.
Biden’s bill, dubbed the American Rescue Plan, proposes $350 billion in direct aid to state and city governments to replenish tax revenue collections that declined during the pandemic. Most of the funding for each state would be based on its unemployment figures – not overall population. States where the most citizens were out of work last year would receive a greater share.
However, the New York Times published a report that showed many states did not receive as much economic devastation as suspected. In fact, many received nearly as much tax revenue in 2020 as they did in 2019. One big reason for this was $600-a-week federal supplements that allowed people to keep spending — and states to keep collecting sales tax revenue — even when they were jobless.
The NYT cited these findings from the Urban-Brookings Tax Policy Center, a nonpartisan think tank.
While the overall revenue in the U.S. was down 1.8%, this doesn’t mean the Relief Bill is no longer necessary. Further research found that local governments suffered far worse than state budgets, due to their reliance on different tax revenue sources, and public sector unemployment.
Under President Biden’s American Rescue Plan, state governments would receive $195.3 billion while local governments would receive $130.2 billion, and territories and tribes would get $24.5 billion.
- State funding would include $25.5 billion divided equally among states, and $169 billion would be distributed based on unemployment.
- Half of the local funds will be distributed based on population and the other half based on a modified Community Development Block Grant formula.
From USA Today and the Tax Policy Center/Urban Institute and Brookings Institution.
