Kansas and Missouri face budget holes. Will their federal lawmakers fight for aid?
Kansas and Missouri are both staring at massive budget holes after the coronavirus sent sales and income tax revenues plummeting. But many of their representatives in Washington are cold to the idea of bailing out states in fiscal crisis.
As Congress prepares for its next round of legislation in response to the COVID-19 pandemic, partisan battle lines are forming over whether the federal government should help states fill their budget gaps. Democrats are pushing for more direct aid to make up revenue shortfalls.
However, Senate Majority Leader Mitch McConnell, R-Kentucky, suggested last week that it would be better to change federal law to allow states declare bankruptcy, an idea that could have a huge impact on public employees who rely on state pensions.
Few lawmakers have embraced McConnell’s suggestion. But Republicans aren’t in rush to cut states checks to help them cover their shortfalls either. And while all states are suffering revenue losses, many in Washington are drawing distinctions between which states, if any, deserve help.
Sen. Jerry Moran, R-Kansas, said he’s worried that a bailout for states could be abused by those that were facing budget problems before coronavirus.
“I don’t want Kansas taxpayers bailing out states that have made poor fiscal decisions, living beyond their means,” Moran said in a Friday phone conference.
“We don’t have the ability to continue to spend at the rate we’re spending now— more than $3 trillion,” Moran said. “That’s just a fact.”
But Moran’s home state is grappling with budget crisis despite entering the pandemic with a $1 billion surplus. After shutting down many businesses for more than a month to slow the spread of the virus, Kansas now faces a projected shortfall of more than $650 million for next fiscal year.
Kansas Gov. Laura Kelly, a Democrat, has called on Congress to “backfill some of the revenue shortfalls that everybody’s experiencing,” similar to what was done during the Great Recession.
Each state has received at least $1.25 billion in coronavirus aid from the federal government to help it pay for expenses related to the pandemic. But the aid comes with strict guidelines that state it “may not be used to fill shortfalls in government revenue.”
Kelly wrote the state’s federal delegation a letter Friday urging them to support flexible aid for states, saying without it Kansas will be unable to meet its obligations to fund public education and public safety.
‘Hard choices’
Republicans in Kansas’ congressional delegation appear cold to the idea of a bailout for state budgets even if they’re not endorsing McConnell’s bankruptcy idea. Rep. Ron Estes, a Wichita Republican, wrote a guest column for Fox News arguing that the federal government shouldn’t bail out states like it did small businesses.
“Everybody’s concerned about the health care aspect and concerned about the economy, but more and more people are saying what are we doing to our debt and our deficit?” Estes said in an interview Monday, referrinig to the $3 trillion spent so far on coronavirus aid.
Estes said it would be illogical to use Kansas taxpayer money at the federal level to prevent Kansas from having to raise taxes at the state level.
“The same taxpayers are going to get hit regardless,” Estes said, contending that a federal bailout for lost tax revenue would disproportionately favor high-tax states. “The needs of Kansas are going to be somewhat different from the needs of New York and California.”
Asked about whether Kansas should make cuts to its budget or raise taxes to fill in the shortfall, Estes said state lawmakers would be in the best position to decide what to cut.
He suggested, as an example, that because fewer people would be buying cars this year, Kansas could cut positions at the Department of Motor Vehicles to save money.
The Wichita congressman served as state treasurer from 2011 to 2017, a period when the state faced multiple revenue shortfalls, but he suggested that the projected shortfall for next fiscal year may not be as severe as anticipated.
Rep. Sharice Davids, the lone Democrat in the Kansas delegation, said in a statement that Kansas’ budget had just begun to recover from shortfalls caused by the Great Recession and former Gov. Sam Brownback’s tax cuts, which were repealed in 2017.
“The coronavirus has the potential to cause even greater economic devastation to our state, undoing all of the work that Governor Kelly has done to balance Kansas’ budget,” said Davids, whose district covers Johnson, Wyandotte and Miami Counties.
“Congress must ensure that our state and local governments can receive direct, flexible aid in the next COVID-19 response package so they can continue to provide the strong public education, health care, infrastructure, and other services that Kansas families depend on.”
State Rep. Steven Johnson, an Assaria Republican who serves as Kansas House tax chairman, said direct aid to states would be helpful to Kansas lawmakers but he doesn’t expect Congress to authorize it.
“I unfortunately think we’ll have more hard choices to make,” Johnson said.
Kelly said in a news conference on Monday there was “a lot of politicking going on in DC and a lot of posturing” regarding the issue of aid to states.
“I think in the end that the Kansas congressional delegation will be there for us,” Kelly said. “But I don’t think the timing is right right now to ask them to come out and express their support for that. We just need to let some things play out in DC.”
Red states also face shortfalls
Moran’s concerns were echoed by President Donald Trump Monday.
“Why should the people and taxpayers of America be bailing out poorly run states (like Illinois, as example) and cities, in all cases Democrat run and managed, when most of the other states are not looking for bailout help?” Trump said on Twitter. “I am open to discussing anything, but just asking?”
While Democratic-controlled Illinois has long-standing budget problems, Trump and other Republicans are ignoring the fact that solidly Republican states are also struggling with shortfalls during the pandemic.
Missouri, where Republicans control the legislature and governor’s office, is preparing to cut $700 million from next fiscal year’s budget in face of a revenue shortfall.
Amy Blouin, the president and CEO of the Missouri Budget Project, a think tank that advocates for programs to help vulnerable Missourians, said the state’s budget hole might be even bigger than the $700 million Gov. Mike Parson’s administration is looking to cut.
“We definitely think we need a federal assistance,” said Blouin, who said federal aid would allow states to avoid layoffs of teachers and other public employees.
“I think it’s very strange that there hasn’t been a rally around this by members of both parties,” she said. “There’s a lot of good stuff that the Congress has done so far, but we need them to do more.”
Sen. Roy Blunt, R-Missouri, a member of GOP leadership, said in a statement last week that he expected state and local needs to be part of the discussion as Congress moves forward with additional legislation.
But he also said the Treasury Department should “maximize the flexibility states have to use federal resources” already provided. Missouri has received nearly $2.4 billion in aid, including roughly $123 million in direct aid to Jackson County which can only go toward coronavirus-related expenses.
Sen. Josh Hawley, R-Missouri, said in an email that addressing “coronavirus needs is one thing, but this can’t be an exercise in letting Nancy Pelosi and Chuck Schumer send blank checks to California and New York, and our neighbor Illinois, at the expense of states like Missouri.”
In contrast to Kelly in Kansas, Missouri Gov. Mike Parson, a Republican, hasn’t called for federal aid to fill the shortfall.
“You can only spend what you have. You can’t spend more. Other states need to focus on that same responsibility. It’s not right for them to get bailed out and other states like Missouri that does it right ends up bailing other states out. That’s not what the federal government should be doing,” Parson said last week.
However, one of Missouri’s state agencies has been lobbying members of Congress to shore up revenue losses.
The Missouri Department of Transportation, which is overseen by a bipartisan commission, sent letters to the state’s congressional delegation earlier this month urging passage of federal transportation aid.
The letter said that MODOT projects a 30 percent decline in state transportation revenue— $925 million over 18 months— as a result of the pandemic.
“Absent Congressional action with this federal assistance there is deep and substantial impact to critical functions and transportation improvements in Missouri,” said the letter, which warned that 400 bridges and 20,000 miles of roadway would not be repaired as a result of project delays caused by the projected funding shortage.
The Star’s Jason Hancock contributed to this report.
This story was originally published April 28, 2020 at 5:00 AM with the headline "Kansas and Missouri face budget holes. Will their federal lawmakers fight for aid?."
