NO ONE HAS ever been inclined to give back free money handed to them by the federal government, so don’t look for Massachusetts state officials to start now, but the not-so-secret truth is we’re hardly in desperate need of the billions of DC dollars slated to come our way.
While some warned that we should brace for an enormous falloff in state revenue due to the pandemic, after a short-term hit, the state has actually seen year-over-year gains in revenue — something more typical of stable economic times than what would be expected amid an enormous spike in unemployment and shutdown of big parts of the economy.
Writing last month in CommonWealth, Evan Horowitz, director of of the Center for State Policy Analysis at Tufts University, pointed to two big factors: The infusion of federal money through earlier rounds of pandemic relief, including PPP loans to businesses and unemployment aid, and a 2018 Supreme Court ruling that expanded states’ ability to collect sales tax from online retailers, a change that made a huge difference as people switched to online purchases while hunkered down at home.
Nevertheless, the state is now poised to get $5.3 billion in federal aid, to be spent over five years, as part of the $1.9 trillion American Rescue Plan signed by President Biden in March.
Massachusetts is hardly alone in planning for a huge windfall despite healthy revenue numbers. From California to Oregon to Virginia, states that may have seen steep shortfalls in the most acute phase of the pandemic are now “flush with tax revenues,” reports today’s New York Times. The paper chalks up the reversal of fortunes to a rebounding economy and the soaring stock market.
California, where officials had feared a shortfall that might exceed $50 billion, is now anticipating a budget surplus this year of $15 billion. California may be more of an outlier, Horowitz said in an interview Tuesday morning, pointing to its very progressive tax structure that captures lots of revenue from the state’s top earners — and their stock-market winnings. “But for the bigger picture, we are very much one of the states that they’re talking about in that story, which doesn’t right now need federal money to address COVID-related shortfalls,” Horowitz said of today’s Times report.
Meet the Author
Executive Editor, CommonWealth
About Michael Jonas
Michael Jonas has worked in journalism in Massachusetts since the early 1980s. Before joining the CommonWealth staff in early 2001, he was a contributing writer for the magazine for two years. His cover story in CommonWealth's Fall 1999 issue on Boston youth outreach workers was selected for a PASS (Prevention for a Safer Society) Award from the National Council on Crime and Delinquency.
Michael got his start in journalism at the Dorchester Community News, a community newspaper serving Boston's largest neighborhood, where he covered a range of urban issues. Since the late 1980s, he has been a regular contributor to the Boston Globe. For 15 years he wrote a weekly column on local politics for the Boston Sunday Globe's City Weekly section.
Michael has also worked in broadcast journalism. In 1989, he was a co-producer for "The AIDS Quarterly," a national PBS series produced by WGBH-TV in Boston, and in the early 1990s, he worked as a producer for "Our Times," a weekly magazine program on WHDH-TV (Ch. 7) in Boston.
Michael lives in Dorchester with his wife and their two daughters.
About Michael Jonas
Michael Jonas has worked in journalism in Massachusetts since the early 1980s. Before joining the CommonWealth staff in early 2001, he was a contributing writer for the magazine for two years. His cover story in CommonWealth's Fall 1999 issue on Boston youth outreach workers was selected for a PASS (Prevention for a Safer Society) Award from the National Council on Crime and Delinquency.
Michael got his start in journalism at the Dorchester Community News, a community newspaper serving Boston's largest neighborhood, where he covered a range of urban issues. Since the late 1980s, he has been a regular contributor to the Boston Globe. For 15 years he wrote a weekly column on local politics for the Boston Sunday Globe's City Weekly section.
Michael has also worked in broadcast journalism. In 1989, he was a co-producer for "The AIDS Quarterly," a national PBS series produced by WGBH-TV in Boston, and in the early 1990s, he worked as a producer for "Our Times," a weekly magazine program on WHDH-TV (Ch. 7) in Boston.
Michael lives in Dorchester with his wife and their two daughters.
Some states, especially those heavily reliant on tourist spending, such as Nevada and Hawaii, may be in dire need of the federal help. But the Times says the overall rosy picture for state budgets is putting pressure on the Biden administration to “repurpose” some of the money for a bipartisan deal on infrastructure spending.
Horowitz said it could even be to our benefit to redirect some of the federal money to infrastructure projects. But that’s now subject to the political give-and-take of Congress, where it may be difficult to pull off a reworking of the massive spending plan given all the competing interests at play.
