Jonathan Williams and Dave Trabert in the Wall Street Journal: The Alternative to a Bailout

The latest op-ed from ALEC Chief Economist and Executive Vice President of Policy Jonathan Williams and Kansas Policy Institute CEO Dave Trabert was featured in the Wall Street Journal this week. In their piece (“The Alternative to a Bailout for Fiscally Mismanaged States“), they explain that while COVID-19 has strained many state budgets, borrowing trillions from the federal government will only make matters worse for taxpayers. The key for states is to get spending under control.

The 41 states with an income tax spent 55% more per resident in 2018 than did the nine states without an income tax. Florida, which doesn’t have an income tax, spent the least, at $2,327 per resident. Texas and New Hampshire, also without income taxes, have the next lowest spending at $2,585 and $2,773, respectively. New Hampshire is frugal enough to avoid a sales tax.

Now that the pandemic has constricted revenue and blown out budgets, high-spending states are at the front of the line for a federal bailout. New York, which has an income tax, spends $5,231 per resident. Gov. Andrew Cuomo threatens to cut services unless he gets a $60 billion bailout over two years. If New York spent at Florida’s level per resident, the Empire State would save $56.7 billion each year.

If Illinois Gov. Jay Pritzker were to trim his state’s per resident spending to match Texas’, he would save his taxpayers $22.3 billion a year—and there would be no need for any income-tax increase. Gov. Gavin Newsom could save Californians $64.6 billion annually if his state matched New Hampshire’s spending.

Read the complete op-ed here.