Last year, there was a panic about whether states would go bankrupt without urgently needed bailouts from the federal government. It’s one of the reasons there was widespread bipartisan support for the initial COVID-relief bill. However, the federal government has not bothered to turn off the money spigot. This has led to a peculiar paradox: Despite falling tax revenues, state governments are running massive budget surpluses. How has California decided to spend its newfound printed wealth? If you guessed rent control, education, and parking fines, then congratulations, you got bingo.
While direct payments to individuals brought the most media attention, the vast majority of the relief was not earmarked for the public directly. Much of the expensive relief packages helped fund state governments, which were dealing with potential budget shortfalls. In many cases, the federal government doled out grants without stipulating how the money was to be distributed at the state level.
More than a year later, after six COVID packages have been signed into law totaling over $5 trillion, states are now enjoying budget surpluses. This is why California has over $5 billion to spend on rent-control relief. Ironically, landlords only need the money because policy-makers in California have shut down businesses and frozen all evictions since the pandemic. California is now expected to extend its eviction moratorium, while simultaneously using borrowed government money to subsidize the landlords the policy is hurting.
According to Russ Heimerich from the California Business, Consumer Services and Housing Agency, “The big question is can we spend it all.” One of the ingenious ways Governor Gavin Newsom wants to spend taxpayer money is on paying off traffic tickets.
What is most frustrating is that there are real issues California should address. California has been engulfed in wildfires that have turned the Golden State red and brown. The California fire department has repeatedly asked for more money, and providing extra funding would be a genuinely worthwhile investment. Police departments in California, particularly the LAPD, are low on officers and are in need of better resources, too. The Left has constantly cried out for increased police training. However, it seems they will pass up the opportunity to pay for it.
While Russ Heimerich may find it difficult to spend all of the excess money we have printed, it’s not actually that hard to find good ways of spending relief money. Unfortunately, critical pieces of California’s police, fire, and infrastructure systems will not benefit. California is not the only state that has extra coins in its coffers because of profligate congressional spending. Let’s hope other states make more sensible decisions.