State and local government revenues have recovered from the pandemic, and further federal aid is unnecessary



“California is not only poised for recovery, but we’re seeing real signs of recovery in our state,” Governor Gavin Newsom announced in early January, as he unveiled a state budget with record spending fueled by a $15 billion budget surplus. Yet two weeks later, Newsom sent a letter to President Biden expressing support for his plan to give an additional $350 billion in aid to state and local governments.

Similar stories have played out in other states. “We’re going to need a robust federal support system to help our states and economies recover beyond the federal CARES funds that expire at the end of the year,” said Wisconsin governor Tony Evers in November. Yet within weeks, the state was projecting a budget surplus, and by January it had revised that estimate up to $1.8 billion. Rather than drawing on these reserves, Wisconsin added to its “rainy day” fund, the balance of which is expected to hit nearly $1 billion this year.

Author(s): Noah Williams

Publication Date: 11 February 2021

Publication Site: City Journal