Why California will Receive the Most ‘COVID’ Bailout Money of all 50 States

The Foundation for Economic Freedom published a really interesting article about Congress’ and President Joe Biden’s $1.9 trillion ‘COVID’ spending bill. “Help is here,” Biden Tweeted.

FEF says the $350 billion going to the states in federal spending is “unneeded taxpayer money to flush the coffers of state and local governments.”

“Cato Institute economist Chris Edwards noted that while there was a significant downturn in state revenue in the second quarter of 2020, overall it was balanced out by an uptick in the third quarter,” FEF reported. “’There is no need for more federal aid to the states,’ he concluded.”

“Bureau of Economic Analysis data (Table 3.3) show that state and local tax revenues are rising nationwide, not falling,” Edwards said. “Sales tax revenues dipped in the second quarter of 2020 but bounced back in the third quarter. Individual income and property taxes did not fall—they rose in both the second and third quarters. Some places such as New York City are in trouble from self‐​inflicted wounds, but there is no nationwide government budget crisis.”

The listing is not prioritized by population, so, how and why did they decide which states get the most money?

USA Today says “the minor discrepancy is the result of a formula used in Biden’s American Rescue Plan that largely relies on the number of unemployed citizens in each state at the end of 2020, not overall population, to determine the funding amount for each state.”

Top 20 States By ‘COVID’ Bailout Money

Here are the 20 states receiving the most money from the latest spending legislation.

1. California: $42.3 billion
2. Texas: $27.3 billion
3. New York: $23.5 billion
4. Tribal Governments: $20 billion
5. Florida: $17.3 billion
6. Illinois: $13.5 billion
7. Pennsylvania: $13.5 billion
8. Ohio: $11 billion
9. Michigan: $10.1 billion
10. New Jersey: $10 billion
11. North Carolina: $8.7 billion
12. Georgia: $8.17 billion
13. Massachusetts: $7.96 billion
14. Arizona: $7.48 billion
15. Washington: $6.94 billion
16. Virginia: $6.68 billion
17. Maryland: $6.21 billion
18. Tennessee: $6.12 billion
19. Colorado: $5.9 billion
20. Indiana: $5.7 billion

Foundation for Economic Freedom concludes that Democrats crafted this bailout to favor blue states who pursued the COVID-19 policies they agree with – clearly political favoritism. And even with California bragging about having a budget surplus, so why is the Golden State at the top of the list?

USA Today points out that Republican governors say the plan’s funding formula “punishes” states that kept businesses open amid the coronavirus pandemic and is “biased” toward Democrat-led states that enforced shutdowns.

CATO’s Edwards sums up why the federal bailout was unnecessary: “Tax revenues are likely to continue rising as the economy recovers. Nationwide home prices are currently up more than 6 percent over last year, suggesting that local government budgets are solid given that property taxes account for 70 percent of local tax revenues.”