The Washington PostDemocracy Dies in Darkness

Opinion Stimulus money will keep flowing, whether it’s needed or not

The U.S. Capitol at dawn in Washington, D.C. (Oliver Contreras/Bloomberg)
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The biggest complaint about the $900 billion stimulus package that President Trump signed late Sunday was that it is too small and contains no funding for state and local governments. But that misses the bigger picture. If the $2 trillion package enacted last March hadn’t been so haphazardly distributed, there wouldn’t be such a need for more stimulus spending now.

Under the Cares Act passed in March, local governments that flourished despite shutdowns and stay-at-home orders received millions anyway. Stimulus checks went to Americans who never lost their jobs or suffered any other economic hardships. Businesses that didn’t need them received millions in forgivable Paycheck Protection Program (PPP) loans.

Now, we’re doing much of it again, consistent with the philosophy adopted by Democrats and Republicans alike that even though the national debt is already unconscionable, Uncle Sam will shovel money at the pain and consequences from our disastrous decision to crash the economy this year.

Full coverage of the coronavirus pandemic

How do I know this? Until October, I served a two-year-plus stint as a member of the Highland County (Ohio) Board of Commissioners. County commissioners are primarily tasked with overseeing the county budget. When Gov. Mike DeWine (R) ordered business closures in March, local governments were naturally worried about the loss of sales taxes that, for many, represent 50 percent or more of their annual revenue.

In Highland County, we issued a memorandum to department heads urging them to consider cuts based on the shortfalls that would almost surely come. Then a funny thing happened on the way to insolvency — our county auditor, Bill Fawley, informed us that sales tax revenue was actually increasing. In 2019, Highland County’s sales tax reaped about $6.8 million. For 2020, it’s anticipated to reach $7.5 million — a record by at least $500,000, Fawley told me Monday.

Highland County wasn’t alone in not only weathering the shutdowns but also thriving. According to a report by the National Association of Counties, “Many rural counties throughout the Midwest have experienced upward trends in sales tax collections” during the covid-19 pandemic. Kenosha County, Wis., “had all-time record collections for sales tax revenue in the months of May, July and August.” Hickory County, Mo., “is up over $100,000 in sales tax revenue for the month of September compared to last year’s numbers.”

Since March, rather than travel to the malls and outlets in nearby metropolitan areas, rural residents have stayed home to shop, driving local sales tax revenue through the roof. But rather than set up a system based on need, state officials merely divvied up the federal money proportionally. So far, Highland County has been allocated more than $4 million, the auditor told me — a windfall that dwarfs the sales tax windfall. The same thing happened in small counties across the nation. That doesn’t count the millions provided directly to schools, hospitals, health departments and other local entities.

In Highland County, the biggest Cares Act expenditures were installing glass barriers at county offices, upgrading law enforcement vehicles with computers to reduce personal contact, digitizing records to reduce the number of people coming into an office to peruse musty old books, and other similar items, many of which had long been on department wish lists.

Was it great to be able to do those things? Sure. Were they all necessary? No. But no local government is going to look a gift horse in the mouth. Coronavirus or not, small counties are often just one calamity away from ruin — in our region, see the closure of a DHL distribution hub and 7,000 lost jobs in 2008 — so they’re going to use the funds for allowable wish-list expenditures. Granted, at first, no one knew the impact the shutdowns would have everywhere. But once that was clear, redirecting money away from thriving local governments to the areas in need would have made more sense — and perhaps reduced the need for subsequent stimulus packages.

Congress’s new package doesn’t contain money for states and localities, but there are hundreds of millions for another round of stimulus checks and PPP loans. And President-elect Joe Biden promises to push for even more spending in the months to come; state and local governments are sure to be a part of that.

Will it be done more responsibly next time? Probably not. There are voters to be courted everywhere, not just in suffering communities. When it comes to spending money that doesn’t really exist in the first place, being frugal about it seems silly, doesn’t it?

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