For Immediate Release: May 8, 2020

WASHINGTON, DC: As Congress considers additional relief efforts to address the COVID-19 crisis, conservatives are firmly opposed to the inclusion of federally funded bailouts for states and local governments.

Federal aid has been primarily targeted toward individuals, businesses, and hospitals struggling due to the public health mitigation efforts designed to slow the spread of COVID-19. States have also received aid in the form of Medicaid coverage for tests and vaccines, unemployment insurance, and more than $200 billion in direct support for unforeseen expenses.

Unrestricted funding on top of this raises significant concerns based on how states have handled such infusions of federal money in the past. Rather than going to address critical areas of need related to previous crises, states have used those funds to expand existing programs beyond sustainable levels and then to underfund them, in hopes of more federal support. Areas of actual need fail to be addressed as a result.

This is particularly true when it comes to states with already underfunded pension and health care benefit shortfalls. The federal share of state budgets has already increased to 32 percent; an additional infusion of unrestricted money will open the door to even more demand for future bailouts.

Moreover, not all states are identical. Some states have responsibly managed their finances in preparation for a crisis. Others have not. A federally funded state bailout would reward the reckless states while punishing the prudent ones.

Finally, bailouts of this nature threaten the fundamentally American principle of federalism, which allows states to decide for themselves how they will manage in a crisis. This requires the forward thinking and preparation that a government bailout would only disincentivize, while at the same time putting American taxpayers on the hook for poor decision making. This expansion of federal welfare to states will not serve the interests of a country that relies upon diverse and robust state economies.

As Congress contemplates a future relief package, we urge them to reject state and local government cash bailouts in favor of policies which give states the flexibility to address the crisis according to the needs of their state – including providing relief from onerous regulations, unfunded federal mandates, and policies which stifle economic growth.

Call your Congressman and Senator today to let your voice be heard!