There’s a good reason Florida doesn’t need a bailout, while Illinois and New York do.
By Rick Scott
Wall Street Journal April 27, 2020
Gov. Andrew Cuomo speaks about Covid-19 in Albany, N.Y., April 22.
Congress has taken significant action over the past two months to address the unprecedented economic crisis brought on by the coronavirus pandemic.
We’ve pumped hundreds of billions of dollars into the health-care system, significantly boosted unemployment insurance that directly helps those who have lost their jobs, created a loan program to help small businesses, and provided funding to reimburse states and local governments for coronavirus-related expenses.
There’s more Congress can do, but one thing we absolutely shouldn’t do is shield states from the consequences of their own bad budgetary decisions over the past few decades.
The debate began last week when Majority Leader Mitch McConnell made the point plainly. “There’s not going to be any desire on the Republican side,” he said, “to bail out state pensions by borrowing money from future generations.”
Democrats predictably expressed outrage. They claim that refusing to support hundreds of billions of dollars in bailouts for state and local governments amounts to telling police officers, firefighters and schoolteachers to “drop dead,” as New York’s Rep. Max Rose put it on the House floor. That kind of rhetoric only distracts from Democrats’ true aim: using federal taxpayer dollars to bail out poorly run states—typically, states controlled by Democrats.
When I became Florida’s governor in 2011, we had a huge budget shortfall and had lost 832,000 jobs in four years. I had to make tough choices. We cut taxes every year—more than $10 billion over my eight years in office—and saw revenues increase every year. The state went from losing hundreds of thousands of jobs over four years to adding almost 1.7 million in eight. We turned a $2.5 billion budget shortfall into a $4 billion surplus, with $3 billion a year in the rainy-day fund.
Florida’s pension system was funded at 83.9% when I left office, and for the first time in state history all three credit-rating agencies rated the state’s general-obligation bond at AAA. Compare that to states like Illinois, California and New Jersey, whose pension systems are funded at 38.4%, 68.9% and 35.8%, respectively, despite significantly higher taxes.
Florida is well-positioned to address the coming shortfall in revenue without a bailout. The state may need to make some choices, which is what grown-ups do in tough economic times. And if we need to borrow a small amount in the short term to get us through this economic crisis, that borrowing will be cheaper thanks to our AAA bond rating and the reduction in state debt.
New York Gov. Andrew Cuomo said it was “irresponsible” and “reckless” not to bail out states like his, a state with two million fewer people than Florida and a budget almost double the size of ours. The opposite is true. It’s irresponsible and reckless to take money from America’s taxpayers and use it to save liberal politicians from the consequences of their poor choices.
American families make responsible budgetary decisions every day. Well-managed states like Florida have done it for years. It’s time for New York, Illinois and California to do the same.
Mr. Scott, a Republican, is a U.S. senator from Florida.
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