Dr. Ernie Goss (Source: Facebook)

DES MOINES, Iowa – U.S. Rep. Cindy Axne, D-Iowa, during a tele-roundtable with local mayors on Wednesday, touted a bill that would provide $500 billion to states and cities to make up budget shortfalls due to COVID-19. Dr. Ernie Goss, Jack MacAllister Chair in Regional Economics at Creighton University, said that bill is a bad idea.

“And as many of you may be aware, in our last bill, we were able to get support for states and cities. But clearly, what we got for the state of Iowa and other states across this country isn’t going to be enough to address the issues. And clearly, it was very unfortunate that only cities over half a million people had access to that funding for their cities themselves. Knowing that that was a problem, I decided to get to work,” Axne said. 

The legislation that the freshman congresswoman introduced with U.S. Rep. Peter King, R-N.Y., on Tuesday, entitled the “Coronavirus State and Local Financial Assistance Act,” creates a new program with $500 billion to issue grants to state and local governments to offset lost revenue. The grant awards would be based on the city or state revenue estimates before COVID-19 and would make up for the full shortfall in income, property, sales, and other taxes for the remainder of the year.

“The lack of revenue for cities and counties has not been one of the most talked-about issues, and I see this as one of the biggest issues that will be facing us and one of the most detrimental if we don’t get ahead of it,” Axne added.

Goss told Caffeinated Thoughts on Wednesday that he is against the idea.

“It’s a bailout of the overspending of California, Illinois, New York, Connecticut, and Massachusetts and other state economies,” he said. “State and local governments are overspending, Iowa and Nebraska and other states in this part of the country have been more restrained in the growth.” 

“Now set local spending has grown and unsustainable pace. But that was because it was tracking ag income when ag income began to take off in 2010, 11, 12, 13, 14, and then 15 it came down, and then we started moving lower, and property taxes were growing, unsustainably high in that period of time,” Goss added.

“So I’m opposed to that. There are some needs and those needs; the President has discussed that some of those (are) directly tied to COVID-19. Not tied to other levels of spending, overspending,” he concluded.

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