Tennessee Senate Majority Leader Jack Johnson, who represents Williamson County, spoke out against the recently passed $1.9 trillion relief bill Wednesday morning during a Williamson Inc. event in Nashville, arguing that the funds will be disproportionately distributed and essentially "bail out poorly run states."
The $1.9 trillion relief bill
Known as the American Rescue Plan Act of 2021, the $1.9 trillion relief bill passed in the U.S. Senate on Saturday with a vote of 50-49, with both Senators from Tennessee — Marsha Blackburn and Bill Hagerty — voting against the measure. The bill faced a final House vote today where the measure passed. It is headed to President Joe Biden's office for final approval.
Biden said he aims to have the bill signed by this weekend.
Included in the bill are a third round of stimulus checks for a majority of Americans: $1,400 for those making up to $75,000, with the amount being phased out completely for those making above $80,000. According to a study by the Institute on Taxation and Economic Policy, the lower income level threshold means an estimated 17 million Americans who previously received a stimulus check will not receive one this round.
Also included in the bill is an extension on additional unemployment benefits at $300 through Sept. 6, expanded tax credits for families, additional small business assistance, $20 billion for vaccine distribution, and $350 billion for state and local aid.
Regarding the state and local aid, $195 billion of the $350 billion will be split between all 50 states and the District of Columbia, with $120 billion allotted for city and county governments.
It was the state and local aid support, Johnson argued, that unfairly targeted certain states.
"This is money that's being used to basically bail out poorly run states"
During the Williamson Inc. event, Johnson spoke optimistically about Tennessee's economic future. In the state's upcoming budget, Johnson said Tennesseans could expect to see $200 million allotted for broadband expansion across the state, $900 million for infrastructure improvements for things like state office buildings and state parks, and pay raises for teachers.
It was when the topic of federal aid came up during the discussion that Johnson expressed his contempt for the latest stimulus bill.
"I think it's a disgrace what's happening in Washington, D.C.; I pick on Washington quite a bit, but a $1.9 trillion boondoggle is just borrowing from our great, great, great grand kids... it's abhorrent in my view," Johnson said.
"I'm all for relief and stimulus appropriately spent, but this is money that's being used to basically bail out poorly run states. We have our challenges, but when I look at where we are as a state and then I look at a state like Illinois... they were in solvent before COVID happened, I mean their pension plan is 30 percent funded. They're getting bailed out."
Illinois does in fact have a severe crisis regarding government pensions, with pension benefits growing by more than 900 percent since 1987. Couple that with comparatively generous retirement ages, with many state employees retiring in their 50s, and Illinois has racked up more than $144 billion in pension debt — debt that Illinois was forced to spend nearly 30 percent of its entire 2020 budget toward.
Johnson's concerns mirror those of Republican governors across the country who have taken issue with the way the state and local aid is being distributed. In previous relief bills, state and local aid was distributed on a per capita basis, essentially meaning the amount of aid a state or local government received was dependent solely on its population.
Under the latest relief bill, state and local aid is actually distributed based on the number of unemployed citizens, something Republican governors — including Gov. Bill Lee — have argued unfairly benefits states that have imposed more restrictions on businesses and thus created more unemployment.
While this is true in some instances where a state receives a higher percentage of the $350 billion relative to its population, the differences are typically within a few percentage points. California for instance, with its population of 39.51 billion which represents nearly 12.04 percent of the U.S. population, is poised to receive $42.28 billion in federal aid, approximately 12.08 percent of the $350 billion pie.
In the case of Tennessee and Illinois, both states are expected to receive a lower percentage of the $350 billion in federal aid relative to their respective population sizes.
Tennessee is expected to receive nearly $6.12 billion in federal aid, which represents nearly 1.75 percent of the $350 billion pool. Tennessee's population of nearly 6.83 million represents 2.08 percent of the U.S. population, meaning Tennessee will in fact receive less federal funding relative to its population.
The same is true for Illinois, though less so.
Expected to receive nearly $13.51 billion, which represents 3.859 percent of the $350 billion pool, Illinois' population of 12.67 million represents 3.86 percent of the U.S. population, meaning like Tennessee, Illinois will receive a smaller portion of federal aid relative to its population.
"States that have shut their economies down and refused to allow businesses to open back up, they're getting more money, they're basically redistributing tax dollars from us to bail out Illinois, and for me as a state lawmaker, that's a big problem," Johnson continued.
"Specific to Williamson County, there's not much we can do about that, but the money is coming. Our local governments are going to get money, our schools are going to get money, our cities are going to get money and so our challenge is to be responsible with that money and to try to do the best we can to invest it for a payday down the road."
While Illinois will in fact receive more federal aid relative to its population than Tennessee through the most recent relief bill, generally speaking, Illinois is one of the least federally-dependent states in the nation, ranking 45th on SmartAsset's 2020 study of states with the highest dependency on the federal government.
Tennessee ranked as having the 10th highest dependency on the federal government, with 39 percent of its general revenue in 2018 coming from federal aid versus Illinois' 30 percent.