State Watch

Up for reelection, Democratic governors dole out checks

AP-John Hanna, Getty Images

Facing political headwinds against their party, Democratic governors in key battleground states who are up for reelection this year are offering constituents the one thing voters in every party love to see: straight cash.

Governors considering how to spend hundreds of millions, and in many cases billions, of dollars in unanticipated tax revenue have asked legislators to cut checks directly to voters. The windfalls fueled by pandemic-era federal relief checks and a rapid economic rebound will allow some of the most vulnerable incumbents this year to deliver what may be the most potent political benefit any voter can see.

In Wisconsin, Gov. Tony Evers (D) has called on Republican legislators to approve a $150 stimulus check to every resident. In Maine, a budget proposal introduced by Gov. Janet Mills (D) would include $500 checks to about 800,000 eligible taxpayers. Kansas Gov. Laura Kelly (D) has proposed a one-time $250 tax rebate to any resident who filed a tax return last year.

Others have proposed more targeted payments. In Michigan, Gov. Gretchen Whitmer (D) said she would use a $5 billion surplus in a state insurance fund to deliver drivers a $400 rebate for each vehicle they own. New Mexico Gov. Michelle Lujan Grisham (D) pushed for a statewide cut in gross receipts taxes, while Connecticut Gov. Ned Lamont (D) proposed cutting property taxes for a million residents.

All six governors are certain to use the push for extra cash in campaign advertisements as they begin difficult reelection marches this year.

“I can’t think of a single thing that a governor would rather be dong in an election year than sending direct payments to their constituents. It’s good policy at a time when people desperately need the economic help to keep up with inflation, and it’s the best politics you could imagine,” said Thad Kousser, a state government expert who chairs the political science department at the University of California-San Diego. “These are surpluses. It’s not throwing the state into deficit. There are no tradeoffs.”

The extra cash, coming on top of thousands of dollars in relief payments delivered by the federal government in recent years through both direct payments and things like an extension of the child tax credit, underscores the remarkable fiscal condition in which states find themselves.

At the beginning of the pandemic, the precipitous drop in sales tax collections and a huge spike in job losses caused severe anxiety among governors and state budget analysts, who were suddenly starring into a fiscal abyss that made the depths of the Great Recession look like a minor speed bump.

But the rounds of recovery and stimulus directed to both residents and states, a strong economy and robust wage gains, coupled with inflation, helped states climb into the black. Today, the vast majority of states have so much money they are stocking some away to refill rainy day funds. A report this week from the National Conference of State Legislatures (NCSL) found half the states will exceed forecasted revenue collections this year, and another 17 are on track to meet their current year revenue projections.

It is “a total 180 from where we were at the start of the pandemic,” said Erica MacKellar, principal of NCSL’s fiscal affairs program and the author of the report. “This quick rebound is really positive for states.”

It is also really positive for the governors of those states. Consider Minnesota Gov. Tim Walz (D), who faces reelection in a state that has oscillated in recent years between Democratic and Republican governors.

Earlier this year, Walz proposed giving residents checks up to $350 to those making less than $164,400, and $700 to married couples earning less than $273,470. Under the plan, more than 2.7 million Minnesotans would receive what his office called, unsubtly, Walz Checks.

But last week, Minnesota’s Office of Management and Budget projected the state would reap a surplus of $9.25 billion next year — and Walz promptly increased the size of his request, to $500 per person and $1,000 per couple.

“Voters want to see that their governor gets what they’re going through and is trying to do something about it. A direct payment is a tangible way for a governor to show that they understand their constituents’ economic challenges,” said Jared Leopold, a former top adviser to the Democratic Governors Association. “Average voters aren’t combing through the state budget proposal, but they’re definitely going to notice when a check shows up in their mailbox.”

The requests put Republican legislators in an uncomfortable position. They would love to deliver checks to their own constituents — but they are loath to deliver a win to a Democratic governor up for reelection.

Instead, they have offered alternatives that would return money to a taxpayer’s pockets, but through other means. In Minnesota, the Republican-controlled state Senate has proposed permanent tax cuts. In Kansas, the GOP-dominated legislature has agreed with Kelly to eliminate a tax on groceries. Wisconsin lawmakers on Tuesday rejected Evers’s proposed $150 checks.

“It took Joe Biden’s plummeting approval ratings, an awful 2021 election season and their own lackluster poll numbers for Democrat governors to shamelessly start behaving like they care about inflation and lower taxes,” said Jesse Hunt, the spokesman for the Republican Governors Association. “Voters prefer elected officials who fight to keep money in people’s pockets year-round, no matter the election season.”

But Biden — and, in a way, former President Trump — are responsible for putting states both red and blue in a position to reap budget surpluses. Several rounds of coronavirus relief packages passed by Congress under both administrations included money directed at state and local governments, helping them avoid the devastating holes they endured in the last recession.

Democrats are not the only ones who have figured out that major surpluses are a political winner in an election year, but the Republicans who are doing so have been more likely to focus on tax cuts than on direct payments.

Iowa Gov. Kim Reynolds (R) signed a law lowering her state’s income tax this year. Mississippi Gov. Tate Reeves (R) has mounted a major push to eliminate the income tax in his state altogether. Republican governors in Tennessee and Georgia have proposed tax rebates or credits.

But for the Democratic governors up for reelection this year, one of their own colleagues, California Gov. Gavin Newsom (D), stands as a model. In the face of a recall election last year, Newsom approved stimulus checks that directed hundreds of dollars to about two-thirds of Golden State residents. Newsom survived the recall attempt by wide margins.

That playbook is now on offer to the other governors seeking reelection this year.

“Governor’s careers live or die by whether people think the state is moving in the right or wrong direction,” Kousser said in an interview. “Nothing says I love you to your constituents like a check.”

Tags Donald Trump Gavin Newsom Gretchen Whitmer Janet Mills Joe Biden Michelle Lujan Grisham Minnesota New Mexico Tim Walz Tony Evers Wisconsin

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