Utah figures to receive what one economist calls a “stunning” amount of money from the $1.9 trillion coronavirus relief package Congress passed Wednesday, even as the state’s representatives in Washington argued that the state doesn’t need much of what is coming its way.
The massive American Rescue Plan will direct an estimated $7 billion to $8 billion to Utah, said Phil Dean, public finance senior research fellow at the University of Utah’s Kem C. Gardner Policy Institute.
Utah’s all-Republican congressional delegation voted against the bill in the Senate and the House, saying it’s wasteful, saddles future generations with insurmountable debt and is largely unneeded in a state with one of the healthiest economies in the country.
“Simply put, this is not a pandemic relief bill, and it’s sad to see congressional Democrats trying to convince their constituents otherwise,” said Rep. Burgess Owens, R-Utah.
Speaker Nancy Pelosi’s $1.9 trillion “wish list” allocates less than 10% for COVID-19 health care relief, only 1% for vaccine distribution, and ignores $1 trillion in unspent funds from the previous bipartisan packages, he said.
President Joe Biden said he’d sign the bill Friday.
The expansive relief package would bring another round of direct payments to Americans, increase the child tax credit and extend supplemental unemployment benefits that are set to expire next week. It also provides billions of dollars to state and local governments and schools.
Rep. Chris Stewart, R-Utah, said the “so-called” COVID-19 relief bill is forcing the country to take a step in the wrong direction.
“The bill includes a variety of permanent, political provisions that create the wrong incentives. Mismanaged states will be bailed out, schools that refuse to reopen will be funded and my home state will be barred from cutting taxes. It’s simple: The best way to stimulate our economy is by sending Americans back to work and school,” he said.
Rep. John Curtis, R-Utah, has called the package the “largest government redistribution of wealth in history.”
The biggest chunk of the money headed to Utah will be in $1,400 direct payments to residents, which Dean estimates will reach about 85% of the state’s households totaling $3.8 billion.
“I definitely think it will be stimulative to the economy. Part of my question is where are people going to actually spend that. How much is that being spent in state and out of state,” he said during a panel discussion the Gardner Institute hosted Wednesday.
“I think it pushes us back to full employment,” he said. “I think we’re approaching it but not there yet by the end of 2021.”
Darin Mellott, the Americas director of research at CBRE and a Gardner Institute senior adviser, said there are legitimate discussions about whether certain parts of the relief plan are necessary.
But, he said, it’s clear that adding $300 a week to federal unemployment benefits is a necessity. That money is targeted for people who are unemployed or affected by the pandemic.
“That is going to have a positive and stabilizing impact on the broader economy,” he said.
Utah has weathered the COVID-19 pandemic better than most states. State revenue remained strong in 2020 and Utah lawmakers recently passed a $100 million tax cut.
Dean said the state isn’t back to normal, whatever that will look like, but employment levels are back in the range of pre-recession employment even if there are sectors that are still significantly impacted.
“This is one of the interesting issues we face here in the state,” he said. “By and large, we’re doing much better than the nation, and we’re getting all of this fiscal stimulus dumped into the Utah economy.”
While Moody’s Investor Service is calling the national economy “rip-roaring,” Dean characterized the Utah economy in the next year or 18 months as “rip-roaring plus” given the amount of federal money headed to the state.
State government is in line for an estimated $1.5 billion and local governments $1 billion under the stimulus plan, which about double what they received under previous legislation, he said.
“How on earth does a state and local government spend that much money wisely?” asked Gardner Institute Director Natalie Gochnour, who called the total amount coming to Utah “stunning.”
“My maybe little bit snarky answer is somehow it’s going to get spent. There’s one thing I do have a lot of confidence in and that’s the ability of government to spend money when it’s handed money,” said Dean, a former state budget director.
Utah shouldn’t refuse the money but use it to help propel the state into a strong economic future, he said. Though there are some restrictions, it could be used to build roads, water systems and expand broadband, he said.
“This really is a time to play the long game,” Mellott said. “You want to be looking at those long-term investments, things that will pay dividends years in the future and increase productivity for the state. ... This is an opportunity to go big.”
Sens. Mike Lee and Mitt Romney argued that the plan doesn’t make sense for states like Utah that are doing well economically.
“We’re going to be asking the American people to allow us to borrow money from China and others, pass that on to our kids and grandkids, so that we can send money to states like California and mine that don’t need the money,” Romney said last week.
Romney was among a group of GOP senators who unsuccessfully pushed for a relief package that was about half the size of the $1.9 trillion plan.
Rep. Blake Moore, R-Utah, said he voted against the bill because it does not provide targeted relief to areas of that economy hurting most from the pandemic. He said a quarter of the $4 trillion Congress approved in previous coronavirus aid has not been spent.
“With that in mind, I could not in good conscience vote to pass this bill, which includes huge amounts of funding for liberal priorities that are unrelated to the pandemic such as pension bailouts, inclusion of language that allows for taxpayer-funded abortions and more,” he said.
Moore said the legislation contains “fine print” that will hurt Utahns, including a provision that disallows states from changing their tax laws if they choose to accept any of the bill’s funding.
Dean said he doesn’t think it would eliminate the state’s ability to access the federal funds, but would reduce the amount available corresponding to the size of a tax cut.