Astute political observers frequently notice the large gap between rhetoric and reality. That is certainly true of some of the Democrat governors in blue states. Their political rhetoric has been critical of the Trump tax reform. The reality is that their state budgets have benefited significantly from those tax cuts along with the Trump administration deregulation.
Fortunately, the editors of the Wall Street Journal collected the news stories and economic numbers to show that blue states are actually receiving a blue state dividend. . A rising economic tide is lifting those states in ways that aren’t often acknowledged.
For example, the governor of California recently was able to revise the Golden State budget to include a $21.5 billion surplus. That is already a few percentage points higher than the projection a few months ago. Illinois reported earlier this month that individual and corporate tax revenues exceeded internal forecast by more than a billion dollars. That should eliminate most of the state’s budget gap for this year.
These are not the only examples. The Pew Charitable Trusts noted that tax revenues in 41 states have hit records, even after accounting for inflation. Revenue was up in blue states like California, New York, Connecticut, and Washington. Of course, it was also up in red states like Tennessee and Texas.
At least the Pew report acknowledged that this significant and extended stretch of growth was due to the federal Tax Cuts and Jobs Act. The increased revenue to these states was due to “favorable economic conditions” and “robust stock returns.”
One more point is worth mentioning. While these state budgets have received a dividend from tax cuts and deregulation, the citizens of those states should not expect that this dividend would be passed on to them. Politicians in those states will merely find other ways to spend that additional revenue.