State capitals across the country have been grappling for months with the economic consequences of the Covid-19 outbreak last spring.
Now, a new report issued by the Washington-based National Association of State Budget Officers is predicting that overall state revenues are expected to drop by 4.4% for fiscal 2021, with rainy day funds forecast to be off by $33 billion because of the pandemic.
The association’s Fiscal Survey of States notes that the pandemic has made itself felt in all 50 states, as well as the District of Columbia. But the report adds that the impact has varied depending upon the states’ “economics, tax structures, virus transmission levels, and other areas that have been disproportionately affected by the pandemic.”
In general, states “facing higher unemployment rates, are generally seeing larger impacts on their economies and tax revenues.”
In response, notes the report, states as early as last summer began to reduce their budgets through spending cuts, hiring freezes, and salary reductions.
Some states, in desperation, have increasingly turned to “federal assistance to offset some eligible general fund costs related to pandemic response and relief.”
At the same time, 35 states have experienced lower revenue growth from sales, personal income, corporate income, and gaming taxes.
The report is predicting continued revenue declines for the new fiscal year, forcing many states in the months ahead to revise their overall revenue forecasts.
Such changes in revenue are only naturally expected to impact state expenditures pertaining to transportation and infrastructure projects, as well as public building construction.
The report adds that while current state revenue projections are in some ways dire, the report itself “represents a point in time, as spending and revenue projections continue to be moving targets.”
By Garry Boulard
