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State Budget Cuts

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Last Updated: 18 January 2022

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General | Latest Info

COVID-19 Pandemic Could Swipe Roughly 200 Billion From State Coffers By June Of Next Year, According To Analysis By Urban Institute's State And Local Finance Initiative. Record-high unemployment has wreaked havoc on personal income taxes and sales taxes, two of biggest sources of revenue for States. Hawaii's and Nevada's tourism industries have crash, and states like Alaska, Oklahoma and Wyoming have been hit by collapse of oil markets. From March through May of this year, 34 States experienced at least 20 percentage drop in revenue compared with same period last year, according to data provided to NPR by State and Local Finance Initiative. Those drops directly affect State budgets, so NPR asked member station reporters to fill US in on what's going on in nearly every State across United States. Check out your State here. With dwindling cash, cuts to education, health care and other areas are in many places. State leaders have described situation as unprecedented, horrifying and devastating. Florida's Republican Governor, Ron DeSantis, compared his state's budget cuts to Red Wedding scene in HBO's Game of Thrones. Maryland Gov. Larry Hogan, Republican, say, responding to this crisis has created multiyear budget crisis unlike anything State has ever faced before, more than three times worse than Great Recession. For example, far that State has cut nearly 190 million from higher education. Programs designed to reduce crime in Baltimore also take hit, as do foster care providers public defenders. And State leaders everywhere are getting nervous as economy shows little signs of swift recovery. In March, Congress worked quickly to pass aid package worth 2 trillion called CARES Act, which offers Relief to State and Local governments, individuals, small and large businesses, and hospitals affected by Coronavirus crisis. But language in law requires that funds go to expenses related to COVID-19 and not to plug holes in budgets, with few exceptions. Republicans and Democrats in states such as Maryland, California, Michigan, Iowa, Georgia, New York and Illinois have asked Congress for additional funds that they say are critical stay afloat. Others don't agree. Last week, more than 200 State lawmakers signed onto letter from American Legislative Exchange Council, organization of conservative lawmakers, opposing further Federal money for States. Letter read, American people are being to make difficult but fiscally responsible decisions during pandemic, and States need to do same. Democratic-lead US House Passed Bill To Inject More Money Into States, But Many Republican Lawmakers Say Any New Money Has To Be For Items Directly Related To Viruses, Not To Pay Down Deficits In States. California has gone as far as preparing contingency Budget: If additional Federal money does not come through, State will have to furlough State workers and slash Funding for State universities and courts.

* Please keep in mind that all text is machine-generated, we do not bear any responsibility, and you should always get advice from professionals before taking any actions.

* Please keep in mind that all text is machine-generated, we do not bear any responsibility, and you should always get advice from professionals before taking any actions

Estimates Show Substantial Shortfalls

Revise forecast Data from 27 States tax revenues are expected to fall 34 billion short of pre-COVID-19 forecasts in Fiscal year 2020 and 80 billion short in Fiscal year 2021. Base on information from those 27 States, tax revenue shortfalls for all 50 States will be roughly 75 billion in Fiscal year 2020 and 125 billion in Fiscal year 2021. Fiscal year 2021 begins 1 2020 in 46 States. Last January, all States were projecting solid revenue growth for remainder of 2020 Budget year. But COVID-19 pandemic hit States like tsunami starting in March. Several States have not passed their Fiscal year 2021 budgets. Revenue forecasters in of these States are waiting for final individual income tax payments, now due by July 15, to revise their estimates. But 27 States have already updated their projections, including some of largest, such as New York, California, and Illinois. Personal income and general sales taxes, which represent about two-thirds of tax revenues in 27 States updated forecasts, are projected to decline drastically through Fiscal 2021. Corporate income taxes, third major source State tax revenues, also are expected to fall sharply. Prior to spread of COVID-19 and resulting economic slowdown, States were projecting about 4-percent growth in Fiscal 2021 for both personal income and sales tax revenues. Now, States forecast decline of more than 6 percent for two largest sources of tax revenues. Growth in sales tax revenues was steady during Fiscal years 2014-2018 and somewhat stronger in 2019, With increase partially due to US Supreme Courts Wayfair decision that allow States to require remote or online retailers to collect sales taxes on purchases by buyers inside their State. States now anticipate substantial declines in sales tax revenues for years 2020 and 2021. Stay-At-home mandates, imposed in attempt to slow pandemic, significantly slow consumer spending starting in late March and early April. While all states have begun reopening their economiesat disparate pacesit, will take months until economy is back on track. Growth in personal income tax revenues was volatile between Fiscal years 2014 and 2019, largely due Federal policy changes that created short-term tax windfalls for some States and shifted revenues between Fiscal years. Growth rates in income tax revenues are expected to normalize beginning in 2020. However, COVID-19 pandemic caused job market to o collapse. While job losses may be stabilizing, States anticipate substantial declines in personal income tax revenues due continued high unemployment, wage reductions, and possible declines in capital gains realizations. Every State that has updated its forecast predicts significant decline in revenue. Even seven that do not impose stay-At-home ordersArkansas, Iowa, Nebraska, North Dakota, South Dakota, Utah, and Wyomingexpect revenue shortfalls. Figure 3 shows percentage change in State tax revenue estimates for Fiscal years 2020 and 2021 compared to pre-COVID-19 projections.

* Please keep in mind that all text is machine-generated, we do not bear any responsibility, and you should always get advice from professionals before taking any actions.

* Please keep in mind that all text is machine-generated, we do not bear any responsibility, and you should always get advice from professionals before taking any actions

Overview

As impact of COVID-19 reaches communities across country, elect officials have been forced to assess how to cut spending in face of sharp reductions in revenue and changing needs of people they serve. While revenue is decreasing, demand for services during health and economic crisis is increasing. Relying on data and evidence to make spending decisions, which has proven useful in times of prosperity, is critical now during Recession. Though State and county officials are facing unprecedented fiscal challenges, leaders should resist temptation to make indiscriminate, across-The-Board Budget cuts. Instead, there are useful, proven tools that policymakers can use to inform their spending decisions that will lead to better outcomes during downturn that began suddenly in February. State officials say they learnt during Great Recession of 2007-09 that, in face of declining revenue, ability to effectively and accurately prioritize spending on programs and services that have beneficial outcomes is crucial. Out of that concern come Results First, initiative of Pew Charitable Trusts, to help State and local officials use evidence to make strategic investments in programs that work and to make tough Budget decisions based on nonpartisan, objective data to deliver best possible outcomes. For example, in Iowaone, of first States to work with Results Firsta shrinking Budget because of that Recession led Department of Corrections to reassess its services so that it was spending its limited funding wisely on programs known through research to be effective and that provide positive return on investment for State. Department Director At Time Said That Focus On Evidence Challenges Them To Do Better. More broadly, in long recovery from Great Recession, Budget Officers, agency heads, and elected officials enacted reforms to quickly and efficiently access and use data and evidence, allowing them to be more resilient and responsive to changing needs. This issue brief provides look at select reforms officials made in past, 10 years of revenue expansion that can be repurposed for more challenging fiscal conditions. COVID-19 Recession Gives Policymakers Opportunity To Use These Tools As They Decide What Services And Programs To Deliver And Where To Cut Budget In More Strategic Way.

* Please keep in mind that all text is machine-generated, we do not bear any responsibility, and you should always get advice from professionals before taking any actions.

* Please keep in mind that all text is machine-generated, we do not bear any responsibility, and you should always get advice from professionals before taking any actions

Sources

* Please keep in mind that all text is machine-generated, we do not bear any responsibility, and you should always get advice from professionals before taking any actions.

* Please keep in mind that all text is machine-generated, we do not bear any responsibility, and you should always get advice from professionals before taking any actions

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