The Center for Budget and Policy Priorities, a research and policy institute, recently published a snapshot of the hit the coronavirus crisis has dealt state governments, based on preliminary numbers from every state.
The center estimates that state revenues collectively will fall short by $765 billion in the three fiscal years 2020 through 2022. That’s not including any losses among local governments, territories or tribes.
It’s not that states as a whole were not unprepared. With $75 billion in reserves, states’ rainy day funds were historically well stocked. And yet, the center says:
“Even if states use all of it to cover their shortfalls, that still leaves them about $600 billion short.”
States must balance their budgets, emergency or not. In April alone, state and local governments laid off or furloughed almost a million workers. Even counting assistance currently approved by Congress, without more aid, states will have to cut deeply into health care and education, lay off teachers and other workers and cancel contracts with businesses, with effects reverberating through communities, the center predicts.
Following is a look at the states that face an estimated revenue decline of at least $1 billion for the 2020 fiscal year, according to the Center for Budget and Policy Priorities report. We start with the state that faces a $1 billion shortfall this year and end with the worst-off state, which is facing a $9.7 billion revenue shortfall this year.
Estimated revenue decline in FY 2020: $1 billion
Not only does the state of Virginia face an estimated $1 billion decline in revenue in the 2020 fiscal year, it faces an estimated further decline of $1 billion to $2 billion in the following fiscal year.
Virginia Secretary of Finance Aubrey Layne described these projections as “probably the best case,” the Richmond Times-Dispatch reported in late March.
Since then, however, newly enacted federal laws have provided payments to individuals and businesses, as Money Talks News details in “12 Ways the Government Is Helping You Amid the Pandemic.”
And another bill — the Health and Economic Recovery Omnibus Emergency Solutions Act, or HEROES Act — would provide payments and other aid to state, local, tribal and territorial governments. The HEROES Act passed the U.S. House of Representatives on May 15 and is now before the Senate.
Estimated revenue decline in FY 2020: $1 billion to $1.4 billion
Utah is expecting losses of from $1 billion to $1.4 billion in the 2020 fiscal year, according to the Center on Budget and Policy Priorities.
But the shortfalls won’t stop there if the state’s early projections turn out to be accurate. Revenue shortfalls of up to $447 million are possible in 2021, the report says.
Estimated revenue decline in FY 2020: $1.3 billion
The Colorado Legislative Council’s Economic & Revenue Forecast Update for May notes a projected cumulative two-year revenue shortfall of $3.3 billion for fiscal years 2019-20 and 2020-21.
The report also notes that the outlook could improve with the rapid discovery of a vaccine or other treatment for COVID-19 (the disease caused by the coronavirus), any additional federal aid or a quick recovery from the economic downturn. On the downside, the council’s update says:
“Longer or repeated periods of reduced economic activity to control the spread of COVID-19 will cause more severe and longer lasting revenue impacts.”
Estimated revenue decline in FY 2020: $1.4 billion
Arizona is looking at hard times. In addition to the $1.4 billion revenue shortfall projected for fiscal 2020, an additional shortfall of $758 million is projected for fiscal 2021, with an $805 million decline in revenue is projected for fiscal 2022, according to the Center on Budget and Policy Priorities.
As Money Talks News reports in “The Most Unemployment You Can Get in Every State Since COVID-19,” the state’s insurance payments for unemployed workers recently ranked as the second-lowest in the country. The maximum annualized unemployment benefit in Arizona is $43,680.
Estimated revenue decline in FY 2020: $1.6 billion
In addition to the $1.6 billion shortfall that the state of North Carolina is estimated to face for fiscal 2020, it could see a far bigger shortfall — $2.6 billion — over the next fiscal year, according to projections from the Center on Budget and Policy Priorities report.
Estimated revenue decline in FY 2020: $2.7 billion
The Illinois Office of Management and Budget has predicted that the state faces a revenue decline of nearly $3 billion this fiscal year. What’s more, Illinois’ troubles appear likely to grow in fiscal 2021. By then, the state’s OMB says, the shortfall could be $7.4 billion.
Estimated revenue decline in FY 2020: $2.8 billion
The state of New Jersey is looking at hard times, with a $2.8 billion revenue decline projected for fiscal 2020. The state’s financial picture is likely to get considerably worse the next year. New Jersey’s Treasury reported in May that the state is estimating a $7.3 million shortfall in fiscal 2021, according to the Center on Budget and Policy Priorities report.
Estimated revenue decline in FY 2020: $3.2 billion
Michigan has projected revenue shortfalls in the billions of dollars for three consecutive fiscal years. The state’s Consensus Revenue Agreement projects a $3.2 billion shortfall for fiscal 2020. In addition, Michigan could see revenue losses of $3 billion in 2021 and $2.1 billion in the year after that, according to the report by the Center on Budget and Policy Priorities.
Estimated revenue decline in FY 2020: $3.8 billion to $4.5 billion
Massachusetts’ potential revenue losses for this fiscal year are in the multibillions of dollars for fiscal year 2020 and for fiscal 2021, when they are estimated to be in the range of $4.2 billion to $7.2 billion.
But unemployed residents are fortunate that their state pays the highest unemployment benefit in the nation, at a maximum annualized amount of $73,996, as Money Talks News reported in “The Most Unemployment You Can Get in Every State Since COVID-19.”
Estimated revenue decline in FY 2020: $9.7 billion
California has the biggest economy of any state in the U.S. If it was a country it would have the fifth-largest economy of any nation in the world, according to Business Insider. As a consequence, the state’s projected revenue decline is the nation’s biggest.
California’s Department of Finance is projecting a $9.7 billion decline in revenue for fiscal 2020. But it gets much worse. In fiscal year 2021, the state estimates, the shortfall could grow to as much as $32.2 billion, reports the Center on Budget and Policy Priorities.