after years of growth, states across the country are confronting sharply declining revenues
Arizona is among just four states that is projecting that its largest revenue drop owing to the COVID-19 outbreak and subsequent economic shutdown will occur during fiscal year 2020.
Colorado and New Mexico are in a larger group of nine states projecting that their largest revenue decreases will not be seen until fiscal year 2021.
Such statistics, according to the Washington-based Center on Budget and Policy Priorities, underline the challenging fiscal cards dealt to state governments across the country because of the coronavirus and the business shutdown consequences.
As of today, state budget officials in Arizona are predicting an overall budget shortfall of just over $1.1 billion.
The office of Governor Jared Polis in Colorado has come out with a forecast loss of $3.2 billion for both 2020 and 2021 fiscal years; while New Mexico officials are seeing a drop of anywhere between $1.7 billion and $2.4 billion for fiscal year 2021.
According to the Budget and Policy Priorities center, shortfalls for all states will hit the 10 percent mark at the end of this fiscal year, with a bigger 25 percent chunk expected to come out of the states’ fiscal 2021 year budgets.
“States’ initial revenue projects give a first look at some of the damage the pandemic-induced downturn could cause to state budgets,” notes the center’s recent report, Early Estimates Show Substantial Shortfalls for 2020, 2021.
But the report also makes the point of noting that, so far, the various state budgets are not showing “the increased costs from fighting the virus and from rising demand for state services.”
Solutions are currently elusive, continues the report, which also notes that even though many states will soon be drawing from rainy day funds to remain solvent, such funds will likely prove inadequate.
Meanwhile, the report warns that states will only worsen their economic woes by “laying off employees, scaling back government contracts for business, and cutting public services and other forms of spending.”
An earlier report also put together by the Center on Budget and Policy Priorities provides at least one glimmer of hope. While total state shortfalls are expected to reach the $350 billion mark in fiscal year 2021, that figure will decline to a smaller $190 billion by fiscal year 2022.
By Garry Boulard
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