States prepare for coronavirus fiscal storm
By Michael Rainey
THE FISCAL TIMES
State budgets will be crushed by the coronavirus crisis as millions of workers and businesses stop paying taxes, says Josh Goodman of Pew Charitable Trusts. But state officials are going to have to wait a few more weeks until they know just how bad their fiscal situations will be.
Personal income taxes and sales taxes are the two largest sources of revenue at the state level, and both will take a serious hit as businesses reduce hours or close up shop entirely and workers lose their jobs.
Federal aid is in the pipeline, with $150 billion set aside for states and localities in the $2.2 trillion aid package signed into law last week. But some governors are saying that won’t be enough.
Colorado is one state seeing a rapidly deteriorating fiscal picture, according to Bloomberg Tax. Two weeks ago, state officials projected a $750 million shortfall in revenue this fiscal year and next as a result of the pandemic. A week later, that number nearly doubled to $1.4 billion.