Politics

Friday Night Owls: State revenue loss not as bad as expected. But, as with pandemic, worse is coming

Fortunately for states, revenues for fiscal year 2020 (which ended in June in most states) came in significantly better than they expected. Our analysis of Census data and state tax collections finds that revenues were about 2 percent below states’ pre-pandemic projections, which translates into total shortfalls of about $22 billion. That’s much lower than seemed likely earlier this year when unemployment rates were rising very rapidly and leading economic forecasters were projecting rates to hit Depression-era levels. It’s also much less than the historical relationship between unemployment and state revenues, mainly because this recession has been concentrated among lower-income workers (who pay less in taxes) and because federal aid, like expanded unemployment benefits, boosted workers’ income and purchasing power in the pandemic’s early months.

Much of that federal aid, though, is now expired or spent, and states still face considerably lower revenues, with unemployment high and business activity still down. In the last couple of months, states have grown modestly more optimistic about the current fiscal year but remain pessimistic about next year. States’ adjusted estimates suggest that, in the absence of further federal support, shortfalls will total about 11 percent of their budgets in fiscal year 2021 and 10 percent in 2022, which begins next July in most states. Plus, states face increased costs due to higher enrollment in Medicaid and other programs. Including these higher costs, states’ own estimates suggest shortfalls through fiscal year 2022 that total about $305 billion.

Those estimates could easily prove too optimistic. […]

THREE OTHER ARTICLES WORTH READING

TOP COMMENTS

QUOTATION

“We are just an advanced breed of monkeys on a minor planet of a very average star. But we can understand the universe. That makes us something very special.” ~~Stephen Hawking (1988)

TWEET OF THE DAY

x

BLAST FROM THE PAST

At Daily Kos on this date in 2009—On the difficulty of keeping ducks in a row:

Why has it historically been so tough to keep House progressives standing strong and using the leverage of their voting bloc to extract concessions on important legislation the way Blue Dogs have been able to?

Part of the reason is that progressive elected officials occupy a portion of the political spectrum that generally leaves them insulated from most accountability to progressive voters. In other words, they’re protected to some degree by the “where else are they gonna go?” factor.

That’s why progressive grassroots activists have come to expect their elected officials to eventually and in most every case, end up making the “best deal we could get” argument in support of their ultimate abandonment of principles clearly stated in the earlier stages of the process. 




Source link

Show More

Related Articles

Leave a Reply

Your email address will not be published. Required fields are marked *

Back to top button
Close