The coronavirus economic shock came just as states were finally making up for the damage done by the Great Recession. Coming out of that downturn, state and local tax collections declined for two consecutive years—for the first time in the post-World War II era. A subsequent slow economic recovery made state revenue growth sluggish for nearly a decade. It took states, on an inflation-adjusted basis, until 2016 to get back to the levels of tax collections seen before the recession. But the economic expansion of the last three years, accompanied by a soaring stock market, had finally enabled states to stabilize their budgets, put money into areas (such as education) that some had neglected for years, and build up modest rainy-day funds. Read Full Article »
The Crisis's Impact on Budgets
When
Major League Baseball postponed the opening of its season, teams also closed their spring training camps. That’s a $25 million hit to the Arizona economy, where many clubs train, local experts say. Meantime, every NBA game that the Chicago Bulls don’t play because the league has suspended its season will cost the Windy City and Cook County $228,000 in local amusement taxes alone. These are just a few of the many ways that the closing down of large sections of the American economy, along with the plunge of stock markets, is likely to undermine state and local budgets and force governments around the country to cut spending, even as they scramble to find extra funds to help battle the coronavirus. States that rely on meetings, conventions, and tourism, or that derive substantial economic growth from energy production, or that depend on big gains in the financial markets from wealthy individuals, will be among the biggest losers unless the economy turns around fast. The problem: most are in the middle of budget season, trying to plan for the fiscal year beginning July 1 amid enormous uncertainty.
The coronavirus economic shock came just as states were finally making up for the damage done by the Great Recession. Coming out of that downturn, state and local tax collections declined for two consecutive years—for the first time in the post-World War II era. A subsequent slow economic recovery made state revenue growth sluggish for nearly a decade. It took states, on an inflation-adjusted basis, until 2016 to get back to the levels of tax collections seen before the recession. But the economic expansion of the last three years, accompanied by a soaring stock market, had finally enabled states to stabilize their budgets, put money into areas (such as education) that some had neglected for years, and build up modest rainy-day funds. Read Full Article »
The coronavirus economic shock came just as states were finally making up for the damage done by the Great Recession. Coming out of that downturn, state and local tax collections declined for two consecutive years—for the first time in the post-World War II era. A subsequent slow economic recovery made state revenue growth sluggish for nearly a decade. It took states, on an inflation-adjusted basis, until 2016 to get back to the levels of tax collections seen before the recession. But the economic expansion of the last three years, accompanied by a soaring stock market, had finally enabled states to stabilize their budgets, put money into areas (such as education) that some had neglected for years, and build up modest rainy-day funds. Read Full Article »
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