Falling Revenue From COVID-19 Has Put State Budgets In Peril - NPR

The COVID-19 pandemic could swipe roughly $200 billion from state coffers by June of next year, according to an analysis by the Urban Institute's State and Local Finance Initiative.

Record-high unemployment has wreaked havoc on personal income taxes and sales taxes, two of the biggest sources of revenue for states. Hawaii's and Nevada's tourism industries have crashed, and states like Alaska, Oklahoma and Wyoming have been hit by the collapse of oil markets. From March through May of this year, 34 states experienced at least a 20% drop in revenue compared with the same period last year, according to data provided to NPR by the State and Local Finance Initiative.

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Those drops directly affect state budgets, so NPR asked member station reporters to fill us in on what's going on in nearly every state across the United States. Check out your state here.

With dwindling cash, cuts to education, health care and other areas are inevitable in many places. State leaders have described the situation as "unprecedented," "horrifying" and "devastating." Florida's Republican governor, Ron DeSantis, compared his state's budget cuts to the Red Wedding scene in HBO's Game of Thrones.

Maryland Gov. Larry Hogan, a Republican, said, "Responding to this crisis has created a multiyear budget crisis unlike anything the state has ever faced before, more than three times worse than the Great Recession."

For example, so far that state has cut nearly $190 million from higher education. Programs designed to reduce crime in Baltimore also took a hit, as did foster care providers and public defenders.

And state leaders everywhere are getting nervous as the economy shows little signs of a swift recovery.

Some states still seeking federal help

In March, Congress worked quickly to pass an aid package worth $2 trillion — called the CARES Act — which offered relief to state and local governments, individuals, small and large businesses, and hospitals affected by the coronavirus crisis.

But language in the law requires that funds go to expenses related to COVID-19 and not to plug holes in budgets, with few exceptions (though some state leaders have used creative accounting to make the money work the way they want it to).

Republicans and Democrats in states such as Maryland, California, Michigan, Iowa, Georgia, New York and Illinois have asked Congress for additional funds that they say are critical to stay afloat.

Others don't agree. Last week, more than 200 state lawmakers signed onto a letter from the American Legislative Exchange Council, an organization of conservative lawmakers, opposing further federal money for states. The letter reads, "The American people are being forced to make difficult but fiscally responsible decisions during the pandemic, and states need to do the same."

The Democratic-led U.S. House passed a bill to inject more money into states, but many Republican lawmakers say any new money has to be for items directly related to the virus, not to pay down deficits in the states.

California has gone as far as preparing a contingency budget: If additional federal money does not come through, the state will have to furlough state workers and slash funding for state universities and courts. It would also mean that K-12 school districts and community colleges won't receive nearly $12 billion in upfront state payments at a time when costs could be at an all-time high.

"The federal government has a moral, ethical and economic obligation to help support the states," said California's Democratic governor, Gavin Newsom.

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Daniel Wood designed and developed the graphics for this story. Acacia Squires, NPR's state government editor, wrote portions of this story and worked with NPR's network of reporters for individual state synopses.

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