NASBO is monitoring state fiscal conditions, governors' budget proposals and actions related to the coronavirus (COVID-19) pandemic. This summary is intended as a point in time reference and is not an exhaustive list of actions taken to date. The following information was taken from official and unofficial sources including governors’ websites and media reports. NASBO has not independently verified the accuracy of this information. For additional information please contact Brian Sigritz.
Alabama’s state Senate approved the fiscal year 2021 General Fund budget, authorizing $2.3 billion in spending, an increase of $167.3 million or 7.5 percent over the current year, with funding increases for Medicaid ($94.3 million), Public Health ($35.3 million) and Corrections ($23.2 million). The House approved a $7.2 billion Education Trust Fund budget, an increase of $91 million over the current year but $320 million below the governor’s proposal; a 3 percent teacher pay increase was not included. Legislators do not expect to make spending cuts in the current year budget, which ends September 30.
Alaska’s governor proposes to send $563 million to local governments as part of his plan to spend the $1.25 billion in federal Coronavirus Relief Fund dollars received by his state; his proposal is subject to the legislature’s approval. The state may see gross domestic product decline by nearly $2 billion in the second quarter of this year compared to 2019 as a result of the economic impacts of COVID-19, according to a University of Alaska economist. Coupled with lower oil prices, the state’s revenue forecast for fiscal 2021 is down $815 million compared to earlier projections.
Arizona’s governor extended his stay-at-home order through May 15, canceling lawmakers’ plans to return to session last week. Top lawmakers announced a plan to await better data on the state’s budget shortfall that could be addressed in a special session over the summer. As of early April, state budget officials were estimating a combined budget shortfall of $1.1 billion for fiscal 2020 and fiscal 2021, as a result of the pandemic and its economic impacts. The University of Arizona is implementing furloughs and pay cuts for nearly all employees beginning this month, which will be effective through June 2021.
Arkansas legislators approved a $5.89 billion general revenue budget for fiscal year 2021 after the revenue forecast was cut to $5.68 billion for the year; the budget includes spending provisions totaling $212.2 million that would only be funded if revenues exceed the forecast. General revenue tax collections in April fell $270.9 million, or 28.3 percent, compared to the prior year but exceeded the state’s revised forecast by $103.8 million. The governor added an additional $1 million to the state’s quick action loan fund, which was created in March to provide $25,000 loans to small businesses with fewer than 50 employees; the $5 million previously funded was exhausted in mid-April.
California’s governor announced an estimated budget shortfall of $54.3 billion resulting from the pandemic and its effects on the economy, which includes a $41 billion decline in forecasted general fund revenues coupled with increased expenditures on social safety net programs and COVID-related items. The governor has asked the federal government for $1 trillion in fiscal aid for state and local governments to address budget deficits induced by the COVID-19 recession. California lawmakers returned to session this week, facing a June 15 deadline to pass a balanced budget; the governor is expected to release a revised budget plan on May 14. The state’s stay-at-home order is expected to result in $370 million less in gas tax revenues for transportation projects.
Colorado’s governor reduced immediate spending by $229 million, declaring insufficient revenues available for the current fiscal year; the cuts will hit nearly every area of state spending, including education, energy, corrections and Medicaid. The governor’s budget office is projecting $3.2 billion in revenue losses for fiscal 2020 and fiscal 2021 due to the pandemic and its economic impacts. The Joint Budget Committee began meeting to decide on what cuts will be necessary to balance the budget. The University of Colorado is expecting to lose more than $1 billion in revenue if the system must continue remote learning for the next school year-.
Connecticut is projecting an operating shortfall of $934 million for fiscal 2020; the projected shortfall represents 4.8 percent of the general fund. The forecast for the upcoming 2021 fiscal year anticipates a deficit of $2.3 billion with the governor discussing reductions through budget cuts and other cost-saving measures, including some that will require legislative approval. The governor said that it will likely take years for state finances to recover from the pandemic. The state also continues to try to determine how to address transportation and infrastructure demands.
Delaware is expected to see a $784.5 million decline in revenue over the next two fiscal years, according to the Delaware Economic and Financial Advisory Council; the group lowered its revenue estimate for fiscal 2020 by 9 percent compared to its March forecast and 6 percent for fiscal 2021. The University of Delaware is also facing a $50 million shortfall due to the coronavirus. Entry fees and park pass requirements at state parks and state wildlife areas will be reinstated starting Friday.
Florida’s sales tax collections for March may be $770 million below estimates for the month, or 25 percent, based on unofficial figures from the state revenue department; sales taxes account for nearly 80 percent of the state’s general revenue. The governor signed a tax package into law that creates sales tax holidays for disaster-preparedness supplies and school supplies, which is projected to reduce state and local revenues by $47.7 million next fiscal year. The House Speaker is considering a special session to address expected budgetary shortfalls.
Georgia’s tax collections for April fell by approximately $1 billion, or 35.9 percent; income tax collections were down 46 percent compared to the prior year, in part due to the delayed tax filing date; corporate income taxes declined 70.6 percent and sales tax collections declined 14.3 percent. State agencies are being asked to develop new spending proposals for fiscal year 2021 that include spending reductions of 14 percent from their current year original base. The Board of Regents approved a tuition freeze for next year for the state’s 26 public colleges and universities.
Hawaii’s governor proposed 20 percent pay cuts for teachers and other public employees to address the steep drop in tax collections expected as a result of the pandemic; one analysis estimates the pay cuts would lead to a drop in the state’s gross domestic product of $3.3 billion from 2020 to 2022. The state’s over-burdened unemployment system is undergoing upgrades to speed up claims processing.
Idaho’s governor has asked state agencies to prepare 5 percent budget reduction plans, and noted in a recent interview that the state will likely end up relying on a mix of spending adjustments, rainy day fund withdrawals and anticipated aid from the federal government to address the state’s revenue shortfall. The state’s April tax collections fell nearly $500 million (roughly 60 percent) compared to forecast, but state economists believe most of the shortfall is explained by moving the income tax filing deadline from April to June.
Illinois’ governor said the state is expecting to lose $2.7 billion in revenue this year and $4.6 billion in fiscal 2021 due to COVID-19; the governor estimated that at least $1 billion of this year’s shortfall is due to the shifting of the federal tax deadline to July 15. The governor also said he does not support allowing states to declare bankruptcy to help address long-term obligations such as pensions. Credit rating agencies warned that the coronavirus could cause lasting damage to the state’s fiscal outlook. The state is planning on borrowing approximately $1.2 billion to help cover expenses during the downturn. Illinois has added $250 million to a small business loan program. Legalized marijuana sales in April totaled $37.3 million, near January’s high.
Indiana’s governor announced the creation of a task force to plan, administer, and account for federal funds from the CARES Act. In March, state tax collections were roughly 6 percent, or $70 million, below estimates. The state budget director said that COVID-19 is causing both increased spending demands and a decline in revenue and is asking state agencies to take steps to cut costs and freeze hiring. The governor has suspended some business regulations to help companies handle the impact of the coronavirus.
Iowa’s tax collections declined 48 percent over a five-week period in March and April, although much of the decline is likely due to shifting the tax deadline to July. The legislature is not expected to meet again until May 15 at the earliest and will need to consider the fiscal 2021 budget. The state’s public universities are expecting to lose at least $187 million due to the coronavirus. K-12 schools are slated to receive $71.6 million in federal aid related to COVID-19.
Kansas’ tax collections through the end of fiscal 2021 are expected to decline by $1.37 billion, leaving the state with a $653 million shortfall after $900 million in cash reserves are used. The governor said that without additional federal aid the state will be forced to make spending cuts greater than the Great Recession, all in a single budgeting cycle. Legislators have asked K-12 school districts and college officials to examine possible cost savings. The state is also being impacted by a decline in oil production. Tax collections in April declined 51.4 percent, largely due to announced tax deadline extensions.
Kentucky’s general fund receipts declined nearly $432.9 million, or 33.6 percent, in April compared to the prior year, with nearly 90 percent of the drop attributable to individual and corporate income taxes, due in part to the delayed tax filing deadline. The state’s Road Fund dropped by $43.9 million. State budget officials projected a potential general fund revenue shortfall of $318.7 million to $495.7 million through the current fiscal year, with revenues expected to fall another 10.5 to 17.2 percent in the first two quarters of fiscal year 2021. Legislators overrode five gubernatorial vetoes and approved bills related to measuring educational achievement gaps and new rights for crime victims in the final days of the legislative session.
Louisiana’s small business loan program allocated approximately $30 million of the $50 million in available funding within two weeks; loans are available for companies with fewer than 100 employees affected by the coronavirus. Lawmakers returned for a session where the priority is expected to be the fiscal year 2021 budget; the state’s forecasting panel meets May 11 to calculate the scope of budgetary challenges. The President of the Louisiana State University system asked department heads to prepare for a 5 to 10 percent funding cut, in addition to a hiring freeze and potential temporary pay cuts for administrators.
Maine’s governor ordered state agencies to freeze spending and hiring except for emergencies that could free up to $252 million in unspent funds. Moody’s Analytics estimates show the COVID-19 economic fallout could cost the state roughly $865 million including an estimated revenue shortfall of $756 million and an estimated increase in Medicaid spending of $108 million. Applications for the Supplemental Nutrition Assistance Program (SNAP) and the Temporary Assistance for Needy Families (TANF) have increased by 47 and 52 percent, respectively, since February, and Medicaid applications increased by 18 percent. The state Department of Transportation is also facing a large revenue drop due to the pandemic.
Maryland’s governor announced a state budget freeze on all expenses except those related to the coronavirus and payroll, in addition to instituting a hiring freeze and looking for potential budget cuts. The state comptroller’s worst case scenario shows the state could take in $2.8 billion less to its general fund than estimated for this fiscal year. The state extended a salary increase for front-line state employees through June 2. The governor vetoed 22 bills that increased spending, including a plan to significantly reform public schools at a cost of $4 billion annually.
Massachusetts’s preliminary revenue collections for April totaled $1.981 billion, which is $2.168 billion or 52.2 percent less than benchmark; the April revenue shortfall is attributable to multiple factors, including the extension of the personal income tax filing deadline and the overall impact of COVID-19 on economic activity. The House unanimously passed a bill allowing the treasurer to borrow money to fill spending gaps for the rest of the fiscal year and would have until June 30, 2021 to repay the money. The governor has asked the federal government for a $1.2 billion loan to pay unemployment benefits.
Michigan is expecting to lose between $1 billion and $3 billion in revenue for fiscal 2020 which ends on September 30, and between $1 billion and $4 billion in fiscal 2021. The governor joined in a letter with the governors of Wisconsin and Pennsylvania requesting additional federal aid to prevent more significant spending cuts. The governor also issued temporary layoff notices to more than 2,900 state employees. In other actions, the governor created an oversight panel for coronavirus spending, and announced plans for free college tuition for frontline workers. The legislature is planning on challenging in court the governor’s use of state emergency power during the coronavirus outbreak.
Minnesota is now projecting a $2.43 billion budget deficit through fiscal 2021 after previously projecting a $1.5 billion surplus; the coronavirus outbreak is projected to reduce tax revenues by $3.6 billion and increase spending by $391 million. The management and budget commissioner also announced a hiring freeze, while the governor and his cabinet officials are planning on taking a 10 percent pay cut. The legislature continues to debate a bonding bill to upgrade roads and improve sewer systems, as well as a number of bills related to the coronavirus outbreak.
Mississippi lawmakers reached an agreement over control of the state’s $1.25 billion allocation from the federal CARES Act, after legislators had passed a bill placing almost all the funds under legislative purview. The governor created a private-sector task force to assist with the state’s economic recovery due to the coronavirus. The state began distributing the additional $600 weekly unemployment benefit as authorized by the CARES Act, becoming one of the first states to start distribution.
Missouri’s budget director said that April tax collections declined 54 percent compared to last year, partly due to the shifting of the tax deadline to July; he also stated that May’s tax figures will give a better indication of the overall impact of COVID-19 on the state economy. The House and Senate have passed differing fiscal 2021 budget plans that include significant spending cuts and are now going to meet in conference regarding their bills. Earlier in April, the governor signed a supplemental spending bill related to the coronavirus outbreak and established a working group to determine how best to spend federal funds from COVID-19.
Montana’s governor launched nine new grant programs and announced $123 million in grant funds for small businesses, nonprofits and residents affected by the pandemic, paid for with federal coronavirus relief funding. Last month, the governor appointed a task force to make recommendations on how the state should spend the federal stimulus money. A preliminary analysis predicts the state will see a decline of 51,000 jobs or 7.3 percent in employment.
Nebraska is still determining where to direct much of the $83.6 million in emergency funding for the coronavirus outbreak that was approved in March. The University of Nebraska announced that it will guarantee free tuition for students from families at or below the median household income level. State tax collections were above projections and better than expected in March.
Nevada’s governor this week warned that deeper budget cuts may be necessary compared to what he ordered state agencies to prepare last month, due to worsening economic conditions. One analysis found that the state’s tourism industry could lose $39 billion over the next 12 to 18 months, and local governments are projecting a 20 percent to 40 percent reduction in revenues. Nevada’s higher education system may need to make $124 million in budget cuts, which is expected to result in staff furloughs and increased student fees.
New Hampshire’s governor and legislature are determining how to use $1.25 billion in federal coronavirus aid. A judge rejected a lawsuit brought on by some in the legislature regarding the governor’s authority to use the federal funding. State colleges and universities will receive about $40 million from the Higher Education Emergency Relief Fund; the state’s 21 public and private institutions are estimated to lose about $185 million due to the pandemic. The Governor’s Office of Emergency Relief and Economic Recovery is allocating $40 million to the state’s cities and towns from the federal CARES Act to be used to cover COVID-19 related expenses.
New Jersey’s governor says the state could borrow as much as $9 billion from the U.S. Federal Reserve to address revenue losses caused by statewide business closures, stay-at-home orders, and record unemployment during the coronavirus pandemic. A new debt relief measure created in response to the COVID-19 economic downturn aims to help as many as 200,000 state residents struggling to pay privately held student loans. The treasurer said national economic projections suggest the state will lose more than $3 billion from its fiscal 2020 budget with deeper losses looming for fiscal 2021. The federal Department of Health and Human Services says 53 of the hardest hit hospitals are in the state and will share a total of $1.7 billion in federal funding, the second largest given to any state after New York.
New Mexico economists released new informal revenue projections showing the state will take in between $1.7 billion and $2.4 billion less in fiscal 2021 than the prior forecast, as a result of the COVID-19 pandemic and plummeting oil prices; the state’s total approved general fund budget is $7.6 billion. The state also has a shortfall for the current fiscal year between $368 million and $483 million. Lawmakers are expected to hold a special session in mid-June to address the shortfalls. The governor signaled she would support an effort to tap the state’s Land Grant Permanent Fund to help close the budget gap.
New York’s governor said that the state is expected to lose $13.1 billion in tax revenue in fiscal 2021 and $61 billion over the next four years due to the coronavirus; the enacted fiscal 2021 budget gives the governor authority to periodically cut broad areas of state funding should revenue fall short of projections. A consultant’s report detailed the major impact in different sectors of the state’s economy and compares the current pandemic with previous disease outbreaks. More than $5 billion in federal funding is headed to 90 hospitals that were hot spots for coronavirus care. The legislature is considering a series of bills to address COVID-19.
North Carolina’s governor signed COVID-19 relief bills totaling $1.6 billion with funds allocated for schools, hospitals, local governments, small businesses, transportation and researchers; the bills also allow a limited Medicaid expansion for COVID-19 testing and allocate $150 million to the 97 counties ineligible for direct funding from the federal Coronavirus Relief Fund. State budget officials told lawmakers a recession is coming if it is not already here, with expected losses to transportation revenue and income and sales taxes. The state transportation department is considering further cuts as its cash accounts fell below the amount required by state law.
North Dakota’s governor asked state agencies to submit budget requests for the next biennium budget that are 5 percent to 15 percent below current levels, and to use technology and innovation to reshape state government. University presidents said they are supportive of a plan from the North Dakota State Board of Higher Education to allow campuses to return to in-person classes this fall. The shift of the federal tax deadline is not expected to cause serious budget issues for the state since it operates on a two-year budget cycle. In late April, the governor declared a statewide flood emergency.
Ohio’s governor announced $775 million in cuts to the current budget including $300 million to K-12, $210 million for Medicaid, $110 million for higher education, $100 million for other agencies, and $55 million in unspecified cuts. April tax collections were $866 million lower than projections, with $635.7 million of that coming from personal income taxes; much of the personal income tax decline is likely due to the shifting of the federal tax deadline although the state also saw withholding come in lower than expected. Gas and diesel sales are down more than 50 percent threatening funding for road projects. The state has discussed staggering when students will be at school in the fall including going for two-days a week supplemented with online learning. Ohio may need to borrow as much as $3.1 billion from the federal government for unemployment claims.
Oklahoma lawmakers approved a $7.7 billion budget plan for fiscal year 2021 that includes cuts of 4 percent for most state agencies, 2.5 percent for education; the governor indicated he was still reviewing the proposal. Gross receipts declined by $502.5 million in April, or 31.8 percent, compared to the prior year, with some of the reduction due to the delayed tax filing deadline. State general fund revenue is projected to decline $1.3 billion in fiscal year 2021 due to the COVID-19 epidemic and collapse of global oil markets. For the current year, a budget shortfall of approximately $417 million is expected and projections show the state could see a peak unemployment rate of up to 14 percent.
Oregon has begun to furlough state workers, and the governor has directed agencies to slow non-critical spending; reducing services and supplies and hiring freezes are also being considered at the state level. State lottery revenues are expected to decline by 20 to 40 percent ($250 million to $500 million) compared to forecast. Lawmakers approved more than $30 million in state funds to support COVID-19 relief efforts, including rental assistance, payments to workers who do not qualify for unemployment due to their immigration status, and other purposes.
Pennsylvania’s April general fund revenue collections of $2.2 billion were 49.7 percent less than anticipated due to a combination of reduced economic activity and the shifting of tax dates. School districts are projected to lose up to $1 billion in local revenue for the 2020-21 school year because of the COVID-19 pandemic, according to an association of the state’s school business managers. The state Department of Transportation said it may have to delay projects due to a drop in gas tax revenue unless it receives more federal aid. The governor, in a joint letter to the White House along with the governors of Michigan and Wisconsin, said that the state is projecting a budget deficit up to $5 billion.
Rhode Island is projecting to spend over $150 million responding to COVID-19. The state is also determining how it is going to use $1.25 billion in federal coronavirus aid. Economists are forecasting double-digit unemployment and over $1 billion in lost wages, and the legislature is examining how to close a projected deficit of at least $400 million in fiscal 2020. The administration is seeking permission through a waiver to use $5.1 million in federal Medicaid dollars to, at least temporarily, pay for food, rent and mobile phone minutes for the homeless.
South Carolina revenue officials project that state tax revenues will decline $507 million, or 15.5 percent, during the next three-and-a-half months before starting to level off, compared to earlier forecasts, while the ongoing pandemic may cause a $49.3 billion reduction in economic activity and trim personal income growth by 44 percent. Projections from early April estimated that the available surplus for next fiscal year dropped from $1.9 billion down to $750 million due to the coronavirus. The education department is considering options including in-person summer school for struggling students and adding school days at the end of summer or fall.
South Dakota’s governor said the budget is expected to take a big hit from the economic impact of COVID-19; in March, tax collections were down $18.1 million with further declines expected in the upcoming months. The state’s economist said that while certain segments of sales taxes are likely to see declines, other areas are seeing growth related to coronavirus. The governor said that a special session to adjust the budget may not be needed if the federal government allows for greater flexibility for the use of federal coronavirus aid. Earlier, the governor spoke against strings attached to the $1.25 billion the state is receiving in federal aid and said that she does not want to spend it on growing state government.
Tennessee launched a program that provides free child care for children of essential employees that are enrolled in state-licensed child care providers, using funds from the federal Child Care Development Fund. The University of Tennessee System refunded more than $40 million to students because of the coronavirus. A judge ruled the governor’s education savings account program is unconstitutional because it only applied to two counties, violating the “home rule” section of the state constitution. The state expects legal online sports betting to go live in the state by July; there is a $750,000 licensing fee and a 20 percent tax rate.
Texas’ comptroller reported the state’s portion of sales taxes for April declined 9.3 percent compared to the prior year and a larger drop is expected in May; sales taxes account for 57 percent of all state tax collections. The governor announced a $50 million program for private, forgivable loans made to small businesses affected by the coronavirus pandemic, designed to avert layoffs and be used primarily for payroll. Following federal approval, recipients of Supplemental Nutrition Assistance Program benefits in the state will be able to buy groceries online and have them delivered.
Utah lawmakers plan to wait until a special session in mid-June to start making budget cuts that could add up to as much as $2 billion or 10 percent. Lawmakers met virtually for an emergency special session last month to consider various bills and resolutions in response to COVID-19. The legislature passed a resolution encouraging state and local government agencies along with schools and higher education institutions to restrict spending and refrain from any new spending commitments for the fiscal year.
Vermont’s governor has proposed to use reserves, revenue from alcohol sales, and Medicaid funds to address a current year budget gap of $200 million. The legislature's economist projects revenue losses from the COVID-19 crisis will triple in the upcoming fiscal year and that the state could see tax receipts drop by $430 million. The state continues to determine how it is going to use $1.25 billion in federal aid related to the coronavirus.
Virginia lawmakers voted to suspend approximately $2 billion in new spending in the two-year budget that takes effect on July 1; other changes include delaying the state’s minimum wage increase until May 2021, dedicating revenues from casino gambling to school construction, and creating a new COVID-19 relief fund with revenues from a new tax on electronic skill games. The governor said he will call a special session later this year once the revenue picture is clearer. The Secretary of Finance is working with legislative budget committees on a strategy for allocating the state’s $3.3 billion share of funds from the federal CARES Act, which may include sending funds to localities.
Washington State is projecting a $7 billion shortfall over the next three years compared to what was budgeted, according to early revenue estimates from the Economic and Revenue Forecast Council; a formal revenue forecast will not be available until June. The state’s budget director asked state agencies to immediately identify areas where savings could be found, including delayed hiring and reducing or delaying program implementations. The state Supreme Court ordered the administration to take “all necessary steps” to protect state prison inmates from the COVID-19 pandemic.
West Virginia’s April revenue collections came in $192.27 million below estimates, or 33 percent. The year-to-date state budget shortfall grew from $6.4 million in March to $198.7 million; reductions in income tax collections were expected due to the delay in the tax filing deadline. The governor stressed the need for the state to be able to use federal aid funding to backfill tax revenue losses. The state will receive approximately $87 million for its prekindergarten to 12th grade public school system from funding appropriated in the federal CARES Act, in addition to $65 million allocated to the state’s higher education institutions and $16 million for emergency education needs.
Wisconsin’s governor ordered a 5 percent cut in state agency spending related to COVID-19; the state has also issued a hiring freeze except for positions related to responding to the pandemic and positions considered essential for maintaining state agency functions. The governor said that the state is facing a $2 billion drop in revenue due to the economic impact from the coronavirus. Earlier the governor signed a coronavirus response package that he described as “imperfect”. April tax collections were down $870 million due to COVID-19 and people delaying tax payments. The University of Wisconsin system estimated a $168 million loss in revenue as of April 10 related to the pandemic.
Wyoming’s governor has instructed all state agencies to identify where they can make immediate budget reductions, while also asking them to impose position freezes, halt general fund contracts, and review maintenance spending. State revenues may plummet by anywhere from $555 million to $2.8 billion over the next two years as a result of the pandemic and declining oil prices, according to a legislative fiscal analyst staff report. Legislative leaders finalized bills related to COVID-19 for the legislature to consider in its first special session since 2004.