Alabama’s Public School and College Authority issued $1.48 billion in bonds for capital projects, the state’s first major bond issue for public school buildings, repairs and renovations since 2007. Lawmakers discussed the possibility of a special session before the end of the year to address outstanding legislative items but are concerned about meeting during the pandemic. The chair of the Senate General Fund budget committee proposed using some of the remaining CARES Act funds to help small businesses follow state guidelines for controlling COVID-19. The governor announced the awardees of funding for new crisis centers to serve individuals with mental illness and substance use disorders, funded with $18 million from the fiscal year 2021 General Fund budget.
Alaska voters appear to have rejected a ballot initiative to increase taxes on oil producers in the state, according to unofficial election results. A judge ruled that the governor’s vetoes of funding for the state court system in 2019 and 2020 were unconstitutional. The University of Alaska Board of Regents approved proposed budget requests. A nonprofit set up a new website where state residents can select which choices they would make to balance the state budget and close a projected $1.3 billion shortfall for fiscal 2022.
Arizona voters approved a ballot proposition to impose a 3.5 percent tax surcharge on high-income earners, which is expected to raise $827 million for education, with most of the new revenue dedicated to hiring and raising the salaries for teachers and other school employees. Voters also approved a measure to legalize and tax recreational marijuana, and require the state health and human services agency to develop regulations.
Arkansas’ governor proposed a $5.84 billion general revenue budget for fiscal year 2022, an increase of $161 million over the current funded budget of $5.68 billion; the budget also sets aside $50 million for income tax cuts. General revenue collections increased by $11.1 million in October over the prior year and exceeded the state’s forecast by $66.9 million. The state panel charged with recommending use of CARES Act funds endorsed an allocation of $50 million to the state’s unemployment insurance trust fund to mitigate rate increases for employers. Voters approved a constitutional amendment permanently extending the state’s 0.5 percent sales tax for roads and highways, as well as an amendment ending lifetime term limits for state lawmakers.
California voters appear to have rejected Proposition 15, which would have required commercial and industrial property to be taxed at current market value and would have raised as much as $11.5 billion in additional revenue for schools and local governments. The federal government ultimately approved the state’s request for disaster assistance to recover from severe wildfires recently.
Colorado’s governor unveiled a fiscal 2022 budget proposal, calling for $35 billion in state spending from all funds, of which nearly $15 billion is general fund spending. The proposed budget would restore drastic funding cuts to education and employer contributions to the state pension fund, and also includes $1.3 billion in economic stimulus. Voters approved ballot measures to cut income taxes, increase taxes on cigarettes, other tobacco products, and vaping, repeal the Gallagher Amendment restriction on property taxes, impose new restrictions on the legislature’s ability to set fees, and create a new statewide paid leave program.
Connecticut is projecting a deficit of approximately $935 million in the current fiscal year, an improvement from projections of $1.2 billion one month ago and about $2 billion in April. Shortfalls of $1.3 billion and $1.45 billion are projected in each of the next two fiscal years. Some in the legislature have called for increased borrowing to preserve key programs and to take advantage of low interest rates. The administration has more than tripled the amount of funds it expects to save this fiscal year due to employee attrition and other efficiencies, or because programs have been scaled back or suspended; it now projects to save $334 million, compared with $98 million just one month ago.
Delaware’s revenue estimates improved for fiscal 2021 but are still $182 million lower than in December 2019, before the pandemic and the economic downturn. The University of Delaware projects a deficit of $228 million to $288 million for fiscal 2021 and has reduced discretionary spending, offered retirement packages, cut salaries for some employees, reduced positions, and used about $100 million from its approximately $1.64 billion endowment. The state recently settled a lawsuit regarding its K-12 funding system.
Florida’s general revenue for September exceeded a revised estimate by $230.2 million but overall collections were down 6.8 percent from the prior year. Through September 30 the state spent $4.6 billion of the $5.8 billion received through the CARES Act, leaving $1.2 billion to spend before the end of year deadline. Voters approved a constitutional amendment increasing the state’s minimum wage from $8.56 an hour to $15 an hour by 2026. The state court system requested $16 million to address increased workloads caused by the coronavirus pandemic, including $12.5 million for a projected backlog of 990,000 cases.
Georgia’s tax collections were up 1.8 percent in October over the prior year, or about $35 million; collections for the first four months of the fiscal year are up 5.1 percent, or $400 million. Voters approved a constitutional amendment requiring that state fees and taxes collected for a specific purpose are spent as intended. The governor allocated $1.5 billion in CARES Act funding to the state’s unemployment insurance trust fund while committing $400 million for other uses like matching funds for FEMA grants, National Guard expenses, hospital staffing and state response expenses.
Hawaii state employees may be furloughed once every two weeks as part of the governor’s latest plan to resolve a budget shortfall. The governor also intends to defer $1.85 billion in scheduled contributions to public worker and retiree health benefits. The state launched a new grant program that will fund 2,500 small businesses and nonprofits with grants up to $10,000, and also started mailing $500 restaurant gift cards to unemployed residents as part of another economic stimulus program; both programs are funded with money from the federal CARES Act.
Idaho revenue collections are on track to exceed the state’s projections by $587 million in fiscal 2021, though the governor’s 5 percent budget holdbacks are still in place for most agencies as the administration waits to see if current revenue trends hold as the year continues. Lawmakers reviewed state agency budget requests for fiscal 2022, which amount to a 2.8 percent increase in state general fund spending and 0.6 percent increase for all fund spending. However, Medicaid spending is now expected to increase $91 million in fiscal 2022, $60 million higher than was projected when the health agency submitted its request.
Illinois voters rejected a constitutional amendment that would have created a graduated income tax and generated an estimated $3.6 billion more per year for the state. The governor said the state faces serious and painful cuts, while the House Republican leader said the state should start with 4 percent across the board cuts. Revenues for the year are currently running above projections, although the state still faces a shortfall due to the failure of the constitutional amendment and the lack of additional federal aid. The legislature is not expected to return to address the shortfall until next year. Legal marijuana sales exceeded $100 million in Illinois in October.
Indiana received a 10-year extension from the federal government for its Healthy Indiana Plan that enrolls more than 527,000 low-income adults. As of mid-October, the state had committed to using $1.7 billion of its CARES Act funds with $700 million remaining. Gamblers in the state placed $231 million in sports bets in October, a record high number and an 11 percent increase from September. The governor called off stage 5 of the state’s reopening plan due to an increase in COVID-19 cases and hospitalizations.
Iowa’s revenues are expected to decline in fiscal 2021 only slightly, although the state’s Revenue Estimating Conference expects the effects of COVID-19 to linger. The governor hopes to revive her tax swap plan that would raise the sales tax but lower other taxes. The state is directing CARES Act funds to a number of purposes including to theatre relief, rental assistance, and helping residents pay utility bills. The governor said the state did not misuse CARES Act funds on an IT project. The negative impact to the state’s road fund from COVID-19 has been less than initially feared.
Kansas increased its revenue forecast for fiscal 2021, and is expecting a $152 million deficit in fiscal 2022, but the forecasting board stressed that the economic picture remains uncertain. Better than expected enrollment numbers at the University of Kansas has reduced its expected budget shortfall for the current year to $47.6 million. The state has made progress in creating a unified COVID-19 testing strategy and has joined a bipartisan Rockefeller Institute group tasked with COVID-19 solutions.
Kentucky’s October General Fund receipts increased 3 percent compared to last year, almost half of the increase was due to early payments of tangible property tax. Receipts for the first four months of the year have increased by 5.1 percent and can decline 1.9 percent over the final eight months while still meeting the official revenue estimate. The governor announced that he anticipates being able to balance the current fiscal year without further cuts due to the better-than-expected revenue collections and more than $13 billion in federal aid provided in response to the pandemic. Kentucky requested additional federal funds to cover those appealing the state’s denial of supplemental unemployment benefits under the Lost Wages Assistance program. The state is also directing $2.8 million in CARES Act funding to Recovery Kentucky centers to use toward safe, stable housing for people recovering from substance use disorder.
Louisiana’s governor approved the majority of $22 million in projects added by legislators to a state budget bill passed in special session, vetoing five projects worth $700,000. The supplemental budget bill appropriates $85 million to the state’s unemployment trust fund, $1 million to coronavirus testing, and more than half a million dollars for Hurricane Laura relief. In addition to adding funds to pay benefits, lawmakers suspended legal provisions that would have required increases in tax rates on businesses that pay into the unemployment trust fund while a task force meets to study recommendations to address long-term solvency for the fund and states wait for possible action from Congress. The governor also vetoed a measure that would have given lawmakers more authority in a governor’s emergency decisions. Louisiana voters approved sports betting on Election Day; the resulting revenue, however, will likely be relatively small.
Maine’s general fund revenues exceeded expectations by about $45.8 million in September and by $68.1 million over three months but are $34.4 million, or 3.3 percent, below the prior year. Medicaid expansion enrollment increased 40 percent from 45,000 in March to 63,000 in October with rising unemployment driving the increase. A federal court upheld a state law excluding religious schools from a publicly funded high school tuition program.
Maryland voters approved a constitutional amendment legalizing sports betting that could generate $18.2 million annually; voters also approved an amendment giving legislators additional budget authority and authorizing certain veto powers for the governor. The governor used $250 million from the state’s rainy day fund to offer financial relief to struggling businesses, including $50 million to restaurant owners.
Massachusetts’ revenue collections through October total approximately $9.347 billion, $118 million, or 1.3 percent, more than collections in the prior year. The governor proposed a revised $45.5 billion budget for fiscal 2021 calling for a 3.8 percent increase in spending compared to the previous fiscal year; the proposal would use $1.35 billion from the rainy-day fund. The legislature plans to send a fiscal 2021 budget to the governor by the end of November; the House and Senate are filing separate budget proposals.
Michigan voters approved two ballot initiatives regarding parks and recreational facility funding and requiring a search warrant to access individual’s electronic data. The state Supreme Court heard a court case regarding state payments to nonpublic schools. Teachers are eligible for $500 in hazard pay as part of the recently approved fiscal 2021 budget. Michigan State University is facing a $54 million revenue decline due to a decrease in enrollment. The governor has called for a statewide mask law to help slow the spread of COVID-19.
Minnesota’s governor approved a $1.9 billion bonding measure that will provide funding for various infrastructure projects. The governor has said that all options are on the table to address a budget gap in the current budget and in the next biennium budget including reorganizing state government, budget cuts, tax increases, using reserves, and legalizing recreational marijuana. The state’s budget director said the biggest question is if Congress will approve additional federal aid to states. Revenues in October were better than expected, although uncertainty remains for the remainder of the fiscal year. The governor placed additional restrictions on bars, restaurants, and social gatherings as COVID-19 cases have risen.
Mississippi voters approved a ballot measure authorizing a statewide medical marijuana program, which must be running by August 15, 2021 and allows for a sales tax rate of up to 7 percent. The state Supreme Court heard oral arguments in a case between legislative leaders and the governor over budget powers related to partial vetoes. The President approved an emergency declaration for Hurricane Zeta.
Missouri’s governor outlined his plan to spend more than $1.2 billion in CARES Act funds, including for testing and tracing, school districts, and unemployment assistance; the House approved the bill in a special session and it now heads to the Senate. The budget director said it is the state’s intent to spend all of the CARES Act funds. The state is still working to determine the cost of Medicaid expansion approved by voters in August. The state education department recently created a new Office of Early Learning.
Montana voters passed two ballot initiatives to permit the state to legalize and tax recreational marijuana, though the state will still need to set up regulations before the industry can operate. The state’s struggling coal industry is expected to result in less tax revenue for state and local governments. Schools in the state are seeing a steep drop in an enrollment, due in part to a shift toward homeschooling as a result of the pandemic.
Nebraska voters approved constitutional amendments to permit casino gambling at horseracing tracks and use the revenue for property tax relief; voters also approved a measure setting a cap on payday loan rates. The state’s revenue forecasting board increased revenue projections for the remainder of the current budget and the next biennium budget. The governor is targeting $40 million in COVID-19 relief for long-term care facilities. A faculty group has said that the University of Nebraska-Lincoln budget cutting process has been flawed. The state prison system continues to work on making improvements.
Nevada’s revenue forecasters said it could take at least two years for the state’s economy to recover to pre-pandemic levels. Meanwhile, the governor’s budget director issued a memo to state agencies directing them to prepare for budget cuts of 12 percent for the fiscal 2022-2023 biennium. The state and legislature are appealing a district court decision that ruled two bills passed in 2019 were invalid, since they extended existing taxes that were set to expire but did not have supermajority support.
New Hampshire’s revenue collections through October for all taxes and fees are up $16 million, or 2.5 percent above forecast. The governor plans to propose cuts to meals and rooms taxes to support hotels and restaurants and potentially a future cut to the business enterprise tax in his next two-year budget; other goals in the upcoming budget include building up services for the Division for Children, Youth and Families and the mental health system and increasing the rainy-day fund. The state is currently facing a shortfall of approximately $200 million.
New Jersey recently debuted its state-based health care exchange. Legislation to set up the state’s recreational marijuana industry will be considered after voters approved a constitutional amendment to legalize recreational marijuana. The governor announced an additional $60 million in small business aid from the CARES Act. The legislature is examining allowing sports betting on all major collegiate games. Revenue collections from July-September were down 8.7 percent compared to the same three months in 2019.
New Mexico has maintained its credit rating and stable outlook so far, despite fiscal 2021 revenue expected to come in between $500 million and $1.4 billion less than last year’s levels. A state lawmaker is interested in assessing the state’s tax breaks, which cost an estimated $1 billion in annual forgone revenue. The governor proposed a $25 million stimulus package for the state’s tourism industry. Some lawmakers are looking at using the state’s Land Grant Permanent Fund as a long-term source of revenue for early childhood education.
New York is projecting a $14.9 billion general fund revenue decline and a 15.3 percent All Funds tax receipts decline from the budget forecast released in February, creating a total loss of nearly $63 billion through fiscal 2024 as a direct consequence of the COVID-19 pandemic. The state reduced spending through September by $4.3 billion compared to fiscal 2020 spending over the same period by freezing hiring, new contracts and pay raises, and temporarily holding back 20 percent of most payments. Halfway through the fiscal year, state tax receipts are trailing last year by $2.8 billion. The governor remains hopeful that a federal aid package will be passed by Congress and also expects the state to reexamine marijuana legalization to help generate additional revenue.
North Carolina recently approved the sale of $700 million in transportation bonds, part of a $3 billion transportation package approved in 2018 to support road construction and repairs across the state. The state also sold $400 million in bonds to update public facilities including higher education institutions, parks, and local water and sewer infrastructure. The governor signed an executive order preventing evictions through the end of the year.
North Dakota is planning on using CARES Act funds for a number of purposes including education and fracking aid. The governor said that the COVID-19 pandemic will be at the forefront of his second term. Revenues remain above forecast for the current two-year budget, although oil tax collections continue to lag. State agencies are examining lease savings if physical footprints are reduced due to increased teleworking.
Ohio lawmakers are considering bills to change how the state funds elementary and secondary education. Medicaid caseloads have increased nine percent compared to last year, and a projected budget shortfall will challenge the healthcare program according to the state’s Medicaid director. A lawmaker said the state is likely to face a $2 billion shortfall for the current budget. The state is allocating $425.6 million in CARES Act funds to small businesses, universities, hospitals, rental assistance, arts organizations, and bars and restaurants. The state is borrowing more than $1 billion from the federal government for unemployment assistance. The governor said that bars, restaurants, and fitness centers may be forced to close if COVID-19 cases continue to rise.
Oklahoma’s gross receipts to the treasury in October were down approximately $47 million, or 4.1 percent, compared to the prior year, attributed in part to slumping oil and natural gas prices. Two ballot measures failed in the general election, addressing sentencing for non-violent crimes and directing tobacco settlement funds to Medicaid expansion. The state’s higher education system is requesting $860 million for next year’s budget, an increase of 11.5 percent over the 2020 budget.
Oregon approved a ballot measure to raise taxes on cigarettes and cigars and set a tax on vaping. Voters also approved a measure to decriminalize possession of street drugs in small amounts, becoming the first state in the nation to do so. Lawmakers on the state’s Emergency Board approved $35 million for a grant program to help set up emergency homeless shelters in the state, after previously rejecting the proposal; the board also approved $100 million for wildfire recovery efforts last month. The state received roughly $27 million less in gas tax revenue between January and August 2020 than it did during the same period in 2019.
Pennsylvania’s governor and legislature are facing a deadline of completing the fiscal 2021 budget by the end of November, after previously approving a partial budget that provided a full year of funding for many public school programs, colleges and universities, debt payments and pension costs. General fund revenue collections through October total $12.5 billion, which is $824.5 million, or 7.1 percent, above estimate. Leaders of the state university system agreed to continue look at integrating six of its 14 schools into two entities. Medicaid enrollment increased 8.6 percent to nearly 3.1 million in September 2020 with more than half of the Medicaid expansion population working a job that does not offer health benefits.
Rhode Island's revised revenue estimates improved by $331 million from the May estimates for a projected $4.1 billion in state revenue for the current year, or about $7 million lower than last year's collections, and revenue for fiscal 2022 is expected to decline another $12 million. The state is estimating a $113 million decline in state spending from the May estimates mostly from Medicaid and social services. The state does not expect to match the 508,000 non-farm jobs it had pre-pandemic until late 2023 or early 2024. The governor recently expanded a small business grant program funded from the CARES Act.
South Carolina’s latest revenue estimate projects state tax collections to decrease by $50 million, leaving a surplus of $811 million for the current fiscal year; state revenues have shrunk by more than $800 million since February. Tourism spending has declined by more than $5 billion since the pandemic began, about a 43 percent drop to date; the state allocated $20 million for tourism marketing efforts. The state’s education superintendent reported sending $43 million in protective equipment to more than 1,300 schools to help them open for in-person classes.
South Dakota voters moved to legalize medicinal and recreational marijuana beginning July 1, 2021; the governor has spoken out against the measures. Voters also approved a measure to permit sports betting in the state. The state is planning on spending CARES Act funds for a variety of purposes including housing assistance, and relief for small businesses and healthcare providers. The governor also announced a program to provide free internet for K-12 students for the remainder of the year.
Tennessee’s governor asked state agencies to cut budgets by 12 percent for 2021 due to impacts from the COVID-19 pandemic and resulting economic downturn. The governor stated that he is looking to include teacher pay raises in the fiscal year 2022 budget. A new $50 million grant program was launched to assist small businesses struggling due to the pandemic and economic downturn. The University of Tennessee system feels confident about fiscal conditions for the spring semester and noted enrollment went up 2 percent across the system.
Texas legislators have pre-filed more than 500 bills in anticipation of a January session, addressing issues including redistricting, gubernatorial emergency powers, and voting. Lawmakers are also tasked with finding a permanent revenue source for 2019 legislation that increased public school funding by $2.7 billion over two years and provided teacher pay increases. State officials created a supplemental special education program that provides $1,500 to families of children with severe cognitive disabilities to enable access to special education services outside the classroom.
Utah voters approved a ballot measure to expand the use of the state’s Education Fund beyond K-12 and higher education to also support child and disability services. The state’s transit authority released a budget aiming for services at 91 percent of the agency’s pre-pandemic levels. State and local school officials are examining the possible factors that may be contributing to declining school enrollment, and uncertainty about longer-term trends remain.
Vermont’s year-to-date general fund revenues through September were $572.8 million, $49.3 million or 9.4 percent above the consensus target, with the personal income tax showing strength. The University of Vermont is asking the board of trustees to approve a freeze on both tuition and room-and-board costs, and a reduction in students’ comprehensive fee. The Legislature’s Joint Fiscal Committee is holding off on a $75 million request from the administration for additional coronavirus relief for businesses. A bill that would set up a system to legalize sales of recreational marijuana became law without the governor’s signature.
Virginia lawmakers approved a revised two-year, $135 billion budget during a special session that includes $90 million in one-time funding for public schools, $100 million in COVID-19 relief funds to assist with utility bills, and provides police officers a $500 bonus. The governor proposed amendments to the revised state budget, which the legislature adopted in-part. The budget also includes language to set up a bipartisan commission on redistricting following voter approval of a constitutional amendment. The governor announced $30 million in CARES Act funding to retrain workers in high-demand industries through one-time scholarships up to $3,000.
Washington’s governor allocated $24 million from coronavirus relief funds to help provide students with computers and other devices for remote learning. The state commerce department awarded $34 million in grants for facilities and services to help people with behavioral health needs. Voters rejected a constitutional amendment to allow public funds set aside for long-term care to be invested in private stocks. Meanwhile, a ballot measure passed last year to reduce most vehicle taxes and fees was ruled unconstitutional by the state supreme court.
West Virginia was on pace to exceed its October revenue estimates by $20.4 million, 6 percent higher than projected and $5.6 million above October 2019 collections, the governor announced a day before the month ended. For the first four months of the budget year, state tax collections were beating projections by 7.4 percent. The state launched a $25 million program to assist with delinquent utility bills, funded with federal CARES Act dollars. The state has committed all but $80 million of its $1.267 billion from the CARES Act. After Election Day, the governor announced his top priority is eliminating the state income tax which represents 43 percent of the state’s General Fund.
Wisconsin’s governor is advising residents to stay home, as well as making other recommendations, to address the increase in COVID-19 cases. Coronavirus cases among inmates have reached an all-time high. The governor said the state may need to use state dollars to address the pandemic if additional federal dollars are not approved soon. Enrollment in K-12 schools fell three percent in the state due to COVID-19, adding to budget challenges. Enrollment for the University of Wisconsin system is down approximately 1.9 percent.
Wyoming is facing a general fund shortfall of $451 million and a school funding shortfall in excess of $300 million for the current biennium, according to the state’s latest revenue forecast. The University of Wyoming announced it would cut 20 degree programs and 78 positions as a result of state budget cuts. The state is seeking additional time to spend its coronavirus relief funds, given ongoing need to respond to COVID beyond December 30.