Budget Blog

April 10, 2020 - News Flash

By Brian Sigritz posted 04-10-2020 03:00 PM




Alabama lawmakers approved $5 million for the state’s public health department for coronavirus preparedness and response activities. Legislative leaders expect to pass “bare-bones” budgets for fiscal year 2021 for both the Education Trust Fund and General Fund due to the economic uncertainty caused by the coronavirus; the state’s fiscal year begins October 1. At this point, lawmakers are not expecting to make cuts to the current year budget. The Alabama League of Municipalities created a task force focused on the distribution of federal coronavirus-related stimulus money to local governments.



Alaska’s governor signed the state’s fiscal 2021 budget into law, providing for $4.5 billion in spending while vetoing $261 million in state funding for operations and capital projects; most of those cuts will be made up for with $191 million in federal aid. The state released an updated revenue forecast projecting a budget deficit of nearly $400 million for fiscal 2021, even if payments from the annual Permanent Fund dividend are cancelled. The governor proposed an economic plan to respond to the COVID-19 pandemic, including a supplemental dividend payment and $1 billion for the state’s disaster relief fund.



Arizona’s governor signed a $11.8 billion “skinny” budget, passed by the legislature before temporarily adjourning, to ensure the state government can operate into fiscal 2021; the budget includes no new spending for the next fiscal year other than required inflation adjustments and promised pay raises for teachers. The budget does include $50 million in economic aid for residents affected by the pandemic, which can be used by the administration for housing assistance, small business aid, and assistance for food banks.



Arkansas’ governor reduced the state’s general revenue budget for the current fiscal year by $353.1 million in response to expected revenue losses from the coronavirus and the extended tax filing deadline. Lawmakers approved legislation creating a $173 million COVID-19 rainy day fund that the governor can access with legislative approval. State general revenue collections in March dropped by $29.2 million compared to the prior year, to $570.2 million, but exceeded the forecast by $26.4 million.



California’s legislature approved up to $1.1 billion in additional spending to respond to the pandemic before suspending their session work for a month while the state focuses on containing the virus; the governor had submitted an emergency request for this funding, which will help support health care needs, homeless services, and school cleaning. The governor’s budget director has advised all state agencies not to expect full funding either for new or existing proposals due to the severe decline in economic activity due to COVID-19.



Colorado downgraded its revenue forecast for fiscal 2021 by $750 million last month due to the expected contraction in economic activity resulting from COVID-19. More recently, the Joint Budget Committee expects to need to cut nearly $2 billion out of the state budget as economic conditions have continued to evolve. The governor submitted a letter to the state’s congressional delegation asking for $500 billion in federal aid to state and local governments in a fourth stimulus package.


Connecticut is estimating a $500 million reduction in revenue for the current fiscal year, largely the result of expected declines in income and sales taxes, and is estimating $100 million in added costs due to coronavirus response; any fiscal 2020 deficit is expected to be offset by an automatic transfer from the reserve fund. No decisions have been made about whether the legislature will return to adjust the second year of the biennial budget as they await the next scheduled revenue estimates on April 30 to further evaluate the state’s fiscal picture. State colleges are not expecting to lay off any staff or faculty. The State Bond Commission met this week to approve $190.5 million in general obligation bonds for a variety of projects including millions in long-awaited municipal funds.



Delaware’s governor has banned all short-term rentals including vacation homes, hotels, motels, and rental condos to combat the spread of COVID-19, and commercial lodging will be closed through May 15. The Delaware Economic and Financial Advisory Council last month lowered its revenue estimate for this year by slightly more than $1 million compared to December's estimate; the estimate for fiscal 2021 fell by more than $94 million. A new state program will help pay rent and utility bills for those who qualify.



Florida legislators approved a $93.2 billion budget for fiscal year 2021 that includes $52 million in emergency state and federal funds for the health department to respond to the coronavirus; the budget also includes $3.9 billion in reserves. The budget includes $500 million for teacher pay raises, $370 million for an affordable housing trust fund and a 3 percent pay raise for state employees. The governor activated a $50 million Small Business Emergency Bridge Loan Program which provides short-term, interest free loans to small businesses experiencing economic injury from COVID-19. Tourist spending contributes more than 13 percent, or $3.2 billion, to the state’s general revenue and sales tax collections resulting from consumer spending equal 77 percent of the general revenue fund, both of which will be impacted by COVID-19.


Georgia’s governor signed a mid-year budget for fiscal year 2020 that includes $100 million for coronavirus response. The budget cuts spending by $159 million due to a slowdown in state revenue that occurred prior to the pandemic; the governor had previously ordered more than $200 million in midyear reductions. Tax collections were up $163 million for March over the prior year or 9.8 percent, although much of the activity occurred prior to businesses shutting down in response to COVID-19. Extending the tax filing deadline will impact state revenues for the current fiscal year as the state collects roughly $2.8 billion of income taxes in March and April.



Hawaii state tax collections may decline by 10 to 25 percent in the year ahead according to a state university researcher, while state economists are also projecting collections will decline by 10 percent next year, as tourism and other economic activity has come to a halt due to the COVID-19 pandemic. The state Council on Revenues last month issued updated revenue projections predicting flat growth in state tax collections next year, or $225 million less than predicted when the governor prepared the state budget.



Idaho’s governor established a COVID-19 Financial Advisory Committee to oversee distribution of $1.25 billion in federal aid that the state will receive under the CARES Act, which will be headed by the governor’s budget chief. The governor also ordered a 1 percent general fund holdback – excluding agencies directly responding to the virus – cutting the budget by $40 million, as well as a $39 million transfer from the tax relief fund to the governor’s emergency fund.



Illinois continues to analyze the potential revenue impact from the coronavirus and the governor expects significant changes to the budget he originally proposed in February. A report from the University of Illinois said that a four-year revenue impact from the coronavirus could range from $10 billion to $28 billion. General fund revenues increased by $174 million in March although that is expected to change in coming months. The state comptroller’s office borrowed $105 million from various funds to help make larger payments to hospitals. The governor recently said that more assistance from the federal government is needed to respond to the impacts from the coronavirus.



Indiana’s governor announced that he was redirecting $300 million in state reserves that were going to capital projects to coronavirus relief instead. The governor also previously announced plans to prohibit evictions or foreclosures, extend the tax filing deadline, and interpret unemployment laws broadly. The state recently announced that schools would remain closed for the rest of the academic year. Indiana announced plans to temporarily eliminate the cost-sharing requirements of its state-run health plans.  



Iowa’s legislature passed a series of measures to give the governor additional power to respond to the coronavirus outbreak. The state legislature is not expected to reconvene until at least April 30 and other measures are currently on hold including tax reform and the fiscal 2021 budget. Tax collections declined 9.1 percent in March, although it was mostly due to increased tax refunds and not the impact of the coronavirus. Earlier the state revenue estimating conference slightly lowered its forecast for fiscal 2021, although the state’s budget director said the economic impact from the coronavirus for next year could be more substantial.



Kansas’ governor signed the state’s budget bill for the remainder of fiscal 2020 and fiscal 2021 that includes $65 million for coronavirus response efforts. The legislature passed a series of bills before adjourning until late April, including a $9.9 billion 10-year transportation plan, which the governor later signed. The University of Kansas expects to lose tens of millions of dollars due to the impact of COVID-19. March tax collections were 1.6 percent below projections, with most of it due to insurance companies paying the state tax on their premiums early.



Kentucky’s General Assembly passed an $11.4 billion, one-year state budget for fiscal year 2021 instead of the traditional two-year budget over uncertainties about future tax revenue due to the COVID-19 pandemic. The budget continues most spending at current levels and allows cuts as necessary depending on revenue trends while also fully funding required contributions for public pension systems. Legislators also passed a bill reinforcing emergency measures ordered by the governor, including waiving the seven-waiting period for collecting unemployment benefits and lifting restrictions on telehealth services.



Louisiana has spent $573 million on coronavirus response, doubling the amount spent the prior week as the state establishes a temporary hospital and other facilities in response to the COVID-19 pandemic. State officials stood up a $50 million small business loan program for companies with fewer than 100 employees impacted by the coronavirus pandemic, offering loans up to $10,000 with interest rates capped at 3.5 percent and no payments for at least 180 days. State revenues will be impacted by the drop in oil prices, as direct oil and gas sector jobs account for nearly 2 percent of the state workforce and about 6 percent of state revenue.



Maine’s legislature approved a $76 million supplemental budget package geared towards the state’s response to the coronavirus. The governor announced that direct care workers will now see a pay increase on April 1 instead of the originally scheduled July 1 to help ensure that homecare is available; the administration also announced that it is expanding access to meals for older residents. The state treasurer said that state government should expect a decline in general fund tax receipts, which will result in a decrease in monthly revenue sharing with towns and cities.


Maryland legislators approved a $47.9 billion budget for fiscal year 2021 that includes a provision allowing the governor to use up to $100 million in reserves for COVID-19 response; the bill leaves nearly $1.4 billion in reserves. The legislature also approved a public education reform bill that would expand prekindergarten, increase teacher pay and standards, and add more programs aimed at student preparation, with a projected cost of nearly $4 billion when fully implemented. The state spent more than $200 million on emergency equipment purchases since the governor’s state of emergency declaration on March 5, with over 200 contracts signed. Hospitals were authorized to temporarily raise rates charged to all patients to help fund emergency and ongoing care during the pandemic. The Board of Estimates declined to make updated projections on tax collections due to the economic uncertainty, instead maintaining projections from December as a placeholder until more data is available.


Massachusetts’ governor announced $800 million in state funding to help hospitals respond to the coronavirus outbreak. March revenue collections were 3.2 percent above the state’s monthly benchmark although the revenue commissioner acknowledged that tax collections moving forward will be impacted by COVID-19. Legislative leadership is unsure about when the debate on the budget will take place and no decisions have been made about meeting beyond July 31. Earlier the legislature approved a series of coronavirus response bills proposed by the governor including one that speeds up unemployment payments.


Michigan is looking at a wide-range of scenarios related to the impact from the coronavirus, with a potential budget hole of $1 billion to $3 billion in fiscal 2020, and $1 billion to $4 billion in fiscal 2021; the state begins its fiscal year on October 1. Earlier, the governor signed a bill that provides $150 million for COVID-19 response, and took a series of other actions to limit state spending including a hiring freeze. The state announced that state employees that work directly with the public will get bonus pay during the coronavirus pandemic. The governor announced that schools will remain closed for the rest of the academic year.



Minnesota’s legislature passed a $300 million coronavirus relief bill which the governor later signed. The legislature also passed a bill that allows emergency responders to draw workers compensation benefits if they contract the coronavirus. In his State of the State speech, the governor discussed the current impact of the coronavirus on the state, but said that Minnesotans are resilient and are weathering the storm. Officials are currently analyzing the potential impact from COVID-19 on the state budget. The University of Minnesota is projecting a loss of revenue up to $315 million.



Mississippi is giving recipients of the Supplemental Nutrition Assistance Program (SNAP) the maximum amount of funds allowable, regardless of their prior payment, on an emergency basis during March and April. Lawmakers plan weekly updates from state economists to track how the pandemic is affecting state income and expenses. The federal relief bill may not be able to assist the state with revenue losses that could impact spending categories like schools, health care and other vital services. 


Missouri’s legislature approved a $6.2 billion coronavirus response plan that also grants the governor additional executive discretion in spending the funds. The bill includes more federal funds than has currently been allocated to the states, however, the legislature decided to plan for it now in hopes of receiving more federal funds later. Earlier, the governor announced that he is freezing $180 million in fiscal 2020 spending due to the impact from COVID-19, including $81 million for higher education. Net general revenue collections declined 4.2 percent in March compared to last year, likely due to the impact from the coronavirus.



Montana’s governor announced that the state would cover the price of testing and treatment for coronavirus for uninsured state residents, as well as new rules to help workers and small businesses weather the economic impacts of the pandemic. Schools in the state will receive at least $41 million from the federal CARES Act, and will have broad options for how they spend the money.



Nebraska’s legislature passed, and the governor signed, an $83.6 million COVID-19 emergency response bill; the legislature still needs to pass an adjustment bill to the current biennium budget but it is uncertain at this time when the legislature will return. Recently the governor extended a series of health measures for the entire state until May 11. The education commissioner has raised concerns that some students cannot participate in remote learning.



Nevada’s governor has instructed agencies to begin looking for ways to reduce their budgets in the new fiscal environment created by the COVID-19 pandemic, preparing for a 4 percent cut in fiscal 2020, with a 6 to 14 percent cut in fiscal 2021, though also noting the cuts would not be across-the-board. The state’s Interim Finance Committee approved multiple allocations of funding for disaster relief as a result of the pandemic. Using estimates from state economists, shutting down casinos for one month has a rough cost to the state budget of $66 million in foregone gaming revenues.

 New Hampshire

New Hampshire’s state revenues for March were below estimates by $10.3 million, at $667 million; overall state revenue is $13.4 million ahead of estimates, but $63 million below the prior year. The state will receive $147 million in specific coronavirus grants for services including education, mass transit, low-income heating assistance, and state election expenses; the grants come on top of $1.25 billion the state will receive under the CARES Act. The governor modified an emergency order to temporarily prohibit evictions and foreclosures. Earlier the state announced the creation of a $50 million fund to help hospitals.


New Jersey

New Jersey plans to extend its fiscal year by three months because of uncertainty about the new coronavirus’ effect on revenue and how much stimulus is coming from the federal government; the state’s tax deadline will also be moved to July 15 in order to match the new federal deadline. The administration announced it has ordered $920 million in discretionary spending be put on hold due to the expected fiscal impact from COVID-19. Hospitals will be able to receive millions of dollars from the state under new funding plans to help treat the surge of coronavirus patients with the bulk of the money in a pre-payment plan of $140 million. The governor issued an executive order that will allow retired state workers to return to work to help fight the coronavirus pandemic without any impact to their state pensions.


New Mexico

New Mexico may see revenue fall $1.5 billion to $2 billion below projections as a result of the COVID-19 pandemic and low oil prices, according to the state’s Senate Finance Committee chairman. The state is planning to convene a special session once markets have settled and there is sufficient economic information to update revenue estimates, while the administration works on contingency plans. The State Investment Council directed $100 million from an investment portfolio to help medium-sized businesses amidst the economic fallout from the pandemic.

 New York 

New York’s governor announced the highlights of the enacted fiscal 2021 budget that totals $177 billion with $105.8 billion in state funds; the budget includes no new taxes, continues to phase in tax cuts for the middle class, and enacts a paid sick leave program. The budget also allows the governor to unilaterally cut spending in the middle of the fiscal year without legislative approval, though legislators would have 10 days to develop and enact their own plans and authorize borrowing an extra $11 billion to help cover the state's costs and lost revenues. The state anticipates tax revenue projections dropping by at least $10 billion in the coming year. The governor directed schools and nonessential businesses to stay closed through April 29th.


North Carolina

North Carolina officials expect a recession as tax revenues drop due to business closures in response to COVID-19 and the tax filing deadline is delayed; the transportation secretary expects a $20 million revenue loss and income and sales tax losses could be higher. The chief legislative economist estimated revenues could fall $1.5 billion to $2.5 billion below forecasts. Legislative working groups are reviewing proposals related to health care, education, economic support and continuity of state operations for potential consideration when they return April 24. Economists are projecting an unemployment rate ranging from 8 to 12 percent in April, compared to 3.6 percent in February.


North Dakota

North Dakota’s legislature approved accepting federal funds related to the CARES Act; earlier North Dakota’s Emergency Commission approved five requests from state agencies to accept the money. A drop in oil production is expected to have significant repercussions to state revenue and oil workers in the state. The governor announced the creation of a workforce coordination center to help respond to COVID-19.



Ohio’s general revenue tax receipts were 10.5 percent below expectations in March, likely largely due to the impact from the COVID-19 pandemic, according to the state budget director. The legislature is examining possible responses including potentially tapping the state’s rainy day fund and borrowing money for public works projects. Earlier, the governor announced a hiring freeze and called on state agencies to start preparing for cuts up to 20 percent for the remainder of the biennium budget. The state treasurer’s office announced a program to help state hospitals borrow at a lower cost. The governor is recommending releasing additional prisoners to help slow the spread of the coronavirus in the corrections system.



Oklahoma declared a state revenue failure of approximately $416 million for fiscal year 2020 due to the COVID-19 pandemic and decline in oil and gas industry. The legislature approved a resolution granting the governor expanded authority to respond to the pandemic, including redirecting up to $50 million in state funds among agencies; they also passed a bill utilizing $500 million from the state’s rainy day fund to cover the revenue shortfall.



Oregon lawmakers recommended 20 proposals for how the state should respond to the pandemic during a special session, including rental and mortgage assistance, prohibiting evictions, expediting food security benefits, grants and loans for small businesses, and improving health care access. The governor asked the federal government to fund potential mobilization of the state’s National Guard to respond to the pandemic. Top lawmakers decided to hold off on calling a special session to consider legislation to address the pandemic and its economic effects until more information is known about state revenues and federal stimulus. 



Pennsylvania has laid off about 2,500 part-time and seasonal employees due to the financial fallout from the coronavirus; the administration has also ordered a hiring freeze and general purchasing ban for state agencies in an effort to cut spending, as well as withholding paychecks from 9,000 state employees. The administration proposed $50 million in emergency funding for hospitals, nursing homes and emergency medical providers to buy equipment and supplies. The state collected $4.4 billion in general fund revenue in March, which was $294.6 million, or 6.2 percent, less than anticipated; fiscal year-to-date general fund collections through March total $25.3 billion, $45.6 million, or 0.2 percent, below estimate with the shortfall only partially related to the COVID-19 outbreak.


Rhode Island

Rhode Island has secured an initial $150 million line of credit from Bank of America to help keep state government operating through the next few months as the coronavirus pandemic cuts into state tax revenue. The state has formed a partnership with CVS Health to make free, rapid COVID-19 tests available. The state established a special $5million fund to offer grants to nonprofit organizations that are helping individuals to cope with behavioral-health needs during the coronavirus pandemic. The governor announced that the state is preparing three surge sites to provide hospital-level care and treat more than 1,000 people.


South Carolina

South Carolina lawmakers approved $45 million for state health officials to combat the coronavirus, including for additional employees and overtime, protective equipment, lab supplies and an education campaign. Legislators returned for a one-day session where the House passed a bill to continue current spending levels if the fiscal year 2021 budget is not enacted on time due to COVID-19 as well as allocating $180 million for pandemic response; the Senate made changes requiring another vote. Additionally, South Carolina’s Revenue and Fiscal Affairs Office reduced its revenue projection for fiscal 2020 by $507 million and reduced its forecast for fiscal 2021 by $644 million. State unemployment claims hit a record high of more than 64,800 for the week ending March 28.


South Dakota

South Dakota’s governor signed nine emergency bills related to the coronavirus including adjusting the state budget to distribute federal aid. The governor also announced that schools would remain closed for the rest of the year and updated an executive order related to bars and restaurants. The state is expecting significant impacts on tourism, one of the state’s largest industries. Earlier the legislature approved a fiscal 2021 budget that increases state spending 1 percent over fiscal 2020. The governor said that she is looking to call a special session in June to make significant changes to the state budget after the state has a clearer picture of its fiscal situation.



Tennessee’s governor unveiled an updated $39.8 billion fiscal year 2021 budget proposal in light of the COVID-19 pandemic which assumes a zero percent economic growth rate, halves his original proposed teacher pay raise from 4 percent to 2 percent, creates a $150 million fund for pandemic response and sets aside $575 million to increase the state’s rainy day fund. The legislature approved the budget and recessed until June 1. The governor utilized the state’s reserve of Temporary Assistance for Needy Families funds to begin issuing emergency cash payments for lost employment due to the coronavirus, with payments scaled based on family size.



Texas’ comptroller indicated the state’s economy has entered a recession, along with the national and global economies, but said it will be another seven weeks before sufficient data is available to begin making informed projections. State sales tax revenue totaled $2.69 billion in March, an increase of 2.9 percent over the prior year; the impact of social distancing measures will not be seen until April collections. The state’s rainy day fund is projected to have approximately $8.5 billion available for responding to the economic downturn or combatting COVID-19. The governor took actions to keep day care centers open and create slots for front line workers in the coronavirus response.



Utah’s governor introduced a three-phase plan developed by his special task force to promote a health and economic recovery, consisting of an “Urgent Phase”, “Stabilization Phase”, and “Recovery Phase.” Before adjourning, lawmakers passed a $20 billion state budget, also setting aside $24 million for pandemic response efforts. The legislature is expected to meet in a virtual special session soon to address more issues related to the pandemic, including unemployment benefits, expanding sick leave, and expanding Medicaid, as well as budget adjustments. The governor announced a new zero-interest bridge loan program for small businesses to help weather the COVID-19 crisis.


Vermont lawmakers may craft a short-term spending plan instead of an annual budget because of uncertainty caused by the COVID 19 pandemic, according to the Senate Appropriations Committee chair. State fiscal analysts said Vermont could face a revenue shortfall of $200 million due to diminished economic activity and delayed tax payments. Legislators returned to pass a series of coronavirus related bills including ones that increase access to unemployment benefits and increase the capacity of the state’s health care system.



Virginia’s governor will suspend all new spending in the $135 billion, two-year budget approved by the General Assembly in March and divert planned deposits to the reserves to COVID-19 response instead, and will also propose other changes to the biennial plan. The original budget approved by the legislature was a $135 billion two-year plan that included pay increases for teachers and state employees, a one-year tuition freeze at public universities, and an additional $182 million for financial reserves. The governor instituted a hiring freeze for state employees and is asking agency heads to look for possible budget cuts in response to the COVID-19 pandemic.



Washington lawmakers authorized the use of $200 million in state reserves to fund the response to COVID-19, though the legislature may come back for a special session since the state has already distributed 60 percent of those funds. Before adjourning, the legislature also approved a supplemental operating budget containing $160 million for homelessness and housing affordability, as well as a supplemental transportation budget. The governor signed the budget but vetoed dozens of items to cut spending by $445 million through mid-2023, faced with a potential steep decline in revenue due to the pandemic.


West Virginia

West Virginia’s tax revenue collections for March came in 3.5 percent above estimates and 9.9 percent above the prior year but collections will be watched closely for the remaining three months of the fiscal year. The state processed a record 41,549 unemployment claims in the week since the governor ordered closures of bars and certain restaurants in response to the coronavirus pandemic. County jails are working to reduce populations, especially among pretrial defendants and those who do not constitute a public safety risk, in response to the pandemic.



Wisconsin’s governor has released two coronavirus response plans including a second piece of legislation aimed at providing relief for those impacted by COVID-19; earlier the governor proposed a $700 million package aimed at addressing the outbreak. The legislature has been considering its own proposals including one that would grant the budget committee additional abilities to cut spending, among other actions. The state is anticipating a significant increase in Medicaid costs related to the coronavirus. Public universities have asked the state for emergency relief funding. Court rulings overturned the governor’s request to postpone the state’s primary and extend the deadline for absentee voting.



Wyoming created five task forces to address various aspects of the pandemic. Last month, the legislature wrapped up its regular session after passing a $7 billion state budget, and will likely need to hold a special session to address the COVID-19 crisis and make changes to the budget as the state faces severe economic concerns driven by the pandemic, low oil prices, and an existing structural budget deficit.