Alabama’s governor announced nearly $100 million in federal coronavirus aid will support student learning at K-12 schools and state colleges and universities; $48.8 million will be allocated from the Governor’s Emergency Education Relief Fund, funded in the CARES Act, to the state education department to help with reopening schools. The state will also provide $30 million in federal aid to provide testing to all students returning to college campuses in the fall. The governor announced $18.27 million will be provided for COVID-19 testing and surveillance at the state’s nursing homes. Gas tax distributions were down 25 percent from March to April but officials have said it is too early to determine the effect on planned projects.
Alaska began sending Permanent Fund dividend payments of $992 to residents on July 1, totaling $592 million. Alaska’s Department of Commerce announced that it would no longer exclude those businesses that received small amounts of federal aid from being eligible for additional small business assistance from a new $290 million state grant program, supported by federal CARES Act funds; the changes were made in response to calls from lawmakers and businesses for fewer eligibility restrictions.
Arizona’s governor announced that it would allocate $270 million in federal CARES Act funds to schools to help make up for state funding losses that are expected due to enrollment declines; state aid is based on student attendance. The state’s June revenue forecast projected a shortfall of $700 million through fiscal 2021, though there is still significant economic uncertainty that could result in a larger shortfall. The state’s Medicaid program is seeing an increase in enrollment as a result of job losses.
Arkansas’ general revenue collections in June declined by $47.1 million compared to the prior year but exceeded the state’s March forecast by $77.3 million; fiscal year collections were down $176 million from the prior year and exceeded the forecast by $272.5 million. In March, the state revised its revenue forecast down and cut its budget by $353 million. The state began phase two of a juvenile justice overhaul announced in 2018, including private management of the four state youth facilities and increased funding for community-based services. Legislators approved requests from the governor to transfer funds from the state’s COVID-19 rainy day fund for crisis stabilization units and transportation department.
California’s governor signed a $202 billion general fund budget that closes an estimated $54.3 billion budget deficit by delaying payments to public schools, cutting spending on employee salaries, higher education, and other state services, tapping reserves, and increasing taxes on some businesses. Spending cuts would be restored or partially restored if the state receives additional federal assistance by October 15. A state Senate plan is moving forward that would grant tax breaks to landlords that forgive rents and halt evictions, which would allow tenants 10 years to repay debt to the state and would cost the state up to $10 billion.
Colorado’s governor signed the state’s fiscal 2021 budget that closes a more than $3 billion general fund shortfall by cutting spending, tapping reserves and other one-time funds, and eliminating corporate tax breaks. The state’s June economic forecast shows that projected tax revenues will leave a slim reserve of $300 million, but further revenue loss could result in the governor having to make midyear cuts. Looking ahead to fiscal 2022, the administration will ask state agencies to cut their budgets by an additional 10 percent without more federal aid.
Connecticut is projecting an operating shortfall of $444.7 million for fiscal 2020, representing 2.3 percent of the general fund. The shortfall will be addressed through a transfer from the budget reserve fund with reserves expected to be about $2.38 billion by the beginning of fiscal 2021, or 11.8 percent of net general fund appropriations. Implementing safety protocols for schools to reopen to stem the spread of the coronavirus will bring millions in new costs. The state has $760 million already committed out of the $1.4 billion share of the Coronavirus Relief Fund.
Delaware’s governor signed the fiscal 2021 operating budget of $4.52 billion, less than the $4.64 billion budget that was proposed earlier in the year, and approved the capital spending plan of $708 million, an 18 percent decrease over the prior year. The budget uses funds from a new budget reserve fund and does not include previously proposed across-the-board pay increases. The Delaware Economic and Financial Advisory Council slightly increased its revenue estimate for fiscal 2021 by approximately $11 million, however the forecast is still $203 million less than what was forecasted in September.
Florida’s governor vetoed $1 billion from the $93.2 billion fiscal year 2021 budget approved by the legislature earlier this year but maintained funding for state employee and teacher salary increases. The state is allocating $240 million in federal CARES Act funds for rental and mortgage assistance with half assigned to counties. Enrollment in the state’s Medicaid program grew by nearly 7.7 percent between February and May due to economic conditions related to the pandemic.
Georgia’s governor signed a $26 billion budget that cuts $2.2 billion in spending, including $950 million in basic K-12 funding, and uses $250 million in reserve funds; this equates to about a 10 percent reduction, lower than previous projected cuts of 11 and 14 percent. The budget does not require state agencies or the university system to furlough employees. The state begins rolling out the Pandemic Electronic Benefits Transfer program this month, which will provide one-time credits for groceries for qualifying families of school-age children.
Hawaii saw a 25 percent drop in tax collections in June compared to one year ago and faces a $2.3 billion revenue loss over the biennium. The governor said that the state will need to consider budget cuts in fiscal 2021, on top of other measures taken to date. The state is considering borrowing municipal loans through the U.S. Treasury, and the governor says that public employee pay cuts or furloughs will be necessary without additional federal aid. Lawmakers reconvened last month to determine how they planned to spend more than $600 million in federal coronavirus relief funds.
Idaho’s governor issued an executive order directing state agencies to cut their budgets by 5 percent ($200 million) for fiscal 2021, on top of a 2 percent reduction approved earlier this year. State revenues may drop 8.6 percent to 14.4 percent compared to projections. For fiscal 2020, the state is expected to end the year with a balanced budget after earlier making spending cuts and other cost control measures. The state announced it will pay jobless residents one-time bonuses of $1,500 to return to work between May and July, with the bonuses paid for with federal coronavirus relief funds. About 80,000 state residents signed up for expanded Medicaid coverage through early June.
Illinois’ revenues for fiscal 2020 were down approximately 3 percent, or $1.1 billion, compared to fiscal 2020. The state Comptroller said she expects fiscal 2021 to be the most difficult year she has seen, due to the COVID-19 pandemic. The governor signed a bill expected to help lead to the development of a Chicago casino. The governor also announced $50 million in state grants for broadband projects, and $900 million in business relief and rent support from CARES Act funds.
Indiana’s governor said that he is not planning on cutting K-12 spending at this time, although most other areas of the budget will need to be cut due to a multi-billion dollar revenue shortfall. Budget officials did order a $103 million cut to higher education. A number of new laws took effect on July 1, including ones that raise the smoking age to 21, changes teacher evaluations, and permits greater use of out-of-state prescriptions. The governor said the state will not move to the next stage of reopening at this time. Schools across the state are able to apply for $61.6 million in grants to improve remote learning, funded by the federal CARES Act.
Iowa’s legislature finalized a $7.78 billion fiscal 2021 budget that keeps spending mostly flat, while reducing spending in some areas including to the Board of Regents, judicial branch, and the Secretary of State’s office. New laws that went into effect on July 1 included ones concerning voter ID requirements, medical marijuana, police misconduct, licensing restrictions, and COVID-19 liability protections. Tax collections from March 19 to June 23 declined 22.6 percent partly due to the economic impact from COVID-19, and partly due to the shifting of the tax deadline. The governor announced plans to direct $490 million in CARES Act funding to the unemployment trust fund.
Kansas’ governor announced plans to cut approximately $700 million from the fiscal 2021 budget through a combination of reduced spending, delaying loan payments, and other one-time measures. The governor is not currently planning on cutting money from school budgets. The State Finance Council approved distributing $400 million in CARES Act funds to localities. The University of Kansas is expected to face a budget shortfall of $120 million in fiscal 2021.
Kentucky's budget faces a $1.1 billion shortfall in fiscal year 2021 without another round of stimulus funding from Congress, with state agencies facing cuts ranging from 16 to 29 percent. The state’s General Assembly only passed a one-year budget instead of a typical two-year during this year's legislative session as the COVID-19 pandemic emerged. Kentucky’s public universities and colleges have seen a $145 million hit from increased expenses and declining revenues; this financial loss represents 17 percent of the higher education funding appropriated for the FY 2020 fiscal year. More than 900,000 new unemployment claims have been filed by Kentuckians during the coronavirus pandemic, leading the state to borrow $865 million from the federal government for its depleted unemployment insurance trust fund.
Louisiana’s legislature completed work on the fiscal 2021 budget that includes the use of federal coronavirus funds; the legislature indicated that it could return to session in October to make additional cuts if the budget situation worsens. The governor vetoed a provision to delay pay raises for classified state employees and also vetoed $9 million in new spending and a provision that would have violated guidance from the Centers for Medicare and Medicaid Services. To prepare for possible budget shortfalls in fiscal 2021, he ordered cabinet agencies to plan for mid-year cuts by setting aside at least 10 percent of their budgets and will declare a hiring freeze. The governor also announced he will use $32 million in federal funds for the Governor’s Emergency Education Relief Fund for computers and improved internet access for public school students; $15.5 million for higher education was also announced, including $10 million to accelerate training for high-demand jobs.
Maine has set aside $35 million of the Coronavirus Relief Fund for local and tribal governments and has committed $270 million to the unemployment insurance system strained by the pandemic. The state is posting a spreadsheet that shows how all federal funds are being allocated. The University of Maine’s board of trustees conditionally approved a 2.5 percent tuition increase as part of its $559.5 million budget for fiscal 2021. After recessing in March, the legislature may return to session in August to consider the impact of COVID-19 on the economy and state finances.
Maryland’s Board of Public Works approved $413 million in budget cuts for fiscal year 2021, a revised amount from the $672 million originally requested by the governor in response to economic conditions caused by the pandemic. These cuts were part of a larger proposal from the governor to cut $1.45 billion into total spending from the budget over the fiscal year. Early estimates show transportation revenues may decline by $550 million in fiscal 2020 and $490 to $560 million in fiscal 2021, reducing the amount of revenue disbursements sent to local governments. The state will reimburse its correctional health care provider for coronavirus-related expenses.
Massachusetts’s governor signed the $5.25 billion interim budget with an amount sufficient to fund government operations through July and will make it possible for the treasurer to deliver local aid payments to cities and towns; the interim budget approves funding to cover expenses in July at the same funding level that was approved for fiscal 2020. By July 1, 2021, the Massachusetts Bay Transportation Authority’s deficit will exceed $400 million, according to the organization’s estimate. The governor announced a $275 million coronavirus economic recovery package to help spur growth.
Michigan’s governor and legislature announced an agreement to address an approximately $3.2 billion fiscal 2020 budget shortfall using a combination of spending reductions, layoffs, hiring freezes, rainy day funds, and federal coronavirus relief funds. The state still faces a $3 billion shortfall for fiscal 2021, which begins on October 1 for Michigan. The governor signed off on a plan that uses $880 million in coronavirus relief funds for hazard pay, rental assistance, small business help and school grants. The governor recently vetoed legislation regarding further delaying the tax deadline and whistleblower protections. A tax hike for employers was triggered by the state’s unemployment compensation fund falling below $2.5 billion.
Minnesota’s governor is calling a special session for next week to focus on issues including a supplemental, bonding for construction projects, and police reforms. An earlier special session concluded without resolutions on most major issues. The governor approved a plan to send $841 million in federal coronavirus funds to local governments. School districts are concerned about the amount of state funding moving forward as the state contends with at $2.4 billion budget shortfall.
Mississippi’s governor vetoed most of the fiscal year 2021 education budget due to a reduction of $26 million to a teacher pay program; the education department can continue to operate on a letter from the governor until the legislature reconvenes. The estimated shortfall for fiscal year 2021 is approximately $275 million after lawmakers recorded about $275 million in income taxes normally collected for the 2020 budget into fiscal 2021. Lawmakers finalized spending for the $1.25 billion federal coronavirus relief funds, including funds allocated for small businesses, expanding rural broadband and student technology purchases, the unemployment trust fund, and funds for cities and counties.
Missouri’s governor signed the fiscal 2021 budget after restricting $448 million in state spending in areas such as K-12, higher education, and healthcare; the governor also vetoed 17 items. Earlier, the governor announced additional spending cuts for fiscal 2020 bringing the total amount of cuts to $430 million. Additionally, the state announced that it is laying off approximately 300 workers and eliminating 200 vacant positions. Missouri is planning on using $50 million in CARES Act funding to increase internet access.
Montana’s latest forecast projects general fund revenue will decline nearly 13 percent in fiscal 2021 before increasing by 15 percent in fiscal 2022, but rapidly evolving conditions make accurate predictions difficult. The governor announced a new $125 million loan deferment program, supported with CARES Act funds, for businesses that have incurred significant revenue losses due to COVID-19. A U.S. Supreme Court ruling decided that a Montana tax credit program designed to subsidize private education could not exclude religious schools.
Nebraska’s legislature is scheduled to return later this month to consider several issues including possible property tax reform, a new business investment tax incentive program, and funding for a new University of Nebraska Medical Center. The Nebraska Economic Forecasting Advisory Board is planning to meet on July 23 to develop a new revenue forecast to help determine the economic direction of the state. The University of Nebraska Regents are calling for $43 million in cuts due to budget uncertainty.
Nevada lawmakers have convened in special session to decide how to adjust the state’s $4.4 billion annual spending plan to close a $1.2 billion budget shortfall. To close the gap, the governor is proposing cuts totaling $590 million to planned spending on K-12 education, higher education, health and human services, and other state agencies, in addition to fund transfers and reversions, furloughing state employees, and other measures. Last month, the governor ordered the distribution of $148 million in coronavirus relief funds to local governments that did not receive direct allocations from the federal government.
New Hampshire’s total estimated shortfall of $538 million represents just over 20 percent of the $2.5 billion budget, with a revenue shortfall of $182.4 million in fiscal 2020 and an estimated revenue shortfall of $355.8 million for fiscal 2021. The Senate Health and Human Services Committee recently amended a bill to transfer $25 million from the CARES Act fund to aid nursing and long-term care facilities. The governor announced a $35 million housing relief fund to help homeowners and small businesses and the grace period on foreclosures and evictions will be extended to 30 days instead of seven days.
New Jersey’s governor signed a 3-month, $7.7 billion budget into law, a stopgap measure that cuts funding to departments across the board and authorizes the de-appropriation of nearly $1.2 billion in funds enacted in fiscal 2020. Revenue collections through May total $26.86 billion, $2.498 billion, or 8.5 percent below the prior year. The largest state workers union reached an agreement with the governor to postpone annual raises and furlough workers in order to avert layoffs. The state will borrow $1.7 billion from the federal government to replenish the unemployment fund that has paid out more than $2.1 billion in benefits to workers who lost jobs or hours during the pandemic crisis.
New Mexico’s governor signed a budget solvency plan to revise the state’s budget and address a $2.4 billion revenue shortfall through fiscal 2021; the governor vetoed more than $30 million in cuts to public schools and other areas. Lawmakers earlier approved a $7 billion spending plan for fiscal 2021, which scaled back state spending by $600 million compared to the budget originally enacted in March, in addition to using federal funding and reserves. The governor also signed tax relief legislation to local governments, residents and businesses affected by the pandemic.
New York tax receipts in May were down $766.9 million, or 19.7 percent, below the previous year. Personal income tax withholding revenues were $291.8 million below the prior year, a decline of more than 9 percent reflecting both depressed economic activity and timing factors. The governor said without federal aid the state could see 20 percent cuts to public schools, health care and local governments. Lawmakers are reconvening July 20 for a rare summer session in a year where the legislative calendar was upended by COVID-19.
North Carolina’s governor signed a bill that provides a $350 one-time bonus to teachers and instructional support personnel along with the regular experience-based increase. The governor also signed a bill that launches a transformation to Medicaid managed care by July 1, 2021. A bill took effect without the governor’s signature that prohibits the gas tax rate from falling for the next two years in addition to increasing financial safeguards at the state transportation department.
North Dakota’s May tax collections were 19.1 percent below forecast due to declines in sales and oil taxes, but for the year revenues remain above forecast. The state has seen a sharp increase in sales taxes from online retailers. The North Dakota Emergency Commission approved spending $400 million in CARES Act funds for unemployment claims, grants to businesses, and plugging abandoned oil wells. North Dakota’s University System said the governor’s current budget guidelines for the next biennium to prepare for 10 percent reductions would lead to significant cuts to higher education.
Ohio’s governor said he expects to use most, if not all, of Ohio’s $2.7 billion rainy day fund resulting from the impact of COVID-19; the state is currently facing a $2.1 billion shortfall for fiscal 2021 alone. The governor also said he hopes to not have to make further reductions to K-12 after reducing aid to schools by 3.7 percent, or $300 million, in fiscal 2020. Ohio asked the federal Department of Labor for a $3 billion loan to fund unemployment claims. The state recently combined two separate websites detailing state spending.
Oklahoma ended fiscal year 2020 with a $585.5 million budget shortfall after revenue collections fell 4.3 percent compared to the prior year amid the economic slowdown caused by the pandemic, although June collections showed improvement over the prior two months. Voters narrowly approved a ballot initiative to expand Medicaid as Oklahoma becomes the fifth state to expand Medicaid via ballot initiative. The state received reimbursement requests from cities and counties totaling $7.5 million for the June application period, part of the release of coronavirus relief funds to local governments.
Oregon lawmakers concluded a special session after passing a series of police accountability laws, as well as some economic relief measures. The governor is expected to call the legislature into a second special session later this summer to address the state’s revenue shortfall of $2.7 billion, while waiting for more clarity on additional federal aid to states. A number of state parks will stay closed this summer due to budget cuts, and a steep drop in lottery funds has cancelled the sale of $273 million in state bonds to finance major capital projects.
Pennsylvania ended fiscal 2020 with $32.3 billion in general fund collections, 9.1 percent below estimate. General Fund revenue collections for June totaled $2.7 billion, which was $577.4 million, or 17.8 percent, less than anticipated. The governor announced that individuals with intellectual disabilities and autism and the providers of support services for these populations will receive $260 million in CARES Act funding. The state is also providing $225 million in grants to small businesses from the CARES Act. The governor signed legislation making it easier for universities and colleges to consolidate.
Rhode Island lawmakers approved a supplemental budget for fiscal 2020, using the state's rainy-day fund and extra money from state agencies to help address the approximately $250 million budget deficit created by the coronavirus pandemic this fiscal year. The House Finance Committee will resume its deliberations for the 2021 fiscal year and hold budget hearings over the next several weeks in anticipation of budget consideration in August with much dependent on the level of federal support the state receives. The state is currently operating under a law that allows it to spend 1/12 of its previous year’s budget each month.
South Carolina legislators approved a bill allocating $1.2 billion in federal coronavirus relief funds, including funds for rural broadband, the unemployment trust fund, reimbursing state agencies and local governments, and additional learning days in August. The state is projected to end fiscal year 2020 with a 0.5 percent surplus instead of the 6.0 percent surplus projected earlier in the year; tax collections are expected to be $500 million less than once expected. Since the state increased the gas tax in June 2017, the new tax has generated $372 million in revenues and when combined with other funds and fees, allowed for $1.3 billion in contracted work.
South Dakota continues to request greater flexibility in spending federal coronavirus relief funds. The governor announced that localities will be able to access $200 million in CARES Act funds. The state has also examined using CARES Act funds for unemployment insurance, small business grants, and improving broadband service. The state expects to finish fiscal 2020 near its revenue target, according to the Legislative Research Council.
Tennessee legislators approved a revised budget for fiscal year 2021 that spends $39.5 billion, after $1 billion was cut from the budget proposed by the governor in early February; the budget does not include previously planned pay raises for teachers and most state employees, or several other new initiatives that had been considered. The administration will pay a private accounting firm to assist with managing the state’s more than $7 billion in federal COVID-19 funds. The Board of Regents voted to keep tuition and fees at community and technical colleges flat this year.
Texas’ sales tax revenues fell 6.5 percent in June compared to the prior year, following declines of 9.3 percent and 13.2 percent in April and May respectively; the comptroller’s office expects to update the revenue estimate later this month. The governor announced $57 million in federal CARES Act funds will be used to maintain the state’s need-based financial aid programs. The University of Texas System plans nearly $78 million in spending cuts in response to lawmakers asking agencies for 5 percent cut plans. The Texas A&M University System approved a new $100 million scholarship fund geared to first-generation students or those from low-income families.
Utah lawmakers in a special session passed a revised budget for fiscal 2021 to close an estimated $850 million revenue shortfall; the revised budget eliminates a pay raise for state workers, cancels additional new spending that was in the original enacted budget passed in March, and further reduces the budget by another 1.7 percent. Lawmakers also used more than $680 million from state reserves, as well as federal CARES Act funds, to help close the state’s budget gap. The governor signed the special session legislation reducing spending in addition to bills to create an economic recovery grant program for artistic and cultural groups and to put a cap on unemployment insurance rates.
Vermont’s governor signed a budget bill to fund state government for the first three months of the fiscal year as the state continues to assess the impact of COVID-19 on state finances. The state is expecting losses to top $200 million next year because of the pandemic and its impact on the economy. The governor also signed COVID-19 relief bills of about $600 million in assistance including a $300 million package for the health care industry, $35 million for farms, nearly $100 million in grants for struggling businesses, $20 million to fund broadband expansion, and funds to address food insecurity and rental assistance; the economic relief package spends funds from the CARES Act. General Fund revenues through May were $114.8 million, or 7.9 percent below estimates.
Virginia is projected to end fiscal year 2020 with a shortfall of $236.5 million as state revenues grew less than originally forecasted. The governor announced an initial $50 million housing assistance program funded by federal coronavirus relief funds as well as $246 million in mostly federal funds to assist nursing homes and assisted living facilities in coping with the pandemic. The state is redirecting $30 million to pay for a 29 percent increase in Medicaid provider rates, retroactive to March 1.
Washington’s governor directed state agencies to cancel a scheduled 3 percent general wage increase for nearly 5,600 general government employees, and instituted one-day-a-week furloughs for more than 40,000 employees, which together will save an estimated $55 million over the next year. State revenues could decline by $4.5 billion through fiscal 2021 and by another $4.3 billion in the next biennium. Lawmakers are expected to make adjustments to the state’s budget in a special session in the coming months.
West Virginia balanced its fiscal 2020 budget with two Executive Orders issues by the governor. One borrowed $68 million from the state’s Revenue Shortfall Fund to provide cash flow for the start of the next fiscal year, and the other cut $198 million from the budgets of four agencies. The remainder of the $57 million needed to close the $255 budget gap came from the state’s share of federal dollars from the Coronavirus Relief Fund. Tax revenue for fiscal 2020 was 5.44 percent, or $199 million, below estimates for the fiscal year. Severance taxes were 29.9 percent below estimates and personal income tax collections were down by 9.4 percent. The governor also announced plans for the state’s $1.25 billion from the Coronavirus Relief Fund. Half will be used for the state’s unemployment fund to ensure benefits continue to be paid; local governments would receive $200 million; small businesses would receive $150 million, and $100 million would be used for highway projects.
Wisconsin’s governor announced that $80 million in federal coronavirus relief funds will go to education, along with $40 million to hospitals. The legislature may convene later this year to consider budget amendments, but are waiting for updated financial estimates from the Legislative Fiscal Bureau to determine the impact of COVID-19 on state revenues. The Wisconsin Economic Development Corporation is expecting it to take two years for jobs to recover in the state.
Wyoming’s governor announced that agencies will face another round of cuts on top of the proposals they have already submitted to reduce their budgets by 10 percent, due to a worsening revenue situation for the state, for total cuts of 20 percent. Lawmakers are likely to take up a capital construction spending bill later this year, which is expected to be leaner than the capital bill that failed to pass over the winter. The state transportation agency announced numerous rest stop closures to achieve budget savings.