Alabama expects to spend almost all of the $1.8 billion it received in coronavirus relief funds before the December 30 deadline, including a recent $200 million allocation to small businesses and $10 million for prison decontamination equipment. The U.S. Department of Justice filed a lawsuit against the state over prison conditions, including inmate violence and excessive force. Public school enrollment fell by approximately 9,800 students this year, with schools in rural areas seeing the largest decreases.
Alaska voters rejected a citizen-led ballot initiative to increase oil taxes last month, which leaves the legislature to decide where to look for new state revenue sources. The Alaska Permanent Fund rebounded strong due to the stock market’s recent performance. At the local level, Anchorage passed a new economic stimulus package funded by CARES Act dollars to help small businesses, the hospitality industry and individuals get through the latest set of business closures.
Arizona legislative leaders, along with other plaintiffs, filed a lawsuit to block implementation of a new tax surcharge on high-income earners that was approved by voters last month, claiming it as unconstitutional; a hearing on the case is scheduled later this month. Community colleges in the state are seeing enrollment declines, with one system’s headcount down 15 percent this fall compared to last fall. The state university’s top economist said the pace of economic recovery will depend on whether new federal stimulus funding is approved.
Arkansas’ general-revenue tax collections in November increased by $18.3 million over the prior year and exceeded the April forecast by $31.5 million with the state’s chief economic forecaster noting uncertainties for the second half of the year. The governor set a goal of doubling the state’s reserve fund to $420 million by mid-2023. A program to assist hotels, restaurants, tourism operators and other service-sector businesses will use $50 million in federal coronavirus relief funds, while a state panel overseeing distribution of the relief funds rejected a request to fund a $500 payment to public school teachers and staff members. Executive branch agencies saved more than $57 million since July 2019 through the governor’s transformation of operations that merged 42 agencies down to 15.
California’s legislative fiscal office issued a report showing state tax revenues are coming in ahead of projections set this spring, which had predicted a $54 billion state budget deficit over a 14-month period. The report shows revenue is still coming in below pre-pandemic projections, and weaker growth and growing deficits are expected in the out-years. The governor extended an order providing temporary tax relief to small businesses, and also said an emergency appropriation will give cash grants to small businesses.
Colorado lawmakers ended a special session after passing a series of bipartisan bills approving $342 million in stimulus measures to help struggling businesses and individuals, as well as to bolster funding for the state’s public health response. Distribution of that stimulus aid may take several months. An economic forecast out of the state university stresses longer term uncertainty about how the pandemic will affect consumer behavior and the state’s economy.
Connecticut is projecting an operating shortfall of $879.4 million, a reduction of $382.2 million from last month, driven by improved revenue collections and expenditure trends. The projected shortfall represents 4.4 percent of the general fund. The state is estimating a projected $4.3 billion deficit for fiscal 2022-2023. The governor is weighing the possibility of tapping the rainy day fund to pay for distribution of COVID-19 vaccines if no additional federal funding is made available. The governor also plans to offer some state aid to restaurants struggling to survive the coronavirus pandemic and plans to sign an executive order expanding eligibility to the federal Lost Wages Assistance program for residents who did not initially qualify.
Delaware’s governor announced a $45 million Higher Education Relief Fund payment to assist colleges and universities affected by COVID-19. The University of Delaware’s $250 million deficit has so far led to pay cuts, a voluntary retirement option, cuts to retirement contributions and reduced hours. The governor extended the state of emergency declaration another 30 days to confront community spread of COVID-19. Some in the state continue to push marijuana legalization following actions of neighboring states.
Florida legislators are exploring options to address a projected $2.7 billion budget shortfall in the next fiscal year including signing new compacts to increase gambling revenue and passing online sales tax legislation in addition to spending cuts. Increasing tuition for the first time since 2013 is one option also being explored in light of the projected budget shortfall. The tourism industry saw an approximately 32 percent decline in visitors to the state during the third quarter compared to the prior year, which is an improvement to the 60 percent drop in the second quarter. State signups for health care plans under the Affordable Care Act increased by seven percent during the first three weeks of open enrollment compared to the prior year.
Georgia’s governor indicated he does not anticipate additional significant budget cuts following a 10 percent spending reduction enacted in the fiscal year 2021 budget. Enrollment in kindergarten dropped by nearly 10 percent, or 11,900 students, this fall while enrollment across all grades was down by 33,000 students or 2 percent. Students at two state universities filed class action lawsuits over the return of tuition and fees for students who shifted to online classes.
Hawaii’s governor announced that more than 10,000 state employees will be furloughed two days per month as part of the state’s plan to balance the state budget and close a $1.4 billion projected shortfall over each of the next four years. The state teachers association warned of the effects of proposed budget cuts to state education funding, which amount to a $95 million cut to the weighted student formula and a $25 million cut to special education.
Idaho is projecting a general fund budget surplus, though much of that surplus is expected to be one-time due to federal stimulus measures. The governor announced plans to propose tax cuts and investments in transportation, education and water projects for the legislature’s consideration when they convene in January. The state’s rainy day fund balances have reached $600 million. The state has invested nearly $50 million in expanding broadband using CARES Act funds.
Illinois is forecasting it will face a budget deficit of $3.9 billion in fiscal 2020 and continuing deficits of $4 billion or more in each of the next five fiscal years; the state’s unpaid bill backlog could also grow to $33 billion by fiscal 2026. The governor said that spending cuts alone cannot resolve Illinois government’s structural spending imbalance and that new revenue sources also must be examined. The Speaker of the House has called for an increase in the state’s flat income tax rate, while the Minority Leader has called for spending cuts. The state is planning on borrowing an additional $2 billion from the Municipal Liquidity Facility managed by the Federal Reserve after earlier borrowing $1.2 billion, but is not expected to borrow the full $5 billion authorized by the legislature. The governor said that the next four weeks could be the most crucial month of dealing with the COVID-19 pandemic.
Indiana lawmakers are expected to focus on school funding when they return in January to begin crafting the next two-year budget. The Indiana State Teachers Association is calling for improved working conditions, a commitment to increase teacher pay, and protections for funding. The legislature might also consider raising the state’s cigarette tax in the next session. The COVID-19 pandemic has negatively impacted the state’s gaming industry. The governor signed an executive order extending the public health emergency through at least December 31.
Iowa’s governor continues to push tax cuts, although action may be delayed until after the COVID-19 pandemic. Tax collections through November are 10.5 percent higher than last year, however, an analyst at the Legislative Services Agency noted that part of the increase is due to the shifting of the tax deadline from April to July. The governor has called on Congress to approve money for businesses and families struggling because of the coronavirus pandemic, but said there are not current plans to use state funds since there is not enough state funding to make everybody whole. School spending declined $43 million during the 2019-2020 budget year according to the state Department of Education.
Kansas’ governor and legislature recently reallocated $38.5 million in CARES Act funding towards public health and businesses. The state is also including movie theatres among the businesses to receive aid. The state is planning on giving vaccine priority to grocery workers and meatpackers. The governor called on residents to hunker down during the latest COVID-19 surge. The Governor’s Council on Tax Reform has called on Congress to pass a stimulus bill including aid to states and localities.
Kentucky reports its general fund receipts are up 5.1 for the first four months of the fiscal year, while the budget director warned that the state’s tax collections are expected to weaken without another round of federal aid to assist individuals and businesses. The state is seeing rising Medicaid enrollment and lower revenue for parks as a result of the pandemic but anticipates savings due to lower inmate population than expected in prisons and jails. The House Speaker said the upcoming budget will be the top priority of this legislature and will be one of the most difficult budgets the state has faced. The Kentucky Association of Counties and Kentucky League of Cities are advocating for a gas tax hike to improve the state’s roads and bridges. The state has reopened a private prison that has been closed since 2012; the 621-bed prison is expected to ease overcrowding in jails and create more than 270 new jobs.
Louisiana’s Revenue Estimating Conference will delay its forecasting meeting until January due to economic uncertainty caused by the pandemic; the panel’s projections will form the basis for Governor John Bel Edwards’ fiscal 2022 budget proposal. In May, the conference lowered its current year projections by $1 billion. Programs funded by federal aid have seen demand out pace available dollars; nearly $525 million was allocated to local governments, $260 million to small business grants, and $50 million for front-line workers who stayed on the job in the pandemic’s early days. Thirteen broadband providers in the state will share $342.2 million in federal dollars to develop internet infrastructure in underserved areas.
Maine’s revenues exceeded projections by $78 million, or 27 percent in October, attributed to federal aid boosting taxable wages and spending. Medicaid enrollment is up 10 percent from February to November 1, driven by the impact of the COVID-19 pandemic with the state seeing an additional 5,500 new applications in the first two weeks on November. The governor announced a new business grant program targeting hard-hit businesses in retail and hospitality industries. State officials are expanding broadband services to connect more of its largely rural population. Medical marijuana sales totaled $221.8 million from January through October, more than double last year. The governor announced certain individuals who are unemployed due to COVID-19 will receive a one-time direct relief payment of $600.
Maryland’s legislative auditors will examine state spending on the coronavirus pandemic, including equipment procurements. The state’s hotel industry sent a letter to the governor and commerce secretary requesting aid similar to that available for restaurants and small businesses. The state’s attorney general requested $22 million in the fiscal year 2022 budget for civil legal aid to provide free legal assistance for those with low or middle incomes. A legislative workgroup recommended requiring every police department to use body cameras by 2025 while acknowledging financial challenges.
Massachusetts House and Senate legislators agreed on a $46 billion budget for fiscal 2021 with no new taxes, investments in affordable housing, food security, eviction protections, mental health and substance use treatment, and education, and uses the rainy-day fund to partially address a $3.6 billion revenue shortfall. Year-to-date revenues through November totaled approximately $11.46 billion, $142 million or 1.3 percent more than the prior year; part of the increase in withholding is attributed to unemployment benefits. The University of Massachusetts is expected to face a $335 million budget gap.
Michigan’s governor is calling for $300 million in state spending to fight COVID-19, including funding for vaccine distribution. Earlier, the governor called for $100 million in state spending to provide financial support for families and small businesses. Under a separate program, small businesses facing financial hardships can apply for a grant of up to $15,000. Online sports betting and casino gaming is now expected to launch in the state in early 2021. The state is planning on borrowing $600 million for the Flint water settlement.
Minnesota is now projecting a $641 million surplus for the current budget and a $1.27 billion shortfall in the new biennium budget; although the current budget has been helped by higher consumer spending and business investment, much uncertainty remains moving forward according to state officials. The state has also seen increased revenue from sin taxes during the pandemic. Officials are urging residents to apply for housing assistance before the deadline passes. The governor is once again calling for a special session to extend his emergency powers related to addressing the COVID-19 pandemic.
Mississippi’s governor proposed a $6.13 billion fiscal year 2022 budget that phases out the state’s personal income tax by 2030, allocates funds to help small businesses, and level funds most agencies while providing additional funds for workforce training. The Joint Legislative Budget Committee subsequently released its first budget recommendations that propose approximately $6.1 billion in state spending and include cuts to universities, community colleges, prisons, mental health and elementary and secondary schools. A federal appeals court allowed a lawsuit over disparities in school funding to continue.
Missouri lawmakers passed a $1.2 billion coronavirus aid package that gives the governor power to spend roughly $1.1 billion in federal funding to address COVID-19, along with spending some state funding. The governor announced that the state will be partnering with a private health care service to help expand hospital capacity; the company will provide more than 700 health care workers including nurses. State prisons are installing air purifiers and disinfectant machines to help slow the spread of COVID-19.
Montana’s outgoing governor released a draft budget for the next two years that would not cut essential services or increase taxes, and would leave a $251 million general fund ending balance; the plan would increase spending by 1.6 percent year-over-year, and would use $75 million from the state’s rainy day fund through fiscal 2023. The incoming governor will have until January 7 to propose amendments to the budget. The legislature adopted a revenue estimate after voting to drop it by about $102 million; the approved estimate projects $2.47 billion in general fund revenue in fiscal 2021, $2.54 billion in fiscal 2022, and $2.47 billion in fiscal 2023.
Nebraska’s governor said the state’s correction system needs to make improvements and investments, but is not under crisis, following the dismissal of a prison lawsuit. The legislature held a virtual hearing regarding the state’s Medicaid expansion program, which the Department of Health and Human Services declined to participate in. The state’s passport tourism program set a record over the past several months. Tax collections in October came in above projections. The governor recently imposed more restrictive health measures following the rise in hospitalizations related to COVID-19.
Nevada’s consensus revenue forecasting group said the state will have an estimated $8.5 billion in general fund revenue for the next biennial budget, far below the $9.7 billion in budget requests submitted by state agencies. The group’s forecast shows gaming fees and sales and use taxes not recovering to pre-pandemic levels until fiscal 2023. The state’s Board of Examiners approved putting another $31 million in coronavirus relief funds into a grant program for small businesses and nonprofits. The state’s higher education system is implementing a furlough policy due to a COVID-19-related budget shortfall.
New Hampshire is projecting a revenue shortfall of between $76 million and $4 million,
down from an estimated $240 million in September. The state has collected $4.6 million net in tax revenues from gambling profits. The state received a waiver from the U.S. Department of Education to use afterschool programs to supplement school day virtual learning. The state’s Commission to Study School Funding released its final report, calling for changes that would allow unused education property taxes from wealthier communities to be passed along to poorer towns, among other recommendations.
New Jersey authorized the sale of nearly $3.7 billion in bonds, with $4.3 billion in proceeds, to address budget shortfalls. As part of the budget agreement, the legislature approved the borrowing to offset revenue losses. Revenue collections through October total $8.108 billion, down $673.1 million, or 7.7 percent below the same four months last year. The governor signed a bill into law that will provide an extension of unemployment benefits. After voting to approve marijuana legalization this year, voters may be asked next year to decide how marijuana revenue should be spent.
New Mexico’s gubernatorial administration is asking most state agencies to hold budgets flat for fiscal 2022, rather than asking for additional cuts, as new revenue estimates show improvement over the state’s previous forecast. The legislature approved a $330 million package to provide financial relief to individuals and businesses struggling due to the pandemic, funded primarily with reallocated CARES Act funds as well as $10 million from the state’s general fund or legislative cash balances. Federal revenue-sharing payments to New Mexico and other western states tied to energy production dropped 40 percent in fiscal 2020.
New York’s tax revenues through October totaled $43.8 billion, $3 billion lower than the same period in the previous fiscal year, according to the comptroller. The budget office estimated that COVID-19 is responsible for a $13.5 billion drop in state revenue from its February projections, and is projecting an $8.7 billion deficit for fiscal 2021; the governor said that increased taxes will be needed to help address the gap, even if Congress approves additional federal aid to states. The midyear financial plan update by the Division of the Budget projects Medicaid enrollment to exceed 7.1 million, an increase of nearly 1 million over last year, as a result of increased unemployment and other factors. Some legislators continue to examine the possibility of online sports betting.
North Carolina has unreserved funds totaling more than $4 billion following two years of mostly frozen spending levels allocated through “mini budgets” and increased revenues. The governor is considering alternative options for expanding rural broadband after a planned allocation of $30 million from federal coronavirus relief funds was affected by new federal guidance and the upcoming spending deadline. A state audit examined how the state spent federal CARES Act education funds, including for summer learning and nutrition services. State data shows 70,000 fewer students were attending public schools statewide, an approximately 5 percent decline from the previous school year. The state’s vaccine distribution plan prioritizes health care workers, people at long-term care centers and those at risk for severe illness.
North Dakota’s governor proposed a $15 billion budget for fiscal 2021-2022 that includes $4.8 billion in general fund spending; the proposal keeps K-12 spending flat while using $83 million from the school state aid fund, cuts higher education spending 6 percent, uses $240 million from the state’s rainy day fund, and includes a $1.25 billion bonding proposal for infrastructure projects. The budget assumes the state will only receive about $2.9 billion in oil taxes over the next two years, the lowest amount in more than a decade. The chair of the State Board of Higher Education said the proposed cuts to higher education would be detrimental to student success and their ability to serve the needs of the state. The governor recently issued a statewide mask mandate following an increase in COVID-19 cases. The state is planning an investment study on the Legacy Fund, its oil tax savings account.
Ohio’s school funding revamp will be put off until at least 2021 after the House approved the measure, but the Senate decided not to vote on the bill. The state’s budget director proposed a $2.5 billion capital budget to fund construction projects, renovations, and equipment purchases around the state for the next two years. Casinos in the state saw less revenue in November following a spike in COVID-19 cases and an overnight curfew. College enrollment in the state has experienced a decline during the pandemic. The governor vetoed a bill to limit his power to issue statewide coronavirus orders. The state is examining changes to its Medicaid program.
Oklahoma lawmakers are preparing for a challenging budget year in fiscal year 2022, hoping for a flat budget after reducing the current year budget by $1.4 billion and using more than $400 million from reserve funds. The governor hired a consulting firm to analyze state spending and make recommendations for potential spending reductions or structural changes ahead of the next budget. The state’s medical marijuana market is the largest in the country on a per capita basis, with sales since 2018 surpassing $1 billion. The governor hired the state’s first chief financial officer, who will help develop the annual budget proposal and improve financial reporting and accountability.
Oregon’s governor released her budget recommendation for the fiscal 2022-2023 biennium, which calls for $100.2 billion in total spending over the next two years, including $25.6 billion in general and lottery fund spending. State tax revenues continue to show signs of stability in the most recent update from state economists, which they attribute to federal stimulus, the release of pent-up demand after restrictions were lifted, and how high-income earners have been relatively insulated from the COVID-19 recession, though state spending needs are still expected to outpace revenue growth. The governor pledged that $55 million in federal CARES Act funds would be allocated to provide financial assistance to struggling businesses.
Pennsylvania’s governor signed two budget-related bills with no tax increases or major cuts to continue state government operations through the remainder of fiscal 2021; the budget also includes state fund transfers and allocates CARES Act funds. Key lawmakers support a move by a state public-private partnership board to allow tolling of traffic on major bridges. The governor signed into law a bill increasing transparency for pharmacy benefit manager pricing practices in the Medicaid program. Total gaming revenues were around $320.2 million in October, about 13 percent above last year. The state collected $2.3 billion in general fund revenue in November with fiscal year-to-date general fund collections totaling $14.8 billion.
Rhode Island lawmakers released a $12.8 billion budget plan for the remainder of fiscal 2021 that includes no new taxes or fees, no programs created or eliminated, and includes funding to continue the phase out the car tax. The bill also allows the governor to have until March 11 to submit her proposed fiscal 2022 budget. The state’s cash receipts through October are behind the prior year by 2.8 percent, after accounting for the receipt of fiscal 2020 tax payments in July 2020. Some lawmakers are examining the possibility of marijuana legalization and other efforts to increase revenue.
South Carolina collected more than $311 million in taxes from online sales over the past year, compared to $64 million in the previous 12-month period, driven by tax changes for remote sellers and marketplace facilitators. State park revenue is up 30 percent this fiscal year compared to the same point last year with campground occupancy up more than 12 percent. The governor announced unemployment taxes will not increase in 2021 for most employers after allocating $920 million from federal coronavirus relief funds to the state’s unemployment trust fund.
South Dakota’s governor released her fiscal 2021 budget proposal which includes spending $230 million for investments across the state including $100 million for broadband, and a 2.4 percent increase in funding for teachers, state employees and government-funded medical providers. The governor also said during her budget address that the state will not raise taxes, borrow to cover budget shortfalls, or look to Congress for additional aid. The chair of the Senate Appropriations Committee said the budget address is the start of a long process in building a budget.
Tennessee’s governor issued an executive order permitting National and State Guardsmen with applicable training to deploy to hospitals and conduct COVID-19 testing in hospitals, emergency rooms and alternative care facilities. A special session focused on education assistance is under discussion, which would give schools additional time to plan. In the next session lawmakers will consider options for the state’s $741 million in surplus funds from the Temporary Assistance for Needy Families program. State officials appealed a lower court decision ruling a school choice program unconstitutional to the state Supreme Court.
Texas’ comptroller updated legislative leaders on the upcoming biennial budget, noting that revenues have outperformed a July revised estimate but are down compared to the prior year. The state’s vaccination plan prioritizes health care workers who provide direct care to COVID-19 patients and other vulnerable residents in the first group to receive the vaccine. The Federal Reserve of Dallas found that the state’s service sector remained flat in November while retail sales for the month fell.
Utah tax revenues are coming in better than originally anticipated, but much of this improvement is attributed to temporary federal stimulus that helped prop up the economy. State officials are confident they will be able to effectively spend remaining coronavirus relief funds before the deadline, but some lawmakers and other stakeholders are concerned about what will happen to businesses and families once those funds are exhausted.
Vermont’s legislative joint fiscal committee approved the administration’s plan directing $8.5 million in federal coronavirus relief funding to an expanded testing program, including new pop-up sites and more regular testing for teachers and school staff. The state is also spending $75 million of CARES Act funds on restaurants and lodging establishments. Revenue collections for the general fund, the transportation fund, and education fund were $18.27 million, or 10.1 percent above expectations in October. The state noted that higher than anticipated revenue in the General Fund is based on a substantially reduced revenue target adopted in August due to the pandemic and that revenue is still substantially below the pre-COVID revenue forecast. Trustees of the Vermont State College System voted to freeze tuition next academic year.
Virginia’s governor signed a revised biennial budget that includes an eviction moratorium and allots $100 million in federal coronavirus relief funds to utility customers facing financial hardship. The revised budget includes other CARES Act allocations including $22 million for a vaccination program, $220 million for public schools preparedness and response efforts, $70 million for small businesses and $30 million for broadband access. A fiscal early warning system in the state helps identify fiscally distressed municipalities for potential state assistance.
Washington’s latest revenue forecast update shows projected collections through fiscal 2023 are $900 million above the previous forecast, but nearly $2.4 billion below pre-pandemic projections; forecasters stressed considerable uncertainty ahead. The governor announced the distribution of an additional $50 million in grant aid to struggling small businesses to help them endure lockdown restrictions in place due to surging coronavirus cases, after announcing $135 million in economic relief for businesses last month. State transportation officials are looking at toll increases and other financial strategies to address budget challenges, as the state has collected 45 percent less toll revenue from March through October compared to forecast.
West Virginia state tax collections for November were $19.6 million more than the same month last year, exceeding estimates by 6 percent. Personal income and sales taxes were above projections, offsetting a shortfall in some other categories including severance tax collections which were 20 percent below expectations for the month. Corporate net taxes were 57 percent below estimates and business and occupation taxes also fell short. West Virginia public school enrollment dropped by 9,300 students from a year ago; state funding for schools is based upon prior-year enrollment and the drop is estimated to result in a $42.7 million decline in school funding. Nine broadband companies will share $362 million in federal dollars to develop internet infrastructure in underserved areas.
Wisconsin announced that it is allocating CARES Act funds to a number of purposes including to restaurants, movie theaters, and nursing homes. State spending in Wisconsin is projected to exceed revenue by about $373 million in the next two years, according to a policy research organization's report. The governor asked the federal government to prioritize Wisconsin’s health care workers and at-risk residents when distributing vaccines, citing barriers to implementing statewide mitigation strategies. A newly released report from the Governor’s Task Force on Climate Change cites recommendations to fight climate change while spurring economic growth.
Wyoming’s governor proposed his supplemental budget to lawmakers, which includes roughly $515 million in cuts, as well as eliminating 380 positions, including 62 filled positions. These proposed cuts include a 15 percent reduction to the University of Wyoming and a $135 million cut to the state health agency, and would follow a round of 10 percent cuts already ordered by the governor this summer. While the governor cannot propose new tax sources in the supplemental budget, he called for the legislature to take action to improve the state’s revenue situation. Meanwhile, the state’s transportation agency is facing an annual budget gap of about $354 million.