Alabama’s revenue collections have slowed but the state is on track to end fiscal 2020 without budget cuts due to strong revenue growth before the pandemic; the state’s fiscal year ends September 30. The governor announced CARES Act allocations of $170 million to K-12 schools for digital devices and health care supports plus $100 million for hospitals and nursing homes to manage the COVID-19 pandemic. Legislators are unsure if the state can afford to take advantage of the new federal unemployment insurance supplement program and are awaiting budget estimates.
Alaska’s Constitutional Budget Reserve, the state’s primary rainy day fund outside of the Permanent Fund, is expected to be effectively depleted by the end of fiscal 2021, after the state ended fiscal 2020 with a deficit of $1.29 billion and is projecting a $946 million deficit for fiscal 2021. Alaska’s governor was presented with three options for implementing the President’s executive order on unemployment benefits. A state judge dismissed a lawsuit alleging that the state’s plan to spend federal CARES Act funds needed approval by the full legislature, as opposed to a panel of lawmakers.
Arizona’s governor’s office is reviewing how the President’s executive order to extend unemployment benefits would be implemented in the state; last month, the governor called on Congress to extend enhanced unemployment benefits. A superior court judge ruled that a measure to increase taxes on high-income earners in order to boost funding for K-12 education will not be eligible to appear on November’s ballot due to a misleading description of the measure.
Arkansas’ state general fund revenue in July increased by $245.9 million over the prior year after the state shifted its individual income tax filing deadline to July 15. The state’s Scholarship Lottery’s revenue increased by $8.5 million in July over the prior year and exceeded the lottery’s projected budget by $14.2 million. The CARES Act steering committee endorsed proposals to spend $100 million on rural broadband, $8.77 million on immunization initiatives, $5 million to increase capacity at meat-processing facilities, and $6.4 million to expand public television broadcast coverage in the state.
California’s budget for fiscal 2021 assumed $28 billion in additional tax revenue collected by the end of July, in light of the delayed personal income tax deadline to July 15. Income tax collections through July have come in better than expected in the budget, but are down about 13 percent for the April through July period compared to 2019. The governor announced that the state does not have the resources to pay the 25 percent match for unemployment benefits called for in the President’s executive order; the governor’s administration is already projecting an $8.7 billion budget deficit for fiscal 2022.
Colorado cut its mental health budget and has deferred plans for new health spending initiatives due to the fiscal impact of COVID-19. State officials allocated $20 million in federal CARES Act funds to provide rental and mortgage assistance to residents. The governor last week sent a letter to the state’s congressional delegation calling for food stamp benefit increases, home heating and child care assistance, additional enhanced FMAP, and other forms of aid. The University of Colorado Boulder is proposing additional 5 percent cuts, after already reducing the budget by $102 million.
Connecticut’s comptroller is projecting a deficit of $128.1 million for fiscal 2020 with the deficit being addressed through a transfer from the budget reserve fund. The governor announced a $43.5 million investment in remote learning solutions from CARES Act funds to close the digital divide and help students learn from home. The Bond Commission approved nearly $550 million in financing for school construction, transportation and other capital projects. The state will send $100 million in aid to hospitals and will be distributing an additional $160 million in federal funds to help school districts safely reopen and cover costs related to the COVID-19 outbreak.
Delaware plans to spend $40 million from CARES Act funds to help residents who are struggling to pay rent or mortgages during the coronavirus pandemic; other uses for the CARES Act funds include testing, contact tracing, and funds for essential childcare providers. The governor formally extended the state of emergency declaration another 30 days to confront community spread of COVID-19. The Department of Insurance announced finalized new regulations for pharmacy benefit managers to add a level of oversight and transparency.
Florida’s general-revenue collections in June were $427.8 million below forecast and over the year the state collected about $1.88 billion less than projected; sales tax collections were down $328 million for the month. The governor and legislature called on state agencies to develop plans to cut 8.5 percent from current year budgets to address an expected shortfall due to the COVID-19 pandemic. The governor indicated he is exploring getting a loan from the U.S. Department of Labor to assist with the state’s share of the new federal unemployment insurance supplement.
Georgia’s sales taxes were down 1.4 percent for fiscal year 2020 while income taxes were down 3.9 percent, in part because of the delayed income tax filing deadline to July 15. The state incurred approximately $880 million in costs due to the COVID-19 pandemic, according to a report submitted to the federal government. The governor announced he will call a special session to fix a drafting error in a previously passed hurricane tax break bill, but also indicated the session may be timed to address other budgetary and oversight issues. The governor submitted a waiver proposal for health care marketplaces that due to COVID-19 would postpone a reinsurance plan for new state subsidies until 2022.
Hawaii’s governor detailed his plan to address the state’s budget shortfall, which includes budget cuts to state agencies, borrowing between $750 million and $1 billion through the U.S. Treasury’s Municipal Liquidity Facility (MLF) program, and substituting bonds for previously cash-funded construction projects valued at about $300 million. The governor vetoed a spending plan that would have increased state weekly unemployment benefits by $100. The governor issued an emergency proclamation as the state prepared for Hurricane Douglas, and the state’s congressional delegation called for federal disaster assistance.
Idaho ended fiscal 2020 with a higher-than-expected surplus, and the state’s revised forecast for fiscal 2021 estimates a larger-than-expected surplus due to the state’s nearly $100 million cut to agency budgets and another $99 million cut to public schools enacted earlier this year. The revenue report also noted that federal stimulus measures, which have since expired, likely cushioned the state’s economy from the pandemic’s effects. Schools will get an estimated $91 million in federal aid from various CARES Act funding streams to help offset general fund budget cuts. The legislature’s joint budget committee reviewed how the state will receive federal aid while the legislature’s not in session.
Illinois’ governor said that without additional federal aid there will be significant cuts and job losses in Illinois and across the country. The governor announced the launch of rent and mortgage aid programs supported by CARES Act funds. The state launched a 3-part COVID-19 recovery plan to help prevent a resurgence of cases. Illinois officials announced plans for a $3.15 billion transportation plan funded by higher gas taxes but stated that future projects could be in danger due to less revenue from the coronavirus. Marijuana sales set a record in July at approximately $61 million.
Indiana is attempting to determine how to deal with a previously written provision that schools only get 85 percent of the foundation dollars for each student that receives at least half of their instruction virtually; the governor has proposed delaying the fall count of enrollment until at least December to help address the issue. The state detailed how it has spent approximately $1 billion of CARES Act funds including for local governments, payroll for public health and safety employees, public health expenses, economic support, and other purposes. Revenue collections for fiscal 2020 were $1.4 billion short of estimates, although the state recouped nearly $900 million in July following the extension of the tax deadline to July 15.
Iowa detailed how it has spent $2.4 billion in CARES Act funds including more than $1.5 billion for unemployment benefits. Lottery sales from fiscal 2020 declined 4.8 percent compared to the prior year, although the lottery met its budget targets. The Board of Regents approved $65.4 million in cuts to the state’s public universities. The governor said that the state will require at least half of school instruction to be done in person. The governor also recently signed an order restoring felon voting rights.
Kansas’ Department of Labor said it is still analyzing the President’s executive order regarding unemployment insurance, but noted it is dealing with limited resources and legacy IT systems. The state has allocated $254 million of CARES Act funds aimed at helping to slow the spread of the disease and boost the state’s economy. The governor urged the legislature to pass Medicaid expansion after voters in neighboring Missouri approved the measure. The University of Kansas has reduced spending by roughly $60 million for fiscal 2021 due to COVID-19. The state extended some deadlines for vehicle registration due to the coronavirus.
Kentucky ended fiscal year 2020 with general fund receipts exceeding the May revised revenue estimate by $575 million contributing to a year-end surplus of $177.5 million, of which $162.5 million will be deposited into the state’s rainy day fund. The state launched a new campaign aimed at getting more Black and Hispanic residents eligible for Medicaid enrolled in health coverage to ensure care during the COVID-19 pandemic and reduce racial health disparities. The state hired a private vendor to address the backlog of initial claims for unemployment insurance. A new excise tax on e-cigarettes took effect on August 1 and is projected to generate about $7.9 million this fiscal year.
Louisiana’s $50 million program designed to give a one-time check of $250 to frontline employees saw almost 185,000 applications in five days; funds are available for 200,000 applicants. Local governments requested more than $366 million in the first two rounds of payments for a $525 million program, with much of the funding destined for public safety agencies. The state will receive $17 million from the U.S. Department of Education to provide students access to remote learning resources. The governor is reviewing options regarding the new federal unemployment insurance supplement as the state’s Coronavirus Relief Fund dollars has already been allocated and the unemployment trust fund is nearing depletion.
Maine’s governor is asking state department heads to cut spending by 10 percent, as the coronavirus pandemic impacts state revenue. The legislature’s budget committee projects a revenue shortfall of $524 million in fiscal 2021 and up to $1.4 billion over the next three years. The state has $258 million in its rainy-day fund and more than $100 million of uncommitted revenue in the general fund. Voters approved $120 million in bonds for transportation and broadband systems that have been affected by the coronavirus pandemic. The state plans to invest more than $8 million from the Coronavirus Relief Fund to boost access to childcare.
Maryland’s governor is reviewing the new federal unemployment insurance supplement for legal ramifications and budgetary impact. State casinos began reopening in June and operating at 50 percent capacity generated $139.9 million, a 6.3 percent decline from June 2019. The state elections administrator says an additional $20 million will be needed to cover increased costs of the November 3 election. The health department plans to stop paying for weekly coronavirus tests it requires from all nursing home staff members after August 15 and directed facilities to use emergency CARES Act funds to continue testing.
Massachusetts’ governor signed a three-month interim budget into law and eliminated a portion of the bill that would have required his administration to fund departments and services at least to fiscal 2020 levels. The governor also signed into law a $1.1 billion supplemental budget that covers some of the state’s COVID-19 spending. In an interim report for June, revenue collections total $2.493 billion, which is $761 million, or 23.4 percent, less than benchmark, and $691 million, or 21.7 percent, less than actual collections the prior year.
Michigan’s governor signed a bill to close a $2.2 billion budget deficit for fiscal 2020 using federal coronavirus relief aid, savings, shifting funds, and employee furloughs; fiscal 2020 ends on September 30. The budget director said that given current revenue conditions, without additional federal aid severe cuts to public safety, education and health care services would be unavoidable at the state and local levels in fiscal 2021. The state announced plans to direct $50 million in rental aid to landlords through CARES Act funding. The state’s congressional delegation is calling on the administration to not cut funding for the Michigan National Guard, which is helping to respond to the COVID-19 pandemic. School districts in the state are developing their own plans for reopening while using guidance from the governor’s executive order.
Minnesota is facing a projected $7.1 billion budget deficit over the next three years including $2.4 billion for the remainder of the current two-year budget that runs through fiscal 2021, and $4.7 billion in the next biennium budget through fiscal 2023; the state may use part of its rainy day fund to address the current deficit but is hesitant to completely drain the fund. The state is also planning on closing two prisons to help address the budget gap. The governor recently called a special session to vote on an extension of his emergency order. Earlier, the legislature failed to come to an agreement on a bonding bill but did pass police reforms. The state continues to examine the President’s executive order on unemployment insurance and state matching.
Mississippi legislators overrode the governor’s partial veto of the state’s education budget and passed a separate bill to address the teacher bonus funding that was related to the veto; lawmakers also approved expanding a grant program for businesses hurt by the COVID-19 pandemic. Legislators did not resolve differences over the fiscal year 2021 budget for the Department of Marine Resources, which continues to operate by using federal funding. The overall budget adopted for fiscal year 2021 is not expected to result in state agency layoffs with funding levels for most agencies seeing cuts of 3 to 5 percent. The governor indicated the state cannot afford the $100 state share of the new federal unemployment insurance supplement.
Missouri’s legislature continues to consider a series of crime bills with the full House expected to return on August 24. Voters narrowly approved Medicaid expansion, making Missouri the 38th state to expand the healthcare program. The state is planning on using CARES Act funds in a number of ways including to help schools cover the cost of PPE and cleaning, for meat and poultry processors, the tourism industry, higher education, and workforce development. Ninety-six children’s division positions are being eliminated, while the University of Missouri plans on furloughing 671 employees. The state is uncertain how it will respond to the President’s executive order regarding unemployment insurance.
Montana’s general fund balance is sufficient to cover expected revenue losses for fiscal 2021, but the state is projecting a $253 million budget shortfall through fiscal 2023. As of late July, the governor said the state had allocated or expended more than $800 million of the $1.25 billion in coronavirus relief funds received, including $300 million for local government expenses. The state last month announced $75 million in coronavirus relief funds would be distributed to schools to implement COVID-19 precautions, and this week the state allocated $50 million to the state’s child care system.
Nebraska’s legislature approved a measure to provide local property tax relief, a new business development tax incentive program, and funding to help create a new pandemic response center at the University of Nebraska Medical Center; the measure also calls for directing 70 percent of casino revenue to property tax relief if voters approve a gambling initiative in November. The legislature also passed a bill exempting half of a military retiree’s benefits from state taxes. Additionally, the governor signed a bill that makes adjustments to the current biennium budget including funding for damage from last year’s floods, pay increases for the corrections department, Medicaid provider rate increases, and transfers $66 million to the rainy day fund. Earlier, the Nebraska Economic Forecasting Advisory Board met and lowered projections for the current biennium, but not as much as earlier expected; the appropriations chairman noted that the impact from COVID-19 on state revenues will be felt more in the next two-year budget.
Nevada’s legislature passed a bill in special session to close the state’s $1.2 billion budget gap for fiscal 2021, which reduces agency budgets by $400 million and furloughs workers for six days. The package, signed by the governor last month, includes significant cuts to K-12 education, which could be restored if the state receives additional federal aid. The budget bill also allocates $50 million in federal coronavirus relief money towards alternative education strategies during the pandemic. Lawmakers approved $108 million in coronavirus relief funds, mostly for testing and tracing along with $20 million for rental assistance for small businesses. The legislature passed several proposed ballot measures that would raise taxes on the mining industry.
New Hampshire’s governor announced he would direct $1.5 million of the CARES Act federal relief package to organizations that give scholarships to private elementary, middle and high schools. Housing authorities and agencies across the state will receive $39.5 million in federal funding as part of the CARES Act from the Department of Housing and Urban Development to support affordable housing for residents impacted by COVID-19. Hospitals collectively lost $575 million in revenue between March and July and received $300 million from the CARES Act leaving about a $300 million gap. The governor continues to call for a second round of federal aid to states.
New Jersey’s governor signed legislation authorizing nearly $10 billion in debt to address budget gaps that stem from the coronavirus pandemic and the State Supreme Court upheld the law authorizing the governor’s borrowing. The state is creating a new office and task force to make sure the state is spending federal relief funds appropriately and transparently. Fiscal year-to-date total collections of $29.784 billion are $3.0 billion, or 9.2 percent, below the same period last year. The governor signed legislation that will impose a tax on state health insurance plans after a federal levy expires and plans to use those funds to reduce costs for residents.
New Mexico’s governor is directing most state agencies to cut their budgets by another 5 percent in fiscal 2022, while public education, Medicaid and health department budgets expect cuts of 3 percent. The legislative finance committee is recommending spending cuts of 5 percent to help close a projected budget gap of $991 million for fiscal 2022. The governor plans to allocate $50 million in coronavirus relief funds to set up local grant programs for small businesses, as part of the $150 million pot of money for local governments approved by the legislature.
New York’s tax receipts in June were down $1.5 billion, or 17.3 percent from the previous year, according to a report released by the state comptroller. The governor is estimating the current deficit at $14 billion and said next year will total an estimated $16 billion assuming all the promised spending increases and tax levels for fiscal 2021 are continued. Sales tax revenue for local governments dropped 27.1 percent in the second quarter with local governments taking in $3.3 billion in sales tax from April through June, a drop of $1.2 billion from the previous year. The governor announced approval of 148 smart schools investment aimed at improving school security and reimagining teaching and learning for the 21st century.
North Carolina’s legislative leaders sent a letter to the governor urging him to take advantage of the new federal unemployment insurance supplement, indicating the General Assembly will approve the state dollars. The University of North Carolina Board of Governors instructed chancellors of the 17 campuses to submit budget reduction plans of 25 and 50 percent due to COVID-19 pandemic effects. The governor sent a letter to the state’s congressional delegation requesting assistance for the state’s estimated $5 billion decline in local and state revenue due to the coronavirus, projecting the state may not return to previously expected 2020 revenue levels until at least 2023.
North Dakota’s Emergency Commission allocated the remaining $319.7 million in CARES Act funds to replenish the state’s unemployment insurance trust fund, for COVID-19 testing and contact tracing, and installing ionization equipment. The state has also started accepting applications for its economic resiliency grants. The state’s prison system implemented new measures to help prevent the spread of coronavirus. The President issued a disaster declaration following spring flooding.
Ohio’s governor signed a smaller, $555 million, capital bill after the legislature stopped work on a larger two-year capital bill due to less tax revenue from COVID-19. The state approved an additional $100 million for K-12 from CARES Act funds to help schools pay for expenditures incurred due to the COVID-19 pandemic. Ohio’s Medicaid rolls continue to climb due to coronavirus and the economic impact after falling for the past two years. The state is planning on paying claimants $300 a week in additional unemployment aid instead of the $400 possible under the President’s executive order.
Oklahoma regents approved tuition and fee hikes that average out to 1.3 percent statewide for the 2020-21 academic year with the largest institutions holding tuition and fees flat. A federal judge ruled that the state’s tribal gaming compacts automatically renewed on January 1 following a lawsuit brought by tribes against the governor. The governor assigned a criminal reform measure to the November 3 ballot; the question seeks to end the use of sentence enhancements for repeat nonviolent offenders.
Oregon lawmakers met in a one-day special session this week to address the state’s more than $1 billion budget shortfall, approving $362 million in general fund budget cuts. The legislature’s plan also would withdraw $400 million from the Education Stability Fund and divert more than $200 million from accounts created to address the state’s unfunded pension liability; the governor has expressed concerns about relying too much on one-time resources, which will make the next budget cycle harder. Lawmakers approved $244 million in federal coronavirus relief funds for contact tracing, testing, and addressing racial disparities in the pandemic’s impact.
Pennsylvania collected $4.1 billion in general fund revenue in July with approximately $1.6 billion of the revenue collected in July attributed to extending due dates for various taxes due to the COVID-19 pandemic. Facing significant financial pressure, the State System of Higher Education will explore combining operations at three pairs of universities. The governor is dedicating $28 million to postsecondary education institutions and adult basic education providers to help them resume operations in the fall. The state may seek a loan from the federal government to help pay for unemployment benefits.
Rhode Island’s governor is asking the General Assembly to make the Promise program for higher education permanent and include students who are completing certificate programs in high-demand fields. The governor announced increases to her proposed housing and infrastructure and recreational bond recommendations for the upcoming state budget as part of her plan to boost the post-pandemic economy. The governor also announced an investment of $45 million for a workforce development partnership.
South Carolina budget forecasters scaled back the amount of new funding available to spend in the fiscal year 2021 budget from $1.9 billion to $700 million, with $186 million of that available as reoccurring dollars; the state has yet to pass a full-year budget for fiscal 2021 and earlier approved legislation keeping the state operating at current spending levels. A judge heard arguments in the case over the governor’s decision to allocate $32 million of CARES Act funding on grants for private-school tuition. The federal government approved the state’s request to create a Pandemic Electronic Benefits Transfer program to support children who may have missed meals due to COVID-19 school closures.
South Dakota’s governor announced that $47 million in federal and state funds would be going to schools to help them safely reopen. The state is also planning on spending CARES Act funds on law enforcement, while some in the legislature have called for waiting on spending much of federal coronavirus aid until there is more certainty from Congress regarding the allowable use and timing of the funds. July revenues were higher than expected, however, the Legislative Research Council warned that the positive revenue trend could be short-lived if additional federal stimulus measures expire.
Tennessee lawmakers are meeting in special session to discuss coronavirus liability protections and may consider a bill to expand telemedicine access. The governor announced an additional $115 million in CARES Act funding will be made available to local governments who did not receive a direct allocation. State revenues in June were $12.5 million below projections and were $29.8 million below the prior year as overall collections represented a 1.9 percent decline. The state contracted a second private company to provide 100 employees to assist with processing unemployment claims.
Texas’ comptroller released a revised budget projection for fiscal year 2021 that went from a surplus of nearly $3 billion estimated in October to a shortfall of $4.58 billion due to the coronavirus pandemic and low oil prices. The governor announced $118 million from the CARES Act Governor’s Emergency Education Relief Fund will be directed to higher education to support retraining displaced workers and emergency student support. After being directed to plan for 5 percent budget cuts in fiscal year 2021, health services proposed cutting $133 million and the transportation department’s draft proposal cuts roughly $200 million.
Utah ended fiscal 2020 with general and education fund collections roughly on target with its forecast that accounted for the effects of COVID-19 and the anticipated $770 million shift in income tax payments due to the delayed filing deadline; the legislative revenue report notes that the revenue outlook is uncertain, as revenues in fiscal 2020 were helped by federal stimulus. The state transit authority is expecting that ridership and fare revenue may be down 15 percent permanently once the pandemic subsides.
Vermont’s general fund revenue collections for fiscal 2020 were lower than forecasted by $135.5 million, or 8.49 percent. As of July 28, the state had received $160 million in additional tax revenue and about $51 million of that will be used to close out the fiscal year 2020 budget while about $109 million will be carried forward to the current fiscal year to help cover a projected $219 million deficit in the general fund. In fiscal year 2021, the state is expected to see $330 million in revenue losses across all of its funds, according to the latest estimate from the Joint Fiscal Office. The governor announced the launch of a new grant program to help mitigate operational expenses and losses for childcare providers impacted by the COVID-19 pandemic. The governor is weighing if the state can afford the additional unemployment assistance called for under the President’s recent executive order.
Virginia’s governor announced the second distribution, $644.6 million, of coronavirus relief fund dollars to local governments that did not receive a direct allocation, following an initial distribution of $644.6 million in May. The state agency overseeing unemployment insurance benefits announced the state will run out of money within two months and have to borrow from the federal government to continue payments. The governor announced a special session beginning August 18 to amend the state budget and consider new criminal justice legislation. The state launched “Rebuild Virginia,” a $70 million grant program for small businesses and nonprofits to pay expenses during business disruptions.
Washington’s governor announced $40 million in pandemic relief funds to support immigrants who have not been eligible for federal COVID-19 relief programs. The state’s department of commerce is distributing $100 million of federal coronavirus relief funds to counties to provide rental assistance. From March to May, Washington’s tax collections were down 7 percent compared with the same period last year.
West Virginia’s revenue collections in July exceeded estimates by $44.49 million as the state delayed the income tax filing deadline to July 15 and sales tax collections topped estimates by $7.85 million. The state launched an online portal for small businesses and organizations to apply for CARES Act grants. The governor opposed calls for a special legislative session for spending $1.25 billion in federal coronavirus relief funds.
Wisconsin’s governor announced $250 million in spending cuts to the current fiscal 2021 budget after previously announcing $70 million in reductions in April. The University of Wisconsin system released plans for a series of cost-cutting measures including some layoffs. The governor allocated $32 million to higher education for COVID-19 testing and protection, as well as $46.6 million in CARES Act funds for the state’s neediest schools. The state is planning on picking up a portion of the cost for National Guard coronavirus response efforts after the federal government announced it will not directly cover all the costs.
Wyoming’s governor approved an initial round of budget cuts totaling $250 million, with the governor asking agencies to propose an additional 10 percent in cuts for consideration later this year. The cuts will include some employee layoffs, mandatory furloughs, reducing major maintenance spending, and consolidating human resources personnel. The state’s latest revenue update now projects a general fund budget gap of $760 million for the fiscal 2021-2022 biennium, an improvement over the official forecast but still indicative of a dire budget situation, according to the governor and lawmakers. The governor has allocated $50 million in federal coronavirus relief funds for living expenses of students in community colleges or private or technical colleges.