Alabama tax revenues that support the Education Trust Fund grew to $7.4 billion in fiscal year 2020, a 3 percent increase over the prior year, while revenues to the General Fund grew to $2.3 billion, a 6.8 percent increase; the state’s fiscal year ends September 30. The governor announced $300 million in CARES Act funds will be transferred to the state’s unemployment fund and $72.3 million will be allocated to higher education institutions. The state’s gas tax rose by 2 cents on October 1, part of the multi-year Rebuild Alabama Act focused on road and bridge projects.
Alaska’s lieutenant governor moderated public hearings on the implications of a ballot measure to substantially raise oil taxes, estimated to generate about $1.1 billion in additional annual revenue over the long term. The state has seen an increase in Medicaid enrollment as a result of the pandemic and its economic impacts. The University of Alaska faces significant fiscal challenges and revenue losses due to COVID-19 and state funding cuts.
Arizona’s ballot measure to raise taxes on high-income earners would collect an estimated $940 million in revenue, 50 percent of which would go towards funding for schools to hire and retain teachers and classroom support personnel; another 25 percent would be for support services personnel; and the remaining 25 percent would be split among various education-related programs. A recent report highlights the state’s progress in expanding transportation, but also the infrastructure demands ahead. The state said it will provide three public universities with $14 million in additional funding to increase COVID-19 testing, contact tracing, and response efforts.
Arkansas’ general revenue tax collections for September were down $3.1 million from the prior year but exceeded April’s forecast by $73.7 million. The Scholarship Lottery’s revenue increased by $8.7 million in August compared to the prior year, with scratch-off ticket revenue and draw-game ticket revenue both increasing. Legislators approved an allocation up to $150 million in CARES Act funds to reimburse cities and counties for coronavirus-related expenses; the governor urged county judges to consider spending some of the relief funds on rental and food assistance. A panel recommending allocations of CARES Act funds called for the state to use $165 million to shore up the unemployment insurance trust fund.
California’s enacted budget for fiscal 2021 included more than $11 billion in budget cuts and deferrals that would have been restored if the state received $14 billion in federal aid by October 15. California voters will consider 12 statewide propositions on the ballot this year, including several with fiscal implications for the state and local governments. A bill to increase transparency of the money the state spends on homelessness was vetoed by the governor, who said the requirements of the measure were duplicative and unnecessarily burdensome.
Colorado’s governor announced mandatory furloughs of state employees as part of pandemic-related budget cuts, with the number of days dependent on annual salary and with exemptions for certain job types. The state’s most recent economic forecast showed an improving outlook compared to the forecast released in June, but a significant shortfall through fiscal 2023 remains. The state’s budget outlook will also depend on the outcome of certain ballot initiatives on taxes and fees. School districts in the state are seeing enrollment declines that could result in less funding.
Connecticut is projecting an operating shortfall of $2.02 billion for fiscal 2021, with the projected shortfall representing 10.1 percent of the general fund. The governor has proposed closing the shortfall through spending cuts, savings from hiring restrictions, and using the rainy day fund, although the administration has advised the General Assembly to wait to act until the state has an updated revenue forecast. The state’s reserves at the close of fiscal 2020 were $3.07 billion, or 15.3 percent of fiscal 2021 net general fund appropriations. Universities and colleges in the state are asking for $173 million in additional support for the current fiscal year to help address their budget challenges.
Delaware’s governor extended the state of emergency declaration to confront community spread of COVID-19, the seventh extension since March. Small businesses and nonprofit organizations have been approved for the first round of Delaware Relief Grants of $25.7 million in funding; three rounds of grants totaling at least $100 million are planned, with the third round scheduled for early November. The University of Delaware is facing a budget deficit of $250 million and announced layoffs and other measures to help address the gap.
Florida’s chief economist projects that tourism, which accounts for 13 to 15 percent of the state’s main revenue fund, will take two to three years to recover. School districts saw a drop in student enrollment in many of the state’s 67 districts and school leaders are urging the state to hold school funding harmless for the full year. The governor ended a federal program to increase unemployment benefits due to the cost of the 25 percent matching requirement.
Georgia’s gross sales tax collections were up 4.2 percent in September compared to the prior year while individual income tax collections were up 11.2 percent, partly attributed to the additional $300 weekly federal unemployment payments. State agencies requested an additional $700 million in funding for the next fiscal year, following funding cuts of $2.2 billion for the current year. Voters will consider two constitutional amendments and one statewide referendum on the November ballot, addressing issues like dedication of fees and taxes, waiver of sovereign immunity, and a property tax exemption for charities.
Hawaii opened a new virtual call center for unemployment insurance, supported by $5 million in coronavirus relief funds. The state has allocated $67 million in CARES Act funds for a restaurant cash card program aimed at supporting struggling restaurants and unemployed residents. The governor also approved $14 million in CARES Act funds to increase state hospital staffing. The University of Hawaii announced salary reductions of more than 9 percent for all executive-managerial employees. A new report out of the state university predicts that the state will not see any “meaningful” economic recovery until mid-2021.
Idaho’s governor proposed and a legislative committee approved the allocation of $150 million in federal coronavirus relief funds to restore $99 million in public education budget cuts and put $50 million towards helping eligible families with school-related expenses. Some local governments are choosing not to accept coronavirus relief funding offered by the state to cover their public safety budgets in exchange for not increasing property taxes. The state attorney general is asking a judge to dismiss a county’s lawsuit over the distribution of the state allocation from the Coronavirus Relief Fund.
Illinois’ voters will decide on November 3 whether the states’ constitution should be amended to replace a flat-rate income tax with a graduated-rate tax structure; the governor has expressed his support for the measure. The state may face a credit rating downgrade if the amendment fails according to one report. The governor has asked state agencies to prepare for 5 percent budget cuts this year and 10 percent cuts next year partly due to the lack of additional federal aid; the governor remains hopeful that Congress will ultimately agree on a stimulus package. Earlier the governor announced $140 million in federal grants to Medicaid providers.
Indiana has been determining how to spend the final portions of its CARES Act funding. The state may need to borrow $400 million from the federal government to help pay unemployment benefits. The number of state workers has declined by roughly 600 people since the spring under the governor’s hiring freeze. Indiana has yet to release a report outlining recommendations on teacher pay partly due to the impact from coronavirus. Pension assets grew during fiscal 2020 despite the COVID-19 pandemic.
Iowa ended fiscal 2020 with a $306 million surplus which the governor said is partly due to the state’s fiscal responsibility over the years, while some legislators have asked for more transparency in how the state has been using federal coronavirus aid to support the budget. The governor has defended using some coronavirus aid for staff pay. Local governments have begun applying for payroll reimbursements through the state's Local Government Relief Fund. The Iowa Department of Natural Resources recommended a mostly status quo budget for fiscal 2022.
Kansas is planning on directing its remaining portions of CARES Act funds to housing stability, child supervision, and testing. The governor recently introduced a new COVID-19 testing strategy. Kansas has begun processing applications for additional unemployment benefits. The state collected $73 million more in tax collections than projected in September, although officials emphasized that the recovery is fragile.
Kentucky’s August General Fund receipts increased 5.9 percent compared to last year, for an increase of 6.5 percent in the current fiscal year. Sales and individual income taxes are driving the improved collections in the state, which saw the worst quarterly declines since the Great Recession from April through June. Lower-than-expected tuition revenue and the possibility of an 8 percent mid-year reduction in state funds could lead to a potential $33 million budget hole for the University of Kentucky. Kentucky was approved for the final three weeks of $300 per week Lost Wages Assistance to supplement unemployment insurance benefits. Kentucky is also using its Coronavirus Relief Fund moneys to add an additional $100 to the federal supplement. The governor announced the re-launch of “Kynect,” now a one-stop, online shop for people to apply for Medicaid and other resources such as food and child care assistance, job training, and help for the elderly and people with disabilities.
Louisiana is expected to borrow $236 million from the federal government for its unemployment fund; the state has suspended tax hikes and benefit cuts that would otherwise automatically go into effect due to the depletion of the trust fund, which will require the state to find another way to pay back the debt it will incur. In special session, the legislature is addressing Hurricane Laura relief, coronavirus relief to businesses, the governor’s emergency powers, and the state’s unemployment trust fund. Republican lawmakers are circulating petitions to end the emergency health declaration that led to the shutdown of business activities, and to create an avenue for the legislative branch to be involved in any future emergency declarations. The Louisiana State University Board of Supervisors approved a spending plan for next year that includes a 5 percent reduction, $56.4 million less, from the current year.
Maine’s governor approved a hiring freeze and the use of reserves to stem the shortfall the state is facing this year and plans to ask for additional changes when the legislature returns in January; next year’s regularly scheduled budget talks will consider how to fill an $800 million gap expected over the next two years. A recent report predicts that the state may face significant revenue challenges through fiscal 2023. The state has dedicated an additional $25 million in Coronavirus Relief Funds to the unemployment insurance trust fund, building on the previous allocation of $269 million, that is expected to significantly reduce an anticipated employer tax increase for 2021.
Maryland’s Board of Revenue Estimates revised the current fiscal year general fund estimate up by $1.4 billion to $18.7 billion and estimated $19.7 billion for the next fiscal year, but warned estimates could change if there is a second wave of business closures or Congress fails to pass additional relief measures. The Board of Public Works urged the President and Congress to resume negotiations on a new coronavirus stimulus package. The state ended enhanced coronavirus pay for most eligible front line employees but will maintain the payments for employees working in quarantine units. The legalization of sports betting is on the November ballot, which is estimated to generate $20 to $40 million each year earmarked for education.
Massachusetts’ September revenues totaled $3.144 billion, which is $46 million or 1.4 percent less than the prior year; year-to-date collections total approximately $7.27 billion, which is $69 million or 1.0 percent more than collections in the prior year. The state may face a fiscal 2021 gap between $2.7 billion to $5.33 billion according to the Department of Revenue; lawmakers continue to consider a full-year budget and Massachusetts is currently operating under a temporary budget. Tax revenues finished $693 million below estimates in fiscal 2020 but the state will be able to close their books without using its rainy day fund.
Michigan’s governor signed the state’s $62.8 billion fiscal 2021 budget; the state’s fiscal year begins on October 1. The budget includes an increase in per-pupil funding, aid for pregnant mothers, and job training programs and used targeted cuts, account surpluses, and federal aid to avoid additional spending reductions. The governor unveiled a $500 million plan to upgrade drinking water and sewage lines. The governor also said she will continue efforts to fight COVID-19 after the state Supreme Court ruled against some of her emergency powers.
Minnesota’s governor is planning on extending his emergency powers to respond to COVID-19, which will trigger a fifth special legislative session. The University of Minnesota experienced a $65 million budget shortfall in fiscal 2020 due to the coronavirus and is anticipating another large shortfall in fiscal 2021. School districts across the state are using CARES Act funds for a variety of purposes. Last month, the governor spoke in front of the U.S. House of Representatives regarding the need for additional federal aid to states.
Mississippi revenue collections through the first two months of the fiscal year are up 34.8 percent compared to the prior year, which some legislators attribute in part to delayed tax filings and federal stimulus efforts. The legislature reallocated unspent federal COVID-19 funds to landlords for rental forgiveness, farmers, hospitals, veteran’s homes, and emergency communications. The state will hold its annual state fair this month with new rules to prevent the spread of coronavirus.
Missouri’s governor announced that he is releasing $133 million in funding for state services mainly directed to K-12 and higher education, but also for social services, improving infrastructure, military communities, and addressing violent crime. The funding includes $95 million from the CARES Act and $40 million from previously withheld general revenue funds. The legislature recently wrapped up a special session focused on crime while passing some, but not all, proposed crime bills. The legislature also did not override any of the governor’s previous vetoes. The governor and legislature have discussed a supplemental budget proposal aimed at ensuring the governor can manage any additional federal coronavirus aid provided to states.
Montana could raise between $43 million and $52 million in tax revenue if voters approve ballot initiatives to legalize recreational marijuana. The governor released a report highlighting the impacts of Medicaid expansion on businesses and the economy. The state’s university system approved a $1.5 billion budget; with tuition revenue down, the system has managed its budget with a hiring freeze, spending reductions, and using some reserves from last year. The state could lose almost $10 million per year in federal funding with a 1 percent undercount in the 2020 census, according to a U.S. House or Representatives committee report.
Nebraska’s governor has spoken against an initiative proposal for casino gambling in the state. The state recently began its Medicaid expansion two years after voters approved the measure. Nebraska will be able to offer six weeks of the extra $300 in unemployment benefits, despite being the last state to join the program. Several prisons have seen a large number of COVID-19 cases. Tax collections in August were approximately $68 million above projections.
Nevada lawmakers approved $29 million in Coronavirus Relief Fund allocations to provide small business relief, promote tourism, and support distribution of a vaccine once available. Democratic leaders in the state legislature plan to appeal a judge’s ruling against the approval of two funding measures last year – a ruling that could cost the state nearly $100 million in school funds. The state’s school funding commission, established last year, is tasked with developing recommendations on how much the state should spend on K-12 education, and where that money should come from. The state has seen a 13.5 percent increase in Medicaid enrollment since the pandemic hit.
New Hampshire’s Supreme Court heard an appeal on a school funding case after a lower court decision found the state’s baseline contribution of $3,636 toward each student’s education is far from constitutionally adequate. State revenues for September are $20 million more than anticipated, and year-to-date revenues through September are $6 million more than estimates. The governor said that all schools should offer at least some in-class learning. The governor also recently issued an executive order implementing a series of police reforms. Universities in the state are facing a $70 million deficit. Some legislators are looking at legalizing marijuana to help address budget gaps.
New Jersey’s governor signed the $35.7 billion fiscal 2021 budget, for the period of October 1 through June 30, that includes a rate increase from 8.97 percent to 10.75 percent on income above a million and provides rebates of up to $500 for families whose single-parent incomes are less than $75,000, or $150,000 for two-parent households. The budget calls for $4.5 billion in borrowing to help address a revenue shortfall, makes spending cuts, and maintains school funding. Revenue collections in July and August of $2.140 billion were down $374.7 million, or 14.9 percent below the same two months of the prior year. Casinos and tracks saw their revenues decline by 7.5 percent in August compared to the prior year.
New Mexico economists said they are unable to report a specific general fund revenue projection for fiscal 2021 and beyond, due to highly uncertain economic and fiscal conditions, but said revenue is likely to range from $6.4 billion to $7.3 billion for fiscal 2021 and from $6.8 billion to $7.6 billion for fiscal 2022, an improvement over the prior forecast. Lawmakers are considering a tax increase on health insurance carriers. A legislative committee heard concerns from school districts worried that significant enrollment declines could lead to less state funding.
New York’s governor plans to wait until after the election to address the state’s budget shortfall and while some payments to localities, nonprofits and other groups have been delayed, no permanent cuts have yet been announced. The governor may reduce the court system’s annual budget to help close a $14.5-billion deficit. State tax receipts of $4.3 billion in August are $309.3 million above the latest projections by the state Division of Budget, but $219.1 million below collections in August 2019. Both New York State and New York City had their credit rating downgraded by Moody’s Investors Service due to the impact from COVID-19.
North Carolina has distributed more than $2.6 billion of its $3.5 billion coronavirus relief funds; distributions to date include $562.0 million to health and human services, $535.7 million to support public and private education, $467.1 million to state agencies, and $300 million to local governments. The governor announced $35 million in CARES Act funds for operational grants to assist child care programs providing in-person care. A commission found that the state’s transportation funding model could cause project delays for the next 30 years as the 10-year construction program has a capital project backlog of nearly $50 billion.
North Dakota’s legislature is currently wrapping up 47 interim studies. Although August tax collections were below forecast, the budget director is not anticipating any budget cuts as overall tax collections for the biennium budget continue to be above projections. The state is receiving $46 million in federal funds to help repair roads damaged by flooding. The Bank of North Dakota will receive $100 million from the state’s Legacy Fund for a program aimed at helping to provide greater access to capital for businesses.
Ohio’s legislature approved a bill providing $650 million in CARES Act funding to localities on a per capita basis. The governor and lawmakers are working on a plan to provide aid to small businesses and people struggling to pay rent. Medicaid work requirements that were set to begin January 1 have been put on hold because of the coronavirus pandemic. The state is also planning to overhaul its managed care setup for the Medicaid program. A state agency required GM to repay $28 million in tax incentives after closing an assembly plant.
Oklahoma’s collections in the General Revenue Fund for August were 0.9 percent ahead of estimates and nearly 3 percent lower compared to the prior year. The state Board of Education approved a nearly $3.2 billion budget request for the next fiscal year that includes additional funding for the main student information system and funds to hire 350 school counselors. Democratic lawmakers requested a legal opinion from the state attorney general on the governor’s $10 million allocation from the Governor’s Emergency Education Relief Fund to support private school tuition. A ruling from the U.S. Supreme Court regarding tribal lands could significantly reduce state tax collections.
Oregon’s governor line-item vetoed 34 sections of two budget bills to preserve $65 million, a decision prompted in part by the statewide wildfire emergency and a desire to have additional funds available for response efforts. State economists released a revised revenue forecast predicting an improved outlook compared to the May forecast, with much of the improvement attributed to federal stimulus and income tax payments filed near the extended July deadline. Officials cautioned that the economic impact of the pandemic has yet to be fully reflected in state revenues and that the longer-term outlook has improved only modestly.
Pennsylvania’s governor said the state will have a difficult time closing an estimated $5 billion budget deficit over the next two years. The state launched its state-based health insurance marketplace, rather than relying on the federal marketplace. Medicaid enrollment statewide increased 7.4 percent from February to August. The state collected $3.3 billion in general fund revenue in September, which was $248.7 million, or 8.3 percent, more than anticipated. The state generated almost $365 million in sports betting wagers in August, up from $109 million recorded during the same period last year.
Rhode Island plans to hold off action on the state budget until after the November election to see if Congress will pass another relief bill. The governor has recommended three bond measures for voters including $310.5 million for housing and infrastructure, $117 million for higher education, and a $69 million green bond to cover water and stormwater resilience and other environmental measures, with bond initiatives to be voted on in a special election. A judge allowed truck tolls to continue while a lawsuit challenging the constitutionality of the practice awaits trial. Some legislators have called for a reversal of higher education layoffs.
South Carolina’s Senate approved an approximately $9 billion budget for fiscal year 2021 that includes $50 million for teacher raises and sets aside part of a surplus for potential budget shortfalls; the House is unlikely to consider the bill, keeping the state funded via a continuing resolution. Lawmakers approved $693 million in phase-two federal COVID-19 aid for a variety of recipients, including $40 million for small businesses, $25 million for nonprofits, $420 million to replenish the state unemployment trust fund and $93.1 million for statewide COVID-19 testing. The state Supreme Court ruled the governor’s plan to spend $32 million in federal coronavirus aid on grants for private school tuition is unconstitutional.
South Dakota’s governor called a special session to determine how the state should spend the remainder of its federal coronavirus aid. The legislature then approved a bill appropriating the money into the general fund and a separate resolution making recommendations on how to spend $597 million left of CARES Act funding; the legislature recommended $15 million for hospitals, $400 million for small businesses, and $115 million for long-term care facilities. The state continues to deal with a recent surge in coronavirus cases. A higher education task force is meeting for the first time to study the future of the state’s university system. Voters in the state will consider separate measures to legalize recreational and medicinal marijuana.
Tennessee’s revenues in August were $1.2 billion, or $22 million higher than the prior year and $115.1 million ahead of budgeted estimates. The state Court of Appeals upheld a lower court’s decision that the governor’s education savings account program is unconstitutional because it only applies to two counties. Consideration of the state’s proposal to the federal government for a Medicaid block grant has been delayed by the coronavirus pandemic. The Board of Regents announced enrollment at community colleges is down 11.5 percent compared to last year, or about 10,000 students.
Texas’ sales tax revenue collections were down 6.1 percent in September compared to the prior year and overall, the state saw a 2.5 percent decline in revenue collected over the last three months. Hundreds of thousands of households face potential utility shut-offs as the state’s moratorium on disconnections lapses and relief programs expire. State health officials reversed a planned $15 million reduction to health and safety net programs and instead will reduce administrative spending to meet a mandated 5 percent budget reduction. The state published guidelines on which groups would have first access to a coronavirus vaccine, including health care workers and those aged 65 or older.
Utah voters will decide on this year’s ballot whether to allow the legislature to use income tax revenues to support disabled children and individuals; currently, state income tax revenues may only be used for education and higher education expenditures. The state Board of Education approved an attendance proration method to allow schools to better represent what their yearly membership would have looked like last year without the pandemic-related closures this spring, for the purposes of determining state funding levels; this year, state school enrollment dropped for the first time in 20 years.
Vermont enacted a fiscal 2021 budget of $7.15 billion with no new taxes and included nearly $230 million in economic recovery grants to employers, over $30 million in grants to farmers, more than $100 million for schools, and $300 million to stabilize the health care system. The budget contains $5 million to provide $1,200 payments for those who were excluded from CARES Act funding, including migrant workers and their families. The state was able to avoid drastic cuts after July’s revenues came in higher than projected. Vermont received the highest amount of CARES Act funding per capita among the states. The governor let a police reform bill become law without his signature.
Virginia’s House approved a revised two-year $134.2 billion budget to address the pandemic and resulting economic downturn that allocates $95.2 million in one-time revenues from gaming machines to education, $55 million for affordable housing and rental assistance, and $50 million to expand broadband infrastructure in underserved areas. The Senate passed their version of the budget that funds dental benefits and expands postpartum coverage by changing Medicaid managed care rates and funds a one-time $500 bonus for law enforcement personnel. A survey of school districts found that public schools are facing an enrollment loss of 35,000 students which could represent a prospective loss of $146 million in basic aid funding from the state. The governor announced a plan to help save public colleges and universities more than $300 million through debt refinancing and principal payment deferral.
Washington state revenues are now forecasted to total $50.0 billion for the current biennium, $2.3 billion less than what was projected before COVID-19, but an improvement over the $47.8 billion level forecasted in June, though there continues to be considerable downside risks and uncertainty in the forecast. Based on the revised revenue forecast, officials said the state should not need a federal loan to continue paying unemployment benefits, and that there will not be a solvency tax for employers that was previously expected.
West Virginia ended September with a $10 million surplus for the month, and $90.4 million year-to-date. Revenue is 12.8 percent above last year and collections have set records for personal income and consumer sales tax. The governor announced the state will spend $6 million to continue a program funding daycare for the children of essential workers after federal funding ended; the program serves 3,400 each month. West Virginia University is facing a budget shortfall of $10 to 15 million for 2021 due to the COVID-19 pandemic. The university does not anticipate any layoffs or salary cuts; in the spring the school faced a $30 million deficit and furloughed 800 staff members to reduce expenses by $4 million.
Wisconsin state agencies are cutting $300 million from their fiscal 2021 budgets after previously cutting $70 million in fiscal 2020 due to the impact of COVID-19. The governor announced $100 million in support for businesses, tourism, and entertainment venues. The governor has also announced $47 million in CARES Act funding to help residents with child care, food, and rental assistance. Universities are receiving over $8 million in CARES Act funding to help with coronavirus testing. The state is hoping to update is outdated unemployment system in the next budget.
Wyoming lawmakers will look towards road usage charges to bolster state transportation funding. The layoff of the state’s corrections department public information officer has raised concerns about timely access to information. The state university is bracing for a 10 percent state funding reduction of $42 million. State agency’s estimated impacts of budget cuts raise questions as to whether some reductions could cost the state more money over the longer term. The state health department will begin running the Children’s Health Insurance Program, previously administered by the state’s largest private insurer, saving more than $10 million.