How Much Help Do State and Local Governments Need? Updated Estimates of Revenue Losses from Pandemic Mitigation
Abstract: I estimate that state and local governments have lost $141 billion of revenue from all sources in fiscal year 2020 (FY20) due to the COVID-19 mitigation shutdowns. Under three scenarios of increasing severity, I estimate that state and local governments will need to cut expenditures by between $59 billion and $350 billion in fiscal year 2021 (FY21) to offset impending loses of revenue. Some of the revenue losses can be offset by the rainy day funds that state and local governments have set aside during the expansion, but jurisdictions that lack a fiscal buffer may face painfully deep service cuts. This data brief updates and improves upon the estimates in the District Data Brief published on May 13, 2020. In these new estimates, I include all revenue sources that are likely to decline; the original brief covered only income and sales taxes.
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Provider: Federal Reserve Bank of Cleveland
Source: Cleveland Fed District Data Brief
Publication Date: 2020-06-29