Even With Federal Aid, States Slashed Spending By $4.1 Billion To Avoid Shortfalls

Link: https://www.forbes.com/sites/lizfarmer/2021/06/24/even-with-federal-aid-states-slashed-spending-by-41-billion-to-avoid-shortfalls/?sh=1a1c2ceb4a93

Graphic:

Excerpt:

A total of 12 states had to cut a combined $4.1 billion from their budgets in order to balance out projected shortfalls before the end of their fiscal year, according to a new report released Thursday by the National Association of State Budget Officers (NASBO). (Most state fiscal years end on June 30.) Nevada, New Mexico and Washington state cut the most, accounting for 42% of the total.

Many of these states targeted staff for these cuts, including implementing hiring freezes, eliminating open positions, cutting salaries and ordering furloughs. They also turned to Medicaid, which saw more than $1 billion in combined cuts from the 12 shortfall states while higher education cuts totaled more than $500 million from the group. Washington State focused its cuts mainly on K-12 education, slashing more than $1 billion from the budget over the past year.

Author(s): Liz Farmer

Publication Date: 24 June 2021

Publication Site: Forbes

New Jersey Governor to Propose Full Pension Payment for First Time Since 1996

Link: https://www.wsj.com/articles/new-jersey-governor-to-propose-first-full-pension-payment-since-1996-11614028204

Excerpt:

New Jersey Gov. Phil Murphy is expected to propose making a full payment to the state’s chronically underfunded pension system for the first time since 1996, a sign that the blow from the pandemic to all states’ finances isn’t as brutal as officials originally feared.

Mr. Murphy, a Democrat, will call for a $6.4 billion payment to the pension system in his budget address Tuesday, senior members of his administration said. The Murphy administration has been ramping up pension payments and originally intended on making a payment of $5.76 billion for the fiscal year that begins in July.

In New Jersey, as in many other states, tax revenues have outperformed earlier projections. When the pandemic hit, states projected revenue would drop off significantly. State revenues ended up falling 1.6% in fiscal year 2020 and were 3.4% lower than projected before the pandemic, according to the National Association of State Budget Officers. While states expect revenues to fall 4.4% in fiscal 2021, which ends on June 30 for most, 18 states are seeing revenues come in above forecasts.

Author(s): Joseph De Avila

Publication Date: 22 February 2021

Publication Site: Wall Street Journal

Covid-19’s Hit to State and Local Revenues Is Smaller Than Many Feared

Link: https://www.wsj.com/articles/covid-19s-hit-to-state-and-local-revenues-is-smaller-than-many-feared-11612706030

Excerpt:

Immediately after the coronavirus outbreak last March, states slashed revenue projections by an average of about 8%, with some expecting shortfalls as high as 20%. Those projections were largely based on experiences during the 2007-09 recession.

In the end, state revenues fell 1.6% in fiscal year 2020 and were 3.4% lower than projected before the pandemic, according to the National Association of State Budget Officers. While states expect revenues to decline 4.4% in fiscal 2021, 18 states are seeing revenues come in above forecast.

Author(s): Kate Davidson

Publication Date: 7 February 2021

Publication Site: Wall Street Journal