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States Are Now Wrestling With The Biggest Budget Crisis They Have Faced In All Of U.S. History
States Are Now Wrestling With The Biggest Budget Crisis They Have Faced In All Of U.S. History
Most U.S. states are seeing tax revenues completely and utterly collapse during this COVID-19 pandemic, and some are already begging the federal government for bailout money. Because if dramatic intervention does not happen, many states are going to have to start savagely slashing their expenditures, and that could mean unprecedented job losses on the state government level. Typically, state government bureaucrats make above average salaries and those jobs often come with very nice benefit packages. Once those jobs have been eliminated, they will not be easy to replace.
The tax revenue numbers that are starting to come in are nothing short of shocking. Just consider these examples…
Georgia is showing a decline of more than $100 million in sales tax, fuel tax and other tax revenue compared with the same period a year ago. Tennessee’s tax revenue is down more than $120 million. Pennsylvania’s is off by more $760 million, and Texas, which also has been hammered by the downturn in oil prices, has seen tax collections plummet by nearly $1 billion.
And New Jersey officials just reported that tax revenue in their state fell a whopping 60 percent during the month of April compared to a year ago.
These are unprecedented figures, and they have created gaping holes in state budgets all over the nation…
Colorado faces a gap of nearly a quarter of the state’s general budget. The projected gap in California is more than a fifth of its spending plan and in Oklahoma, a sixth. The governor of Oregon is preparing to cut 17% of her budget. Michigan may have to slash up to a quarter of the money it sends to schools.
…click on the above link to read the rest of the article…
Far worse to come: COVID-19 collapse of state and local governments
Far worse to come: COVID-19 collapse of state and local governments
Another sudden and unexpected factor will transform this year’s elections. Many states, cities and counties are about to, suddenly, run out of money. Wages won’t be paid. Services won’t be delivered. Institutions will shut down abruptly. Many state colleges may fold. And yet most state and local political and administrative leaders just sit and watch. Voters will not be pleased.
Millions of American workers filed for unemployment insurance during the past two weeks. That is a record and represents a collapse of our local economies. Across the country, in every state, county and city, businesses have been shut down, and many will not return after the coronavirus crisis is over. Tens of millions have lost jobs, homes, savings and retirement incomes that will never return. Owners of rental property will go under when their loan payments come due and renters can’t pay. Across the country, state and local economies are being badly damaged — many of them permanently.
The result is that state and local tax revenues will plummet. States and localities will burn through any reserves they’ve maintained like wildfire. Since most of our politicians and government managers have been raised during a decade of expanding economies, their first instinct will be to wait and then panic and then raise taxes to cover shortfalls — perhaps a special “coronavirus surtax.” Taxpayers across the country have tolerated various forms of high state and local taxes; the politicians would naturally ask, “Why should now be any different?”
But it is different. The resulting increased tax burden would be a disaster. Businesses that were barely hanging on would go under. Workers and homeowners who were barely surviving would go under. State and local tax bases would collapse even faster. There would be social unrest, possibly requiring martial law. People would migrate from high-tax states toward new jobs, accelerating a downward spiral. These large migrations would make the 2020 census results nonsense.
…click on the above link to read the rest of the article…
