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Thursday, April 02, 2020

Coronavirus slams state budgets; it's unclear how much federal stimulus will help offset reduced revenue

"Governors nationwide have ordered businesses to close and people to stay home in order to slow the spread of the novel coronavirus. But the public-health measures have created an economic crisis that will, in turn, hit state and city budgets," Sophie Quinton reports for Stateline. "Now policymakers are scrambling to figure out how much spending power they’re losing at a moment when they need money to fight the pandemic and help laid-off workers and struggling businesses."

It's impossible to know at this point how much the pandemic will impact state budgets, but early estimates look troubling, said Brian Sigritz, director of state fiscal studies for the National Association of State Budget Officers. The drop-off in tax collections "could be more severe than the Great Recession," Sigritz told Quinton.

Sigritz said the $150 billion in coronavirus relief for states and cities in the federal stimulus package could help stabilize state budgets, but it's unclear how much it will help. "The budget outlook has worsened for states as it’s become clear that social distancing restrictions will need to be in place for months, not weeks, to prevent hospitals from becoming overwhelmed with coronavirus patients," Quinton reports.

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