COVID’s Summer Hot Spots

Update 451: COVID’s Summer Hot Spots
Argue for Targeted, Automatic Relief Fix

No economic relief or bill, regardless of size, will be scrupulously equitable as regards state, sector, class, generation, etc.  Nor would equity on every basis be optimal in all circumstances. Today, Montana and Vermont are both marginally affected by the Coronavirus.  Should relief for those states be equal per capita to say, New York, Michigan, Texas? Few would say yes.

With states entering new fiscal years next week, we ask, where should the marginal federal assistance dollar go to keep them running?  Until now, CARES, HEROES, and the other relief legislation has barely considered stimulative value and local economic conditions.  We point out below the enormous disparity in states’ exposure to COVID and, therefore, their fiscal circumstances.  

We suggest that more targeted relief reflecting reality in the states is not only called for but is a more equitable policy.




Next Wednesday, July 1, 46 states and many local governments will begin a new fiscal year.  Facing both a pandemic and recession, states have struggled to pay for necessary public health equipment and to keep up with sudden demands on social safety net programs. Meanwhile, revenues are falling as tens of millions of taxpayers lose their jobs. 

States are already announcing cuts to programs and massive layoffs of public employees. Below, we examine the fraught situation faced by state and local governments, the implications for budgets and the upcoming election, and potential solutions. 

Nationwide Shortfalls; Spots in Free Fall

At the start of 2020, states expected increases in spending and revenues of around three percent. Now, tax revenues are cratering at the exact moment that states need to increase spending.

About two-thirds of states’ revenues come from sales and income tax receipts, both of which have been devastated by the shutdowns and heightened unemployment. Per Brookings, a one percentage point increase in unemployment coincides with a roughly $40 billion decrease in state tax revenue. Unemployment jumped roughly 10 points between February and May. 

Revenues have dropped so dramatically that less than half of all states have released updated forecasts. Available state estimates are grim. In the table below, we highlight state revenue estimates for the six states with the highest unemployment rates, in order, as of May. In parentheses is that state’s national unemployment rank as of December 2019.

Fiscal Status of High Unemployment States

(note: estimated declines are based on pre-COVID state revenue forecasts)

Sources: Bureau of Labor Statistics, Center for Budget and Policy Priorities

The Federation of Tax Administrators, which advises state tax authorities, projects a nationwide loss of $150 billion in tax revenue collection between April and the end of June. In nominal terms, this revenue loss is 50 percent larger than the $100 billion that states missed out on during the three years of the Great Recession combined. 

Public Sector Jobs, Service Cuts Coming

Forty-nine states and the District of Columbia have balanced budget laws. Balanced budget laws prevent states from running deficits, which requires them to cut services and jobs when revenue declines. States and local governments have laid off or furloughed 1.5 million workers, primarily in the education sector, since the start of the pandemic. The Center on Budget and Policy Priorities predicts that state budget shortfalls will total $615 billion from 2020-2022, forcing states to further slash programs and jobs. And per Moody’s Analytics, state and local governments need at least $500 billion in additional federal aid to avoid four million public employee layoffs. 

Following the 2008 recession, states cut budgets by 3.8 percent in FY 2009 and 5.7 percent in FY 2010. These cuts likely prolonged the recovery; the Hutchins Center Fiscal Impact Measure shows that from 2008 through 2014, state and local fiscal policy lowered GDP by 1.7 percent. 

Now, states are looking at cuts even greater than those undertaken during the Great Recession. Georgia Governor Brian Kemp and Ohio Governor Mark DeWine have instructed their state agencies to prepare for massive cuts to their budgets, up to 10 or even 20 percent, respectively. Without further federal aid to fill in these cuts, the impact on the recovery may be disastrous. 

Democracy: A Key State Budget Line-Item

State and local governments will administer the general election in November. State primaries have seen record numbers of mail-in ballots cast this year, overwhelming unprepared and underfunded election offices. At the same time, public health concerns have led state officials to limit the number of in-person polling places. In recent updates, we have written about the logistical issues that election officials face this November and the accompanying threats to the franchise. 

While it may be difficult for state and local governments to rationalize diverting funding towards vote-by-mail infrastructure and the necessary PPE for poll workers, Congress can act. Per the Brennan Center, ensuring a universally available vote-by-mail option, maintaining safe, in-person polling sites, developing online registration portals, and a nationwide campaign to educate the public on their voting options this fall will cost $4 billion.

The Automatic Option

Congress should consider making changes to levels of aid to state and local governments tied automatically to macroeconomic indicators. During the Great Recession, automatic stabilizers provided essential economic stimulus long after discretionary spending programs ended. Via automatic stabilizers, federal aid to particular states would immediately increase once their unemployment rates reach a certain point, thus avoiding the ad hoc, post hoc approach taken so far. 

Automatic Stabilizers as Stimulus

Source: Hutchins Center at Brookings and CBO (2019)

Rep. Don Beyer and Sens. Jack Reed and Michael Bennet have proposed the Worker Relief and Security Act, which would tie the CARES Act’s expanded unemployment insurance to state unemployment rates. This would help ensure that workers in states suffering the most receive the highest benefits and that expanded UI benefits do not end before state economies have recovered. While Speaker Pelosi has endorsed the idea of automatic stabilizers, they were not in the HEROES Act passed by the House in May.  

Congressional Republicans have repeatedly opposed additional federal aid to states, with Majority Leader McConnell making the astounding suggestion in April that states go bankrupt.  But Republican and Democratic governors alike are vying for further federal assistance, and even Federal Reserve Chair Powell has stated his support for more fiscal aid to state and local governments.

Without Congressional action, states may have no choice but to cut spending, jobs, and basic services drastically.  

49 thoughts on “COVID’s Summer Hot Spots”

  1. Thanks on your marvelous posting! I genuinely enjoyed reading it,
    you happen to be a great author.I will make certain to bookmark your blog and will
    come back in the foreseeable future. I want to encourage
    that you continue your great job, have a nice afternoon! 0mniartist asmr

  2. Thanks a lot for sharing this with all folks you actually recognise what you
    are speaking about! Bookmarked. Kindly also discuss with my web site =).
    We can have a hyperlink alternate agreement among us asmr 0mniartist

  3. Asking questions are really good thing if you are not understanding anything completely,
    however this post gives pleasant understanding even. asmr 0mniartist

  4. I always spent my half an hour to read this weblog’s articles or reviews daily along with a mug of coffee.
    asmr 0mniartist

  5. I do not even know the way I finished up here, but I assumed this publish was once
    great. I don’t realize who you are but definitely you’re going to a well-known blogger should you are not already.

  6. It is appropriate time to make some plans for the long run and it’s
    time to be happy. I’ve read this publish and if I could I desire to recommend you
    few attention-grabbing things or suggestions. Maybe you can write next articles
    referring to this article. I desire to read more things about it!

  7. Greate post. Keep writing such kind of info on your blog.

    Im really impressed by your blog.
    Hi there, You have done an incredible job. I’ll certainly digg it and in my opinion suggest
    to my friends. I am sure they’ll be benefited from this website.

  8. I’m extremely inspired along with your writing abilities and also with the format
    in your blog. Is this a paid subject matter or did you modify it yourself?

    Anyway stay up the nice quality writing, it is rare to
    see a great blog like this one today..

  9. Thank you for the good writeup. It in fact used
    to be a entertainment account it. Look advanced to far introduced agreeable from you!
    By the way, how can we be in contact?

  10. Its like you read my mind! You seem to know a lot about
    this, like you wrote the book in it or something. I think that you can do with a few pics to drive the message
    home a little bit, but other than that, this is excellent blog.
    An excellent read. I’ll certainly be back.

  11. scoliosis
    Magnificent website. Lots of useful info here. I am sending it to a few friends ans additionally sharing in delicious.
    And of course, thank you to your effort! scoliosis

  12. scoliosis
    I visited various web sites but the audio feature for audio songs existing at this website is genuinely fabulous.

  13. free dating sites
    I’m amazed, I have to admit. Rarely do I come
    across a blog that’s both equally educative and engaging, and let
    me tell you, you have hit the nail on the head.
    The issue is something that too few men and women are speaking intelligently about.
    I am very happy that I found this during my search for something concerning
    this. dating sites

  14. dating sites
    Good day I am so thrilled I found your web site, I really found you by accident, while I was looking on Aol for something
    else, Nonetheless I am here now and would just like to say thanks a lot for a
    incredible post and a all round thrilling blog (I also love the theme/design), I don’t have
    time to read through it all at the moment but I have book-marked it and
    also included your RSS feeds, so when I have time I will be back to read
    much more, Please do keep up the superb b. dating sites

  15. Hi there this is kind of of off topic but I was wondering if blogs use WYSIWYG editors or if you have to manually code with HTML.
    I’m starting a blog soon but have no coding experience so I wanted to get advice from
    someone with experience. Any help would be greatly appreciated!

  16. Great post. I was checking constantly this blog and
    I’m impressed! Extremely useful information specifically the last part
    🙂 I care for such info much. I was seeking this particular info
    for a long time. Thank you and best of luck.

  17. I know this if off topic but I’m looking
    into starting my own blog and was curious what all is required to get set up?
    I’m assuming having a blog like yours would cost a pretty penny?
    I’m not very web savvy so I’m not 100% sure. Any tips or advice would be greatly appreciated.
    Many thanks

  18. Wow that was strange. I just wrote an incredibly long comment but after I clicked submit
    my comment didn’t show up. Grrrr… well I’m not writing all that over again. Anyways, just wanted to say superb blog!

  19. Hello everyone, it’s my first go to see at this site, and
    article is truly fruitful designed for me, keep up posting these types of

  20. Oh my goodness! Awesome article dude! Many thanks, However
    I am having difficulties with your RSS. I don’t know the reason why
    I cannot subscribe to it. Is there anybody having identical RSS problems?
    Anyone who knows the answer can you kindly respond? Thanx!!

  21. I haven¦t checked in here for some time because I thought it was getting boring, but the last several posts are great quality so I guess I¦ll add you back to my everyday bloglist. You deserve it my friend 🙂

  22. Woah! I’m really enjoying the template/theme of this site. It’s simple, yet effective.
    A lot of times it’s tough to get that “perfect balance” between user friendliness
    and visual appeal. I must say that you’ve done a awesome job
    with this. In addition, the blog loads very fast for me on Safari.
    Excellent Blog!

  23. Hi there! I know this is kind of off topic but I was wondering if you knew where I could get a captcha plugin for my comment form?
    I’m using the same blog platform as yours and I’m having difficulty
    finding one? Thanks a lot!

  24. Hi there would you mind stating which blog platform you’re working with?
    I’m planning to start my own blog soon but
    I’m having a hard time choosing between BlogEngine/Wordpress/B2evolution and Drupal.
    The reason I ask is because your design and style seems different then most blogs and I’m looking
    for something unique. P.S My apologies for getting off-topic
    but I had to ask!

Leave a Comment

Your email address will not be published. Required fields are marked *