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The coronavirus is pounding state governments with a financial one-two punch, costing them millions to try to contain the disease just as businesses are shutting down and tax revenue is collapsing. The sharp drop in revenue could jeopardize some states’ ability to provide basic services.
States ranging from tiny Rhode Island to California, with the world’s fifth-largest economy, have warned that many programs are likely to face cuts or even elimination.
“I am gravely concerned about our ability to deliver basic services over the next six months to a year given the drop in revenues, and that’s why I am encouraging the Legislature to be extremely fiscally prudent,” Oregon Gov. Kate Brown, a Democrat, said about building the budget for the coming fiscal year.
Many states are blowing through the multi-billion dollar rainy day funds they built up after the end of the Great Recession. Without that cushion, government finance experts say, states would have been in much worse shape.