Sunday, May 26, 2024

Report: 33 states have enacted budgets for fiscal 2021, most with shortfalls

by BIZ Magazine

By Bethany Blankley | The Center Square

Thirty-three states enacted budgets for fiscal 2021 as of June 10, according to an analysis published by the National Council of State Legislators (NCSL).

On July 1, 46 states will begin their fiscal year with a new budget. New York began its fiscal year on April 1; Texas begins its fiscal year Sept. 1, and Alabama and Michigan begin theirs on Oct. 1.

California’s state lawmakers and governor are scrambling to reach an agreement on the state’s budget before July 1, otherwise the elected officials will not get paid, according to state bylaws.

Of the 33 states that have enacted budgets for fiscal 2021, 16 are biennial budgets. Of the states that have enacted budgets, Florida and Louisiana extended and or held special sessions to deal with their fiscal 2021 budget, the analysis shows. New York is the only state so far to have not enacted its budget by the start of its fiscal year.

The NCSL represents state legislatures, territories and commonwealths and facilitates the exchange of information among legislatures, among other roles.

It also has created a resource guide for state legislatures to respond to and anticipate impacts of the coronavirus.

Due to impacts of COVID-19 on state budgets, some states have adopted measures to prevent a shutdown if their budgets aren’t enacted by the start of their fiscal year, NCSL notes, including the adoption of base budgets and continuing resolutions.

NCSL has been tracking the budgetary and economic consequences of the coronavirus shutdowns by state. A recent report summarizes projected revenue shortfalls and revised estimates by state and fiscal year.

In it, NCSL maps each state’s projected revenue declines for fiscal 2021 and shows how much of these declines are attributed to loss of revenue due to the coronavirus shutdowns.

The percentage of COVID-19 costs as part of projected budget losses for fiscal 2021 are the greatest in Colorado (25 percent), the analysis found. Next worst is New Mexico (22-30 percent), followed by Wyoming (20 percent), California (16-21 percent), New Jersey (18 percent), and Vermont (17 percent).

State revenue assumptions vary by state and are based on data from each state’s respective fiscal analyst’s office, the report notes.

In response to budget shortfalls, a new report by Pew Charitable Trust’s division on state fiscal health shows how much states are borrowing to fill budget gaps. Pew notes that state governments generally have two options for borrowing money: long-term bonds and short-term notes. Researchers suggest that borrowing, “could help, but it would be only one component in a broader strategy that will require other budget adjustments.

“And neither short- nor long-term borrowing can solve the harder problem of dramatic revenue declines driven by an economic downturn,” the report adds. “Ultimately, balancing state budgets will require longer-term solutions such as spending cuts, tax increases, drawing on rainy day funds, or federal aid.”

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