Cleveland Fed researcher estimates state and local government revenue losses from pandemic mitigation, sees revenues decline by $54 billion in fiscal year 2020
State and local tax collections will decline sharply over the next two fiscal years because of COVID-19 mitigation shutdowns, according to estimates by Cleveland Fed researcher Stephan Whitaker. In a new data brief, Whitaker provides state-by-state estimates of lost revenues from income and sales taxes. In FY20, which for most states ends June 30, tax collections are expected to fall by $54 billion. Depending on the speed of the recovery over the next fiscal year, another $25 billion to $137 billion of revenue may be lost.
“If states split their rainy day funds between FY20 and fiscal year 2021 (FY21) to offset these revenue declines, the shortfalls would be reduced to $21 billion in FY20 and $4 billion to $78 billion in FY21,” says Whitaker. “While every revenue stream collected by state and local governments will probably be reduced by the current economic slowdown, my estimates focus on the largest sources, individual income taxes and sales taxes.”
Read more and find out which types of local governments are facing the biggest losses in each state: Estimates of State and Local Government Revenue Losses from Pandemic Mitigation
Federal Reserve Bank of Cleveland
The Federal Reserve Bank of Cleveland is one of 12 regional Reserve Banks that along with the Board of Governors in Washington DC comprise the Federal Reserve System. Part of the US central bank, the Cleveland Fed participates in the formulation of our nation’s monetary policy, supervises banking organizations, provides payment and other services to financial institutions and to the US Treasury, and performs many activities that support Federal Reserve operations System-wide. In addition, the Bank supports the well-being of communities across the Fourth Federal Reserve District through a wide array of research, outreach, and educational activities.
The Cleveland Fed, with branches in Cincinnati and Pittsburgh, serves an area that comprises Ohio, western Pennsylvania, eastern Kentucky, and the northern panhandle of West Virginia.
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