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Press Release

Cleveland Fed researcher sees state and local government revenues decline by $141 billion in fiscal year 2020

State and local governments have lost $141 billion of revenue from all sources in FY20 due to the COVID-19 mitigation shutdowns, according to estimates by Cleveland Fed researcher Stephan Whitaker. Whitaker provides state-by-state estimates covering all revenue sources that are likely to decline in an updated District Data Brief. The update incorporates consumption data released since the original estimates were published on May 13, 2020.

“Under three scenarios of increasing severity, I estimate that state and local governments will need to cut expenditures by between $59 billion and $350 billion in FY21 to offset impending loses of revenue,” says Whitaker. “Some of the revenue losses can be offset by the rainy day funds that state and local governments have set aside during the expansion, but jurisdictions that lack a fiscal buffer may face painfully deep service cuts.”

The FY20 losses could be particularly difficult to deal with because most states must offset them with cuts in the fourth quarter of FY20 to meet their balanced budget requirements. A second-wave shutdown, followed by a slow recovery would take 10 to 20 percent off of most FY21 state budgets and force major spending and job cuts.

Read more and find out which revenue streams are facing the biggest losses: How Much Help Do State and Local Governments Need? Updated Estimates of 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.

Media contact

Doug Campbell,, 513.455.4479