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