Risks Rise for State and Local Budgets: COVID Stress Test Update

Source: Dan White, Emily Mandel, and Colin Seitz, Moody’s, June 24, 2020
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• States and local governments will need approximately $500 billion in additional aid over the next two fiscal years to avoid major damage to the economy.
• Timing is of the essence, as state and local policymakers face several important budget deadlines in the weeks and months ahead.
• If action is not taken quickly enough, the spending cuts and tax increases that would need to be undertaken could cost several million additional jobs and further delay the recovery.
• The specter of a second wave of widespread infections is broadening the distribution of potential downside scenarios.