Fiscal Survey of the States: Fall 2020

Source: National Association of State Budget Officers, December 2020

From the overview:
State general fund spending in fiscal 2021 is projected to decline for the first time since the Great Recession, based on enacted budgets. After nine consecutive years of budget growth, states saw revenue fall in fiscal 2020, and greater declines are expected in fiscal 2021. Weakening revenue projections resulting from the COVID-19 recession led states to reduce general fund spending by 1.1 percent compared to fiscal 2020 and by 5.5 percent compared to governors’ budgets proposed before the pandemic.

Other key findings from the report:
• State general fund revenue is projected to decline by 4.4 percent in fiscal 2021 compared to already depressed fiscal 2020 levels, or by 10.8 percent compared to revenue projections in governors’ pre-pandemic budget proposals, based on the most current estimates available when data were collected.
• Fiscal 2020 general fund revenues declined 1.6 percent compared to fiscal 2019, or by as much as 2.9 percent when only counting the 45 states that operated on a July to June fiscal year. 35 states reported general fund collections for fiscal 2020 from all sources came in lower than original budget projections.
• The tax deadline shift from April to July affected fiscal 2020 revenue collections in 19 states that counted these delayed payments as fiscal 2021 revenue. Among these states, 17 were able to provide estimated deferral amounts totaling $10.2 billion, revenue that would have otherwise been collected in fiscal 2020.
• Rainy day fund and total balances were at record highs before the pandemic hit but are now on the decline as states turn to reserves to address budget shortfalls. Total balances are already projected to decline by $33.3 billion in fiscal 2021 compared to fiscal 2019 levels.

Note: The fiscal 2021 data in this report represent a point in time, as spending and revenue projections continue to be moving targets. State-by-state data also reflect differing points in time depending on when a state enacted its budget for fiscal 2021 and how often a state revises its revenue forecast.

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