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The pressures on state and local finances from the coronavirus pandemic and resulting economic fallout are mounting and will quickly become severe – significantly worse in the coming year than states and localities experienced during the Great Recession.
Federal policymakers have provided some emergency fiscal relief, but its far too little to enable states and localities to respond to the immediate public health emergency or prolong a recession.
States urgently need more substantial fiscal support.
States’ costs are rapidly rising as they seek to contain the coronavirus. Those costs will spike as businesses continue to lay off workers and incomes fall. At the same time, state revenues are plummeting, knocking state budgets out of balance.
Without additional federal aid, states will have to respond by budget cuts: laying off teachers and other public employees and slashing other spending. These layoffs and cuts will worsen the economy’s fall and could cause long-term harm to families and communities.
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