Did state and local governments have severe budget shortfalls during the pandemic?
No
Significant shortfalls in the budgets of state and local governments were projected at the pandemic’s outset. Remarkably, a fall 2022 report from the National Association of State Budget Officers found that combining the 2020 and 2021 fiscal years, total general fund revenue ultimately came in 2.2% higher than pre-pandemic forecasts. Importantly, this estimate does not include the revenues states receive as transfers from the federal government. An unexpected increase in revenues and nearly $900 billion in federal fiscal assistance have left state and local governments with considerable surpluses, even after factoring in increases in expenditures.
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Sources:
EconoFact The Resilience of State and Local Government Budgets in the Pandemic
National Association of State Budget Officers Archive of Fiscal Survey of the States
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