November 12, 2020

The Pandemic Effect: Fiscal Year Impacts

Numerous state governments have been grappling with the ongoing COVID-19 pandemic and the disruptions it has caused across several industrial sectors. One of the key areas of concern has been the impact to budgetary planning and revenue collection, which are both vital to how states approach the upcoming fiscal year.

The Associated Press recently covered the Massachusetts House of Representatives’ debate surrounding their delayed state budget plan. The outbreak of COVID-19 pushed back this important deliberation and created the need for temporary interim budgets throughout the year to keep the economy intact until the new state budget could be approved and signed.

The Governor of Arkansas Asa Hutchinson also recently put forth a general revenue budget worth $5.84 billion as reported by the Arkansas Democrat-Gazette. This plan comes after the Arkansas Department of Finance and Administration projected a recession on account of the pandemic back in April.

When speaking with the state’s Legislative Council and Joint Budget Committee, Gov. Hutchinson said, “We have reduced spending in the past year, and we have focused on the core critical areas of education, public safety and our health care infrastructure that was essential during this pandemic. As a result, we are entering the next year in sound financial condition.”

Meanwhile, the Missouri House of Representatives approved a $1.3 billion plan earlier this week that would utilize $750 million in COVID-19 relief funding before it expires at year’s end. This financial restructuring, which was covered by the Springfield News-Leader, was initiated in an attempt to shield the state from the effects of a difficult budget year.

Our CEO & Chief Economist Frederick Treyz, Ph.D. and Economic Analyst Tobias Reynolds hosted a webinar presentation last week entitled “Economic Impact of State and Local Budget Deficits” that explored how governments at all levels approached budget cuts and spending reductions in the face of a pandemic-weakened economy.

You can access the presentation materials from this discussion by clicking here.

You can also find the article by the Associated Press about the Massachusetts budget plan by clicking here.

The Arkansas Democrat-Gazette report can be accessed by clicking here.

More information on the article by the Springfield News-Leader can be found by clicking here.