Get all the latest news on coronavirus and more delivered daily to your inbox. published Thursday in Governing magazine, finance columnist Girard Miller writes that state and local government revenues from income and sales taxes totaled about $1 trillion last year. He estimates that the tax collections will drop by $100 billion to $250 billion this year, depending on how long most businesses remain closed.
In New York – the state with by far the most coronaviruses infections and deaths – state Budget Director Robert Mujica told The Wall Street Journal this week that state revenue would drop by $9 billion to $15 billion from projections made before the coronavirus pandemic hit.
In another example, the state of Nevada gets about 38 percent of its general fund revenues through a tax on tourism. With casinos now closed in the gambling capital, tourism and sales taxes are down dramatically.
And don’t count on property taxes to keep local governments afloat, since unemployed 中国体彩票手机版下载owners are far less likely to pay their taxes on time. After the Great Recession of 2008, 34 states recorded a marked decline in property tax collections.
Government pension funds have lost massive amounts of money
Some states and localities might have to dig into general revenues to supplement their pension funds because of stock market losses.
In New York, for example, the state and local governments are required to contribute a pension fund for their retired employees on a regular basis to keep it solvent. The fund depends primarily on its investment growth. When the stock market loses as much as 50 percent of its value – as it did after the 2008 crash – the state comptroller still demands that the state and local governments make up that loss.
In the current coronavirus-sparked economic crisis, California has seen a $69 billion drop in its pension fund due to market volatility.
Where do we go from here?
Many of us have been saying for years that the federal government spends too much and borrows too much year after year under both Republican and Democratic presidents, regardless of which party controls majorities in the House and Senate.
Our concern about overspending is valid in ordinary times, but we are not living through ordinary times now. There has never been a time in American history where government officials have ordered businesses around the country中国体彩票手机版下载 to close and told us all to stay at 中国体彩票手机版下载 and not venture out except for food and other essential purchases, or to perform essential jobs.
So now is not the time for federal officials to suddenly get religion on the need for balancing budgets. They should use their borrowing power to rescue state and local governments in this unprecedented national emergency.
When the coronavirus crisis subsides, it will be high time that the feds look in the mirror and start controlling their annual discretionary spending. That’s why we need a balanced budget amendment to the Constitution for the federal government. But such an amendment should have a safety valve for emergencies such as a war, a major recession and a pandemic.
Right now our economic house is on fire. And in circumstances like this, we have to put the fire out and not worry about the water bill. Lawmakers and President Trump need to put aside partisan differences and give state and local governments emergency aid NOW.