By DAVID A. LIEB
JEFFERSON CITY, Mo (AP) — States throughout the U.S. are allocating hundreds of millions of dollars to respond to the coronavirus, even as the U.S. government prepares to send billions more their way.
Many states have built up big stockpiles in their “rainy day” funds during several strong years of tax collections. Some governors and state lawmakers now are tapping into those savings for emergency expenses. Others are looking to set aside even more in reserve, fearing the economic uncertainties stemming from the coronavirus could send tax revenues into a tailspin.
“Forget the closure on Broadway — the loss of revenue to the state government, right now, is incalculable,” said New York Gov. Andrew Cuomo, a Democrat.
He pulled the curtain on Broadway theaters this past week while banning gatherings of 500 or more people.
President Donald Trump said Friday that he would free up as much as $50 billion for state and local governments as he declared the virus pandemic a national emergency. Many governors also have declared emergencies, giving themselves greater flexibility to spend money and waive regulations as needed.
“All the resources we can have on hand — to make sure if things get worse — we want,” said Missouri Gov. Mike Parson, a Republican, while announcing a state of emergency just hours after the president did so.
For most people, the new coronavirus causes only mild or moderate symptoms, such as fever and cough. For some, especially older adults and people with existing health problems, it can cause more severe illness, including pneumonia.
State and local public-health agencies have been on the front lines of the response, monitoring and testing those suspected of having the virus that causes the COVID-19 disease. Costs are mounting for staff time and medical supplies.
But states also are bracing for a ripple effect on their revenues. The cancellation of sporting and entertainment events could mean less tax revenue from tourists and local residents. Directives to work and study at home instead of at offices, schools and colleges could mean less revenue from fuel taxes and public transit fares. And if some employees can’t go to work, that could put a damper on state income and withholding taxes while driving up spending for public welfare programs such as unemployment insurance and state Medicaid health programs.
Throughout all states last fiscal year, the median rainy day fund balance equaled 7.6% of general fund expenditures. That’s a record high that was way up from a 1.6% share of general fund expenditures in the 2010 fiscal year, according to the budget officers group.
The spread of the coronavirus has coincided with crunch time in some state legislatures. Florida lawmakers, for example, extended their 60-day session that was scheduled to end Friday while working on a budget plan that has been complicated by the coronavirus outbreak. Concern about the economy has prompted budget writers to consider adding hundreds of millions of additional dollars to the state’s reserves to help offset any potential shortfalls.
Some states where legislatures already had wrapped up budgets are now scrambling to account for the coronavirus costs.
New Mexico lawmakers adjourned Feb. 20. This past week, Democratic Gov. Michelle Lujan Grisham vetoed about $150 million in infrastructure spending as coronavirus concerns caused world oil prices to plunge. The oil sector is a mainstay of the New Mexico economy.
The reductions included nearly $50 million for local transportation projects plus money for a rural water system, a preschool and senior center at Native American communities, and improvements at district courts.