In Oklahoma, the dramatic downturn in the oil and gas markets sent tax collections down, opening up a shortfall. In Michigan more than 1 million people — over a quarter of the state’s work force — have filed for unemployment during the pandemic. Hawaii’s governor, David Ige, told tourists to stay away, idling his state’s main economic engine.
All of which is sending tax collections way down. Sales taxes, the biggest source of revenue for most states, have fallen off a cliff as consumers stay home because of the coronavirus pandemic. Personal income taxes, usually the second biggest, started falling in March, when millions lost their paychecks and tax withholdings stopped. April usually brings a big influx of income-tax money, but this year the filing deadlines have been pushed back to July.
“This is going to be horrific for state and local finances,” said Donald J. Boyd, the head of Boyd Research, an economics and fiscal consulting firm, whose clients include states and the federal government.
On the local level, 88 percent of cities anticipate revenue shortfalls this year, and more than half are already drawing up plans to cut staff or services, according to a survey of local officials released Tuesday by the U.S. Conference of Mayors and the National League of Cities.
“Our cities are hurting, and our residents are scared,” said Mayor Greg Fischer of Louisville, Ky., where authorities have recorded nearly 600 cases.
The National Governors Association is seeking $500 billion in federal aid to offset what it is describing as “drastic state revenue shortfalls.” Local officials are urging the federal government to send aid to municipal governments around the nation.
But the latest round of stimulus has stalled in Washington.
And the expenses of responding to the public health emergency are swiftly being joined by the expenses of providing services to newly-needy residents.