Budget Toll From Virus Hits Both Democratic, GOP-led States

It’s not just Democratic states asking for help amid plunging tax revenue, rising joblessness and a stuttering economy. Plenty of Republican-led states are feeling the pain, too.

Just this past week, five GOP governors made a joint statement calling for Congress to pass a relief package to help their states deal with the fallout from the fast-spreading pandemic.

“The people in our states continue to pay a high price for Congress’ inaction,” said the statement from the Republican governors of Arkansas, Maryland, Massachusetts, New Hampshire and Vermont said. “There is no more room for partisan positioning and political gamesmanship.”

Alaska, Florida and Texas are among other Republican-led states where tax revenue has taken a hit.

Sending tens of billions in unrestricted aid to state and local governments has been a key sticking point for congressional Republicans, including Senate Majority Leader Mitch McConnell. The Democratic-controlled House passed a relief bill late last spring that included about $900 billion in direct aid to governments. One of the latest compromise proposals has that amount down to $160 billion, but even that appears too much for many Republican lawmakers.

States have been hit especially hard if they rely on tourism — Republican-led Florida and Democrat-led Hawaii and Nevada among them — or energy. That group includes Alaska, North Dakota and Wyoming, all led by Republican governors and legislatures.

A Moody’s Analytics report in September found all of them with above-average revenue loss.

The bipartisan National Governors Association is calling for $500 billion over three years to stabilize government finances. The group says the infusion is needed because deep government cuts that could happen otherwise would make the overall economy worse.

Overall, states are still doing worse financially than they were a year ago, even if their revenue projections are better than what they had anticipated after the virus hit the U.S. A member of the state budget officials’ group said states are facing another uncertain time as extended unemployment benefits, help for small businesses and other federal aid are set to expire by the end of the year, even as the number of COVID-19 cases and deaths skyrocket nationally.

A Moody’s Analytics report from September found that states and cities face a collective shortfall of $450 billion over the next two years if no further federal relief comes through. A National League of Cities survey of members released this month found that cities were reporting, on average, revenues down 21% while spending is up 17%.

Across the country, the shortfalls have meant pay cuts for some government workers, delayed road projects and cancelation of police academy classes. This past week, Democratic Hawaii Gov. David Ige announced a plan to furlough 40,000 state workers next year, even though the savings would cover less than one-fourth of the state’s $1.4 billion budget gap.

Some GOP-controlled states are facing budget problems. In Mississippi, lawmakers this week proposed a budget for the coming fiscal year that would include cuts for universities, community colleges, prisons, mental health and child protection services.

Texas went from projecting a $3 billion surplus in late 2019 to expecting a $4.6 billion shortfall by summer.

In Kansas, where Republicans control the Legislature, Democratic Gov. Laura Kelly told legislative leaders Friday that the state will have to pay for its own expanded coronavirus testing program at a cost of $120 million for just eight weeks if it doesn’t get more federal aid.

Even if Congress delivers some help to state and local governments, some governors said they will consider it only a down payment.

“It’s like a 90-day Band-aid,” said Maryland Gov. Larry Hogan, a Republican. “We’re going to have to come back to get the major relief package that we’ve been pushing since April.”