State Policy Network
Snapshot from the states: Budgeting in the time of coronavirus

As federal policymakers discuss additional funding for state and local governments, state leaders are addressing current and growing budget challenges. Some states are tightening belts while others are keeping operational budgets at pre-pandemic levels.

The Network of state-based think tanks is helping state leaders navigate this crisis to ensure Americans have access to healthcare, students are educated, and families and businesses can financially recover. Every state governs their budget and spending priorities differently. This list provides links to state budget recommendations from around the country.

If your organization has a recovery or state budget resource you would like SPN to add to this list, please send it to us at


Alabama Policy Institute: COVID-19 in Alabama: A Primer on the Impacts of the Coronavirus on the State
“A decline in some of these revenues is inevitable, though the General Fund may not be as significantly impacted as the Education Trust Fund (ETF) since it is not reliant on income tax receipts. If total General Fund revenues fall by 10%, that will mean a loss of over $200 million in 2020. A 20% loss would double that figure to over $400 million this year. Like the ETF, the General Fund also has a Rainy Day Account that could help ease some of the immediate economic impacts caused by COVID-19.”


Alaska Policy Forum: It’s Time for a Spending Cap That Works
“Alaska is in the midst of a perfect fiscal storm. The coronavirus has forced the temporary closure of many businesses throughout the state, and global events have pushed oil prices – and state revenues – to near historic lows. Even before the present crisis, our state faced large budget deficits and tough decisions about how to make ends meet. Just as Alaskans have come together to solve past crises, so too will these current challenges be overcome. But as Alaskans look to the future and develop plans for an economic recovery, it is essential to minimize uncertainty and prioritize stability. That’s why adopting a functional limit on the growth in state spending is essential for long-term economic success.”


California Policy Center: Suggested Executive Orders for California Gavin Newsom
“Paying excessive pensions means fewer employees can be hired which means paying more overtime. Meeting these ever escalating personnel costs means there isn’t public money left anymore to fund infrastructure, which means home builders now have to pay infrastructure fees that add hundreds of thousands to the cost of homes.”

Pacific Research Institute: State Budget Update: Get Ready for the ‘August Revision’
“Billions in cuts will surely be required to balance the budget this year— even with some of the proceeds from the bipartisan rainy day fund softening the blow. As the budget takes shape, the big question is whether Capitol liberals will go along with what will surely be an “austerity” budget—or will there be calls to reject cuts in favor of the Legislature raising taxes.”

Pacific Research Institute: How State Budget Will Be Impacted by Coronavirus Coming More into Focus
“But cash infusions from Washington don’t absolve state policymakers of making tough budget decisions. One lesson from the 2008-09 budget crisis is that “kicking the can down the road” comes with great risk. Budgets enacted during much of the 2000’s largely “passed the buck.” It ultimately took a decade-long effort to repay roughly $35 billion in budgetary debt run up in that period, which Governor Jerry Brown famously called the ‘wall of debt.’”


Yankee Institute: Gov. Lamont Should Suspend the Scheduled Pay Increases for State Employees
“In light of the pandemic’s potential implications for the state budget, Yankee Institute recommends that Gov. Ned Lamont suspend a scheduled wage increase for state employees — totaling roughly $353 million — until the state is in a position to better understand the economic and fiscal fallout of this crisis.”

Yankee Institute: COVID-19 Relief and Recovery Plan for Connecticut
“Lamont should call on state agencies to identify a percentage of their 2020 budgets that can be rescinded for the remainder of the current fiscal year and resubmit their 2021 budget requests at a reduced percentage of their 2020 appropriated levels. Exemptions from this reduction should be granted to programs directly involved in COVID-19 response.

Connecticut’s unfunded pension liabilities are among the most serious in the country and crowd out other budgetary priorities. Connecticut’s budget will be greatly burdened by the economic downturn, closure of businesses and increased costs related to unemployment and Medicaid. Connecticut must be able to decrease its current and future obligations to public sector unions in order to properly assist those most affected by the COVID-19 pandemic.”


James Madison Institute Statement
“Florida has “thread the needle” on protecting the health and safety of residents while balancing the need to restore economic activity. We avoided an overrun of the healthcare delivery system and our mortality rate from COVID is much lower than all models projected. We are now in Phase I of our three-phase “Reopen Florida” effort and thus far it is managing well. Florida’s plan is surgical and regional – our hot spot counties in South Florida are moving much more deliberately than the rest of the State.

Florida has no state income tax. Our major source of state revenue for a $93 billion budget is sales and use taxes (about $34 billion). We also generate about $6 billion a year in state revenue from tourism. Those revenue streams are in jeopardy. We have made wise fiscal choices over the years. Our reserves will help shoulder some of the burden, and our state pension system is in solid shape. It would be our hope that CARES Act funding directed at the states would recognize states like Florida that have kept the proper fiscal trajectory, while not rewarding states that are simply hoping to use the crisis to bail them out for their poor decisions over the past 20, 30, or 50 years.

Ideally, we would have flexibility to shore up our acute revenue challenges from the pandemic, and states with chronic mismanagement wouldn’t be allowed to use what is essentially borrowed trillions to get them off the hook.”

J. Robert McClure III, Ph. D.
President and CEO, The James Madison Institute


Georgia Public Policy Foundation Statement
“Congress already has appropriated hundreds of billions of dollars in relief for state governments. Giving states more flexibility in using those funds would maximize their effectiveness and could reduce or even eliminate the need for additional relief. If there is to be more federal relief, however, it is vital to ensure new funding is designed to solve the actual problems states face. Doing so means waiting to see how state revenues actually develop; recognizing how already appropriated relief funds and states’ accumulated reserves can offset losses; and not rewarding the highest-spending, or worst-managed, states by subsidizing their pre-existing budget holes. By acting in this way, we can limit additional federal spending to what is justifiable — likely saving hundreds of billions of dollars.”

Kyle Wingfield
President and CEO, Georgia Public Policy Foundation

Georgia Public Policy Foundation: Near-Term Proposals as Georgia Tackles COVID-19
“The large surpluses of recent state budgets are surely gone, at least in the short term. State government must be creative in order to provide relief where possible, while living within its reduced means. Tax increases should be avoided in all circumstances, as the burden will fall on individuals and businesses already struggling mightily. The state should be ready to make prudent use of its ample “rainy day fund”; after all, it’s “raining.” Note that some proposals may prove unnecessary, depending on the relief package the federal government finalizes.”

Georgia Public Policy Foundation: Issue Analysis: Fiscal Policy Considerations in COVID-19’s Wake
“Some trimming of state spending would be prudent, and lawmakers should seize the opportunity to reform programs that would have benefitted from changes even in better times. Calls for tax increases are, at a minimum, premature. We do not yet know the scope of the revenue downturn, or the final size and availability of all federally appropriated relief funds. Nor do we know enough yet about which sectors of the economy will sustain the worst, longest-lasting damage from the shutdown, which means new taxes affecting those sectors and Georgia’s taxpaying families could make the revenue situation worse, not better. Raising new revenue would in most cases be counter-productive as the economy attempts to regain its footing. Good fiscal stewardship has served Georgians well for years. Now is no time for the state to reverse course.”

Related Media in The Atlanta Journal-Constitution: Georgia Agencies Told to Plan Billions in Spending Cuts Due to Pandemic
“With the coronavirus pandemic shutdown and recession hitting state finances hard, Gov. Brian Kemp’s budget office and the leaders of the House and Senate budget committees sent a memo to agencies asking them to develop new spending proposals for fiscal 2021, which begins July 1. The amount they should expect to cut: 14%, no exceptions.”


Grassroot Institute of Hawaii: How to Navigate the ‘Coronavirus Recession’
“Lawmakers could start by reining in spending. If state spending for fiscal 2021 were held at fiscal 2019 levels, that would create a surplus of $1.4 billion that could be used for financial or health emergencies.”


Idaho Freedom Foundation Statement
“Idaho was allocated $1.25 billion under the CARES act. Only about $450 million of that money has been earmarked for COVID-19 related uses. Treasury guidance stated that the CARES money should not be used for property tax relief purposes even though the language in the bill does not actually prevent this.

Our request would be for the Treasury to revise the guidance and allow for property tax or other tax relief as a “second-order” economic effect of the government imposed shut-down. The “revenue replacement,” would accrue to the taxpayer to meet their obligations, not the government.”

Fred Birnbaum
Vice President, Idaho Freedom Foundation and Idaho Freedom Action

Idaho Freedom Foundation: How Government Officials Can Assist Idahoans During The COVID-19 Pandemic
“Preemptively impose other spending cuts. Now is the time for government officials to look ahead and prepare for a severe downturn in tax revenue. It is imperative to make cuts today so that tax increases are avoided in the future.”


Illinois Policy Institute: To Fight COVID-19 Economic Harm, Illinois Must Delay or Cancel Taxes and Fees Where Possible
“State officials can make use of emergency borrowing authority granted in the state constitution to issue short-term bonds of about $6 billion—equal to 15% of this year’s appropriations as the constitution allows—to cover the temporary loss to local governments…

After the last recession, the state used this authority to issue $1.3 billion in bonds for the operating budget. Today, this provision would allow Illinois to provide tax relief where it is needed most without harming local government finances. Because the bond must be repaid within the year, the interest cost could be relatively minor and be covered by modest changes to the fiscal year 2021 budget. The principal of the debt would be repaid when counties collect the delayed installments.

The state should also avoid policy choices that counteract the stimulus and threaten to derail the recovery, such as the $3.7 billion progressive income tax hike. Illinois lawmakers made the mistake of hiking taxes amid recovery from the Great Recession in 2011. The 2011 tax hike raised $31 billion in additional revenues, but cost the state $24.8 billion in GDP and 9,300 jobs between 2012 and 2016. The negative economic effects continued even after the partial sunset of the 2011 tax hike and lawmakers permanently hiked taxes again in 2017.”

Illinois Policy Institute: For Illinois, COVID-19 Cuts Much Deeper Than Public Health
“The state’s rainy day fund can cover state spending for 15 minutes, meaning Illinois has no cushion. The state must leverage as much of the budget as possible toward disaster relief. It’s an uncomfortable conversation, but pension reform to future benefits is the only way the state can save billions of dollars in a crisis while holding retirees harmless.”

Illinois Policy Institute: Illinois Scheduled to Give $261M in Automatic Pay Raises to State Workers
“Pritzker should pause the state’s $261 million in scheduled automatic pay raises for state workers. By joining the growing list of Democratic governors who are freezing state worker pay to manage state budgets amid the COVID-19 crisis, Pritzker would give the state more room to address urgent budget priorities while also helping to forestall state worker layoffs down the line.”


Tax Education Foundation of Iowa (TEF Iowa): Steps to an Economic Recovery
“With state aid from the CARES Act comes concerns as the funding can only go to new spending in combating COVID-19. States would be better served to have greater flexibility in using this aid. This support could be used to fill budget gaps, replenish reserve funds, and provide support to local governments…

The good news for Iowa is that as the COVID-19 emergency began, Iowa had $800 million in budget reserves and a surplus of $200 million. With economic uncertainty likely to linger, Iowa’s budget is positioned much better than some of our neighbors to dampen the financial impact of this pandemic. Some estimates demonstrate Iowa is in a better fiscal situation to confront a COVID-19 economic downturn than on the eve of the Great Recession.”


Kansas Policy Institute: Post-COVID Recovery Plan
“Spend down cash reserves to buy time to find other cost reductions— school districts, for example, started this year with $942 million in operating reserves; they could reduce reserves by about $300 million and still have the same operating cash reserve ratio as in 2005.”

Kansas Policy Institute: Education Shouldn’t be Exempt from COVID Budget Cuts
“With the State of Kansas facing up to a $1 billion shortfall next year in an $8 billion General Fund budget, there can be no ‘sacred cows’ exempt from COVID budget cuts.  K-12 education consumes about half of the budget and with $843 million in funding, higher education takes another 11%.”


Pelican Institute for Public Policy: Economic Shocks Should Signal Spending Restraint from Lawmakers
“There are many excellent proposals for lawmakers to limit state government spending, and these are worth heavier consideration now than ever before. Proposals by Representative Beau Beaullieu would limit the state’s general fund spending to ensure it’s in line with inflation, economic growth, population, and personal income. Extra revenue could be sent to the rainy-day fund, which would be useful at a time like this…..The Legislature should also look to adopt a proposal by Representative Rick Edmonds, which would prevent the Legislature from appropriating more than 98 percent of the official revenue forecast.”


Mackinac Center for Public Policy Statement
“The Mackinac Center recently led a coalition of state think tanks opposed to bailouts for problems that existed prior to the pandemic.  Bailouts will reward states and perhaps other units of government for their poor policy choices (underfunding pensions, for instance) and encourage more of the same. Indeed, Crain’s Detroit reported May 12 that Detroit has already used part of its first COVID-19 aid funds to hire a lobbying firm to help them get even more federal aid. There is no official estimate yet on how much state revenues will decline in Michigan due to the COVID-19 pandemic, so further assistance seems premature. The CARES Act has already provided state and local financial assistance. It may be better if the federal government provided more flexibility to backfill budget deficits with CARES Act dollars already appropriated than to offer up additional money.”

Michael LaFaive
Senior Director of the Morey Fiscal Policy Initiative, Mackinac Center for Public Policy

Mackinac Center for Public Policy: COVID-19: Coalition Offers Blueprint for Health, Safety and Economic Opportunity
“This crisis is the “rainy day” for which our state has prudently saved for a decade, as our state faces a collapse of state revenue for at least three months. It is appropriate to tap the rainy day fund and reserve balances to cover a shortfall in the current year’s budget. However, we cannot say for certain how long this storm will last or that there isn’t another on the horizon.

Mackinac Center for Public Policy: Budgets in the Time of Coronavirus

“In addition, some estimates of savings cannot be reasonably made without large assumptions, so our nearly $1.5 billion tally of potential savings (on a full-year basis) may be higher or lower depending on what can be done during the current fiscal year.”


Center of the American Experiment: After a Long Run of Rising Spending, it’s Time to Tighten, Minnesota
“The surplus of $1.5 billion forecast in February for Minnesota’s state government budget in the 2020-2021 biennium has turned into a deficit of $2.4 billion.

Fortunately, this is only slightly more than the $2.359 billion the state has squirrelled away in its reserve fund. Joseph would be proud. As a result, if we dedicate the entirety of this fund to filling the budget deficit – and that is what it exists for – we will have a shortfall of only $33.5 million in each of 2020 and 2021. This shortfall could be covered entirely by spending cuts of 0.1 percent, or $6 per Minnesotan.”


Platte Institute Statement
“As written, the Coronavirus Relief Fund encourages our lawmakers to spend an amount near 25% of our state General Fund, but only on new programs. Meanwhile, our state is expected to face a shortfall of 10-15% of our General Fund for commitments we already have. Adding flexibility to the CARES Act would help Nebraska meet these needs with funding the federal government has already allocated and would make a new state and local relief plan unnecessary.

In the current fiscal year:

Even if you don’t count all of the other programs that the CARES Act funded and only focus on the $1.25 billion sent for state and local aid, this accounts for more than a quarter of our state General Fund expenditures in FY2020”  (Full statement can be found here).

Sarah Curry
Policy Director, Platte Institute

Platte Institute: Responding to the COVID-19 Crisis
“Cut Non-Essential Spending Now: The Governor and Legislature need to work together and immediately and substantially cut the 2020 budget that isn’t connected to COVID-19. With one voice, they should call on state agencies to complete two tasks within the next 30 days:

  1. Identify a set percentage of their 2020 budgets that can be rescinded effective May 1 for the remainder of the current fiscal year, and
  2. Be prepared to submit their 2021 budget requests at a reduced percentage of their 2020 appropriated levels. Exemptions from reduction should be granted to programs directly involved in COVID-19 response.”


Nevada Policy Research Institute: Rebuilding Nevada After the Coronavirus Shutdown
“Ensuring balanced budgets and reprioritizing spending will guarantee a strong foundation of effective and limited government moving forward. Ensuring transparency at all levels will ensure taxpayers and public-sector employees alike that government is operating in the best interests of taxpayers, workers and Nevadans of all backgrounds.”

New Jersey

Garden State Initiative: Plan to Furlough New Jersey State Employees Might Rely on Federal Funding
“Under the proposed Employee Job-Sharing Furlough Protection Act, employees working fewer hours would be receiving higher pay, Regina M. Egea, president of the Garden State Initiative (GSI), said in an email response to The Center Square.

“New Jersey math is to save $750 million by increasing the cost of public employees by 26%,” Egea said. ‘A public employee whose salary is $50,000 would normally receive $12,500 for a three-month period. Under Senator [Stephen] Sweeney’s plan, the worker would receive a 26% salary increase to $15,800.’”

Garden State Initiative: Analysis: The Stark Gap in Benefit Costs in Public and Private Sectors in NJ and US
“In the US, average public sector benefits are $19.14 an hour, $8.81 more than private sector, or nearly twice as high. New Jersey government employers pay 50% more for benefits ($17.50 an hour) than the
national average for public sector employers ($11.47 an hour).”

Garden State Initiative: Adding It All Up: The Path to Saving $2 Billion on the Cost of New Jersey’s Roads and Bridges
“…includes recommendations based upon a data-driven analysis of our investments in our state’s roads and bridges. This report identifies $2 billion in savings that can be reinvested for tangible improvements to our state’s infrastructure.”

New York

Empire Center: Essential Plan Surplus Hits $3B
“As Governor Cuomo pleads for financial help from Washington, one of his state’s programs is sitting on $3 billion in unspent federal aid: the Essential Plan. According to records from the comptroller’s office, the plan received $5.6 billion in federal funding in fiscal year 2020, but spent just $3.8 billion on coverage for low-income New Yorkers. 

As a result, the balance in the program’s trust fund ballooned to just over $3 billion, or more than double what it was the year before. That’s enough to cover almost a third of the state’s estimated $10 billion deficit. But federal law allows the money to be spent only on Essential Plan members and benefits, putting it legally off-limits for filling budget holes.”

Empire Center: Cuomo Freezing State Pay
“Governor Cuomo is invoking his “emergency” powers to unilaterally defer a 2 percent pay hike otherwise scheduled for most unionized state government workers during the new fiscal year…

Cuomo’s action will do nothing to help local governments and school districts now on the hook for at least $1.5 billion in base and incremental pay increases during the coming fiscal year. A broad freeze in local government pay would still require passage of state legislation including a clear justification of the need for such an action. With a severe multi-year fiscal crisis ahead, the need for a broad wage freeze at every level of government is clear.”

Empire Center: Empire Upward
“Even before the pandemic, New York’s tax and regulatory policies were the economic equivalent of a pre-existing condition, leaving struggling upstate counties especially vulnerable to even a modest recession. New York City, the state’s main engine of economic growth for the past decade, also has been the epicenter of Covid-19 infections. The harrowing intensity of the health crisis in the metropolitan region could become yet another factor pushing New Yorkers away—to lower-cost, lower-taxed states.”

North Carolina

Civitas Institute: State Government’s Response to Coronavirus: Budget & Tax Recommendations
“The good news: North Carolina state government is better financially prepared for the coming economic fallout from the coronavirus pandemic than previous economic crises. The most recent General Fund monthly report shows the state’s rainy day fund balance at nearly $1.2 billion, with another $1.5 billion in “non-reverting Department Funds.” The state’s unemployment insurance fund is well stocked with roughly $3.9 billion in surplus funds to provide targeted relief for those laid off during this crisis. The state has already relaxed rules for unemployment benefits.”

John Locke Foundation Statement
“North Carolina’s budget bill to begin distributing money from the CARES Act’s Coronavirus Relief Fund. How they went about allocating the money and what they did with it provides plenty of evidence on the value of flexibility, which 29 state think tanks have requested from Congress.

The General Assembly is waiting to see what is needed and what is possible before allocating $2 billion of the $3.6 billion to North Carolina from the CARES Act Coronavirus Relief Fund. Of the $1.6 billion already specified, $470 million is dependent on federal flexibility before it can help local governments, the NC Department of Transportation, the state zoo, aquariums, and museums offset lost revenue from sales taxes, gas tax, and visitor ticket sales. State government has frozen pay increases, hiring, travel, and other purchases in a bid to save money through the end of the fiscal year, and preserve the state’s available fund balance.

The danger of inflexibility was seen when the Republican-controlled NC House included temporary Medicaid expansion to 200% of poverty for prevention, testing and treatment of COVID-19. The federal government already provided funds directly to hospitals for COVID-19 treatment for the uninsured and through Medicaid for testing. So this new appropriation of Coronavirus Relief Fund money was duplicative and wasteful.

Potentially duplicative provisions did survive to provide $225 million to schools, community colleges, and universities for the transition to distance learning. This was over and above the $856 million in the Education Stabilization Fund. Hospitals also received direct $95 million in relief on top of money already allocated through the Provider Relief Fund.” (Full statement available here)

Amy O. Cooke
CEO, John Locke Foundation

John Locke Foundation: How will the Coronavirus Affect Cities and Local Governments?
“As a result of COVID-19, local governments are stuck trying to balance their budgets without much flexibility in cutting the services they provide. They cannot simply raise taxes on their residents and cannot rely on financial assistance from the state. Ending economic incentives, shrinking the physical size of government, and finding ways to share administrative functions are ways to reduce the cost of government without reducing the quality of services to citizens. Reducing the burden on new businesses can help make a more resilient local economy and prepare for the next round of growth after the pandemic. States should also take a more proactive role in ensuring the financial health of towns and counties with something like North Carolina’s Local Government Commission. State think tanks can and should help local governments get through this crisis with ideas like these that advance freedom and protect taxpayers.”


The Buckeye Institute: Another Tax Filing Delay Sounds Nice, But Congress Should Not Do It Twice
“Rather than another filing extension, policymakers should maintain the current July 15 deadline and offer taxpayers meaningful tax relief. At the national level, for example, Congress should delay federal tax payments without charging penalties or interest. And at the state level, Ohio should continue to defer its commercial activity tax payments for businesses, strategically limit government spending, and draw on the rainy-day reserve instead of raising taxes.”

The Buckeye Institute: The Buckeye Institute: Targeted Assistance to Local Governments Should Prioritize Public Health and Safety
“As Ohio’s local governments and municipalities struggle to survive the economic challenge posed by the COVID-19 pandemic and its aftermath, the state should provide communities with targeted, financial aid to spend on essential public health and safety services. To ensure that state taxpayer dollars are spent wisely, local governments that use this targeted assistance for nonessential services should see a reduction in monies received from state taxpayers through the Local Government Fund. Doing so will promote good stewardship of scarce taxpayer resources.”

The Buckeye Institute: The Buckeye Institute: Strategic Use of Ohio’s Rainy Day Fund, Along with Budget Cuts, Would Avoid Tax Increases
“To address the COVID-19 crisis, Ohio should eliminate unnecessary state spending and then strategically use its Budget Stabilization Fund—commonly known as the rainy day fund—after first answering Governor DeWine’s call to cut government budgets by at least 20 percent.”

The Buckeye Institute: The Buckeye Institute Identifies Nearly $3 Billion Ohio Can Use to Fight COVID-19 and its Impact
“Ohio should redirect state spending, close tax loopholes, and refocus the state budget to address the urgent public health and economic concerns created by COVID-19. Prudent cuts to a bloated budget could free up nearly $3 billion in Ohio’s fight against the pandemic and its aftermath.”


Commonwealth Foundation Statement
“Overall, appropriation of the Coronavirus Relief Funds should be:

Link to more info on above here.

While giving discretion to governors as the CARES Act did on many issues may sound nice and federalist, in many of the states most relevant to this discussion (I would flag Wisconsin, Michigan, North Carolina, New York, and Illinois, in addition to Pennsylvania) it can have massive unintended consequences. Look at the threats our governor issued yesterday to his political opponents. If Congress does send new funds to states, it should require either state legislative appropriation in order for monies to be spent, or guarantee equal treatment of localities and businesses—so that governors can’t punish their political opponents. Giving discretion to states is good, but giving discretion to governors is not the same thing.

If there is going to be another round of stimulus, the most important thing we could possibly stimulate is education. If we do not, we risk a massive contraction in school choice due to rampant private school closures. Seventy-four percent of families in Philadelphia who benefit from our current school choice program say they are experiencing economic distress. Many of the businesses here whose tax credit dollars pay for those scholarships are losing money. These headwinds could produce massive private school closures. Not only would these students returning to public school cost taxpayers $1 billion; it would also threaten their immediate safety and long-term flourishing, as the schools to which they would return are some of the most violent and failing in America. Meanwhile, massive majorities of Pennsylvanians—particularly in urban areas—want different educational options. Now is the time to push for emergency Education Scholarship Accounts, both in state capitols and as a priority in any funding Congress sends to states in future rounds of stimulus.”

Charles Mitchell
President & CEO, Commonwealth Foundation

Commonwealth Foundation: Policy Recommendations to Fight COVID-19 in Pennsylvania
“Pennsylvania’s economy had been growing and revenue collections had been ahead of projections, but that trend is certain to change. A full-blown recession is possible. Lawmakers should act now to adjust spending in this new environment.

  1. Reduce non-essential spending. During past economic downturns, governors froze non-essential spending. Governor Rendell proposed $500 million in budget cuts in 2008 and implemented a hiring freeze and pay freeze for non-unionized workers. Wolf’s hiring freeze was a good start, but more must be done. Lawmakers should also act to reduce unnecessary spending and prioritize programs during this crisis.
  2. Prepare a stop-gap budget. No one knows how long social avoidance will be needed. It’s possible lawmakers won’t have time to deliberate a comprehensive 2020-2021 budget. To prepare for this possibility, they should develop a stopgap plan that funds essential functions and avoids a government shutdown that could cause even more pain for families.
  3. Move special funds (i.e., the “shadow budget”) online. In this time of crisis, lawmakers need to be able to prioritize all state spending, not just the General Fund budget. This includes about $24 billion in off-budget special funds. The state has $340 million in the rainy-day fund that can be tapped immediately, but this is only about 1% of the General Fund budget.”

Rhode Island

Rhode Island Center for Freedom & Prosperity: Rhode Island COVID-19 Crisis: 30 Public Policy Solutions to Restore Financial and Health Security
“Implement a state Savings Reward Programs to reward state employees for saving taxpayer money through innovative or reengineered government processes. Freeze all government hiring, even in cases of retirement and resignation, reallocating employees where they are most needed. Eliminate all government positions that were vacant for at least six months prior to the COVID-19 shut-down. Freeze all taxes, state and municipal, at current levels.”

South Carolina

Palmetto Promise Institute: Restoration and Rainy Days: The Budget that Almost Was
“The full effects of COVID-19 are still unknown, but there is no question that even with an inflow of federal dollars, cuts will need to be made as the state economy slows down and tax revenues fall.”

Palmetto Promise Institute: 8 New Coronavirus Policy Recommendations for South Carolina to Consider
“State hiring freeze and limiting unnecessary spending. Ohio Governor DeWine ordered a hiring freeze for State Agencies, Boards, and Commissions along with orders that state agencies work to cut unnecessary spending up to 20 percent for the remainder of this fiscal year and next fiscal year.”


Beacon Center of Tennessee: Policy Response to the COVID-19 Pandemic
“The General Assembly, in dramatic fashion, slashed nearly a billion dollars and passed a tornado and COVID-19 response-focused budget before recessing on March 19th.

The state should implement at least a one-day furlough for all state employees by end of fiscal year 2020 to offset lower tax revenues and avoid liquidity concerns. This would save the state nearly $13 million per day during a time period of declining revenues.

It is appropriate to use the state’s “Rainy-Day” Fund. However, any use of reserve funds should be for short-term needs only and not for recurring purposes. For example, with the state already experiencing a 1,300 percent increase in unemployment claims, Tennessee could use reserve funds to ensure the solvency of the Unemployment Insurance Trust Fund.”


Virginia Institute for Public Policy: Recommendations to Governor Northam re: Virginia’s Solvency
“On March 12th, the closing day of the 2020 Session, the Legislature passed a budget based on the expectation of strong growth. Clearly, revenue assumptions in the proposed budget are overly optimistic given recent developments. Expense assumptions for unemployment compensation and healthcare costs need to be revisited. Virginia’s financial position has vulnerabilities; we are not fully prepared for a serious economic downturn.”

Categories: Policy Issues
Organization: State Policy Network