Wind for some states
In his survey, J.P. Peter Digrut, head of municipal research and strategy at Morgan, explored a handful of states, including Idaho, South Dakota and New Mexico, which managed to raise even more money last year than in 2019. Many states where tax revenues have not yet bounced because they rely heavily on tourism, oil and gas or coal extraction – from Hawaii, Nevada, Florida, Texas and West Virginia.
Mr. Sheiner’s analysis showed that Idaho had the largest revenue recovery recovery of any state. He did his research with Byron Lutz, an economist with the Federal Reserve.
The head of Idaho’s financial management department, Alex J. Adams said in an interview that the rebound came as a surprise to officials, who thought one of the reasons was the influx of new California residents who wanted to avoid state costs. Live – a trend that started before the epidemic but accelerated last year. Mr. Adams also said that Idaho did not stop construction when the lockdown occurred, which helped economic activity.
The Republican governor of Idaho, Brad Little, said in his state address in January that the 2020 revenue collection is strong enough to send back $ 295 million to taxpayers, and still be strong enough to invest in better highways, bridges and broadband access. He also wrote a letter to a congressional delegation in Idaho last year, urging them to oppose the use of no-word federal dollars to bail out undeveloped states.
While some states are now “enjoying the breeze” and others are still struggling, Mr. White said small amounts of money, targeting states more carefully, would be the most efficient approach for Congress. But governments will need some “exceptional creativity” to get help to people who really need it, without sending unnecessary aid.
Time played a role
To some extent, the states ’surprising recovery reflects the timing of events last year. The epidemic began in the same way that many state legislators were reviewing early budget proposals for the coming fiscal year. Proposals drawn up weeks before the shock predicted a strong one-year tax recovery.
Then, in a matter of weeks, millions lost their jobs. State officials see unemployment as a powerful driver of their finances; Previous recession research suggests that a one-percent increase in the unemployment rate could produce of 45 billion of the state budget.
