Vice President for State Fiscal Policy
The Trump Administration and some news outlets are citing Treasury Department data showing that states had spent 25 percent of the CARES Act’s Coronavirus Relief Fund (CRF) as of June 30 to argue that states don’t need more fiscal aid to address their massive, pandemic-induced budget shortfalls. Policymakers shouldn’t take this argument seriously, for three main reasons:
The reality is that states, localities, tribal nations, and U.S. territories need significantly more federal aid. The pandemic has caused their revenue to collapse, creating an extraordinary fiscal crisis. Based on past recessions and economic forecasts from the Federal Reserve and Congressional Budget Office, we project that states alone face shortfalls totaling about $555 billion through fiscal year 2022.
States and localities already have furloughed or laid off some 1.5 million workers. Without substantially more aid, they will permanently lay off more of these workers and cut other jobs for teachers, health care workers, and others — making the recession worse — and cut services that help people who’ve lost their jobs and others struggling due to the pandemic and its harmful impacts on families and communities.