To achieve an antiracist and inclusive economic recovery from COVID-19’s ravaging of jobs and state budgets, states must fill their revenue shortfalls in equitable ways while building a foundation to grow thriving, inclusive communities.
COVID-19 and the recession it spurred upended state finances by forcing states to spend much more to contain the virus and address the economic harm as people lost jobs and income, and also by creating huge revenue shortfalls that states must now close.
More federal aid would be a huge help to states, localities, territories, and tribal governments as they try to balance their budgets, fill revenue gaps, and avoid painful budget cuts that harm families and exacerbate the crisis’ inequities, including higher job loss and death rates among people of color. But regardless of what federal policymakers do, state lawmakers should:
After the Great Recession of a decade ago, states responded in ways that worsened racial and class inequities and hardship for many struggling families, especially in communities of color. When facing budget shortfalls they relied heavily on laying off workers, which unnecessarily prolonged the recession, and cut funding for schools, colleges, and other services. Some states also slashed income taxes and shifted to rely more heavily on regressive sales taxes, and most increased fees and fines associated with the justice system. States must make better choices this time.