President Biden is pushing for $350 billion in state and local aid as part of his $1.9 trillion COVID relief bill, but a Wirepoints analysis of state financials across the country shows he should scrap his plan. The money simply isn’t needed.
Wirepoints found that the billions in reserves states had prior to the pandemic – plus their share of $150 billion in the CARES Act – more than covered the dire revenue shortfalls most states projected at the beginning of the pandemic. And now that the states’ calendar year 2020 financials have come in far better than expected, the case for more state aid has collapsed.
Wirepoints analyzed each state’s rainy-day funds and CARES Act aid and compared them to each state’s original pandemic revenue projections. We then looked at each state’s actual calendar year 2020 revenues and found those negative projections never materialized for most states.
Below are Wirepoints’ key findings:
- Even during the early days of the pandemic in April and May – when revenue shortfall projections were at their worst – 38 states had more than enough reserves and CARES Act funds to cover their projected fiscal year 2020 and 2021 revenue losses. Those states had a combined revenue surplus totaling $71 billion.
- Only 12 states faced a combined shortfall in fiscal years 2020 and 2021 after taking reserves and CARES into account. The cumulative shortfall for those 12 states totaled $47 billion.
- Actual calendar year 2020 revenues came in far stronger than expected for most states. In all, calendar year 2020 revenues declined by an estimated $33.5 billion, far less than the $103 billion decrease states originally predicted. In the end, states lost just a third of what they originally feared.
- After taking into account the improved 2020 revenues, the number of states still suffering a combined revenue shortfall in fiscal years 2020 and 2021 dropped to just six: Nevada, Hawaii, Maryland, New Jersey, Illinois and New York. Those six states have a combined revenue shortfall of just $12 billion. The other 44 states have a combined surplus of $105 billion when taking reserves and CARES Act funds into account.