Budget Blog

Under the American Rescue Plan Act (ARPA) enacted in March 2021, state, local and tribal governments received $350 billion as part of the Coronavirus State and Local Fiscal Recovery Fund (SLFRF) program. According to the law, SLFRF recipients are permitted to use the funds to respond to the public health and negative economic impacts of the pandemic; provide premium pay for essential workers; invest in water, sewer, and broadband infrastructure; and replace public sector revenue lost due to the pandemic. This last use – revenue replacement for the provision of government services – has so far narrowly claimed ... More

In an issue brief released today entitled State Budget Processes & Spending Federal Funds , NASBO describes the various nuances around states’ and territories’ legislative session and budget calendars, how they appropriate and spend federal funds, how they handle unanticipated funding – especially outside of legislative session, and recent changes to these processes in some states in response to the pandemic. States are better positioned to meet goals for federally-funded programs when federal granting agencies consider these aspects of their budget processes as they issue program guidance and set deadlines. ... More

Please Note: This blog was originally posted on August 18, 2022 based on partial data compiled by NASBO from recovery plans for 44 states and territories. The blog was updated on September 26 to incorporate more complete data from recovery plans for all 50 states, four territories and the District of Columbia. The  Coronavirus State and Local Fiscal Recovery Funds (SLFRF), authorized by the  American Rescue Plan Act of 2021  (ARPA), allocated $195.3 billion for states and the District of Columbia and $4.5 billion for territories. Under the Treasury Department’s Compliance and Reporting Guidance , states, territories ... More

As expected following strong growth in April tax collections , most states ended fiscal 2022 with both year-over-year revenue growth and revenues exceeding forecast. Fiscal 2022 marked the second consecutive year in which states experienced rapid growth in tax collections following declines in fiscal 2020. A number of factors contributed to fiscal 2022’s revenue growth including economic gains following the initial effects of the pandemic, the role of federal COVID-19 relief aid, and the impact of inflation on both salaries and the price of goods. Year-over-year gains were seen in most major sources of state tax ... More

Early indications are that most states continued the recent trend of strong growth in tax collections in April, led by gains in personal income taxes. States saw growth in payroll withholding, estimated and final tax payments in April. The gains are likely due to several factors including employment growth, salary increases, and strong stock market performance in 2021. Similarly, most states also reported increases in corporate income taxes due to higher corporate profits. Part of the year-over-year increase in income taxes is due to 2021’s tax deadline being pushed back to May, which led to less April tax collections ... More

Introduction Before the COVID-19 crisis, state rainy day funds and total balances were at an all-time high, after a decade of rebuilding reserves following the Great Recession. In spring 2020, when the pandemic first hit, this financial cushion softened the immediate blow for states facing revenue shortfalls and helped them to close budget deficits by the end of the fiscal year – something most states are required by law to do.  At the same time, as state revenue projections were plummeting further, concerns grew that states might end up depleting the rainy day funds they had worked so hard to build in recent years. ... More

One area of state budget processes that has received a lot of attention in recent years, including during the COVID-19 pandemic and recession, is state rainy day funds. In the 2021 edition of Budget Processes in the States , all 50 states reported having at least one rainy day fund for the first time in history. In the years following the Great Recession, a number of states made deliberate choices to strengthen their reserves by increasing deposits and reforming the laws and policies that govern these funds. This blog looks at recent process changes states made to bolster their rainy day funds before the pandemic, ... More