The state’s monthly revenue report showed a shortfall of about $964 million for April, based upon the estimate on the Dec. 20, 2019 revenue forecast. It is also 47 percent below revenues from April 2019.
State Director of the Office of Management and Budget Cristopher Johnston said during the governor’s press conference on Friday that income tax filing extension and the effects of COVID-19 played heavily with the deficit.
Johnston said May’s sales tax numbers will be more revealing.
“April’s sales tax shortfall of $100 million was probably reflective of only a partial month of the stay-at-home policy and business closures that went into effect in the second half of March,” explained Johnston. “It is difficult to estimate how much more of that impact there will be in May collections, but it will be more reflective of an entire month’s effect of the stay-at-home policy and the business closures.”
Johnston added that it could take a few years to come out of this deficit.
“Moody’s Investor Service, a respected credit rating service, issued a report recently that forecasted that state government revenues, in general, would not return to 2019 levels by 2024.
The state is addressing action as it faces an unfortunate economic climate.
Johnston commented, “In April, we issued a financial management circular to all state agencies outlining a variety of cost-saving measures that should be pursued. Soon, there will be a memorandum setting significant spending reduction targets for agency programs. We plan to work with the budget committee, mostly likely this summer, to update the official revenue forecast. We will use this information for the 2021 budget session and beyond which will also include efforts to restore the reserve levels which will be significantly reduced.”
He did say that the state is spending what was budgeted for this year, but will be dipping into reserves to get through the health crisis. There may be some federal relief supplied to states in the near future.
