State tax revenues drop $31B as additional relief lingers in limbo

Researchers predict steeper losses in the coming months

As negotiations on additional coronavirus relief among lawmakers remains at an impasse, states are dealing with multibillion-dollar budget holes and struggling to patch revenue shortfalls.

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Data from 44 states show a cumulative revenue decline of around $31 billion between March and August, according to a study by the Urban Institute, alongside warnings that declines could be even steeper in the months ahead.

“The damage of the COVID-19 pandemic on state governments is already substantial, and, sadly, this is just the beginning of the fiscal and economic pain ahead,” the report noted.

Thirty-six states reported total tax revenue declines, while eight – Alabama, Colorado,  Georgia, Idaho, Nebraska, South Dakota, Vermont and Washington – reported growth.

ARIZONA TAX HIKE ON THE RICH WOULD MAKE RESIDENTS ‘POORER,’ COST JOBS: STUDY

Researchers expect sales tax revenue will continue to remain repressed because some sectors will be slow to resume activity, while others – like travel – will be unable to make up for purchases that were lost.

Funding for state and local government has been a months-long point of contention between Republicans and Democrats.

In a Twitter post Wednesday, Trump criticized House Speaker Nancy Pelosi, D-Calif., and Senate Minority Leader Chuck Schumer, D-N.Y., for holding up an agreement on additional stimulus aid over their desire to provide a bailout to blue states.

A senior administration official told Fox News that a deal is not likely before the Nov. 3 election, despite ongoing talks between Pelosi and U.S. Treasury Secretary Steven Mnuchin.

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With prospect dim for additional federal help in the near future, state governments may look to other measures to chip away at shortfalls – including tax increases, municipal layoffs and spending cuts.

As previously reported by FOX Business, a number of states and localities are turning to tax hikes to generate revenues as they face ballooning budget holes.

On Wednesday, Chicago Mayor Lori Lightfoot issued a budget proposal that contained a gas tax hike and a property tax hike as the city stares down a $1.2 billion shortfall.

Additionally, there are a number of tax-related measures are on other state ballots this November, including in Illinois and California.

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