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By questionable standards of public finances, the past decade has almost been a model of prudence in states across the United States. After the 2008 financial crisis – a rare case where collective government revenues fell – many states created new funds (or supplemented existing funds) “for rainy days.” As a result, state and local governments entered 2020 with $ 119 billion in combined savings, according to the Brookings Institution. But the economic downturn caused by COVID-19 has exploded budgets from coast to coast, and its impact will be lasting. Moody’s Analytics estimates that state and local government budget deficits could reach $ 450 billion over the next three years, even if the economy recovers. Below is a state-by-state breakdown of impending deficits.
A version of this article appears in theDecember 2020 / January 2021 issueofFortunewith the title “State budgets on the brink of the abyss”.
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