America’s economic crisis soon may expand to its states, cities, and towns.
State and local tax revenue are both falling, particularly in areas heavily reliant on sales taxes and tourist dollars. Meanwhile spending is up due to added unemployment and medical obligations.
In Arizona, which had been projecting a $1 billion surplus by the end of its fiscal year in June, now is looking at a $1.1 billion deficit.
The most critical cases may be Florida and Louisiana, which both are in the top 10 for sales tax dependency and have rainy day funds that represent less than 5% of annual expenditures.
Both have been hit hard by the coronavirus. Louisiana is believed to have peaked last week, but Florida isn’t expected to peak for a couple more weeks.
They also have large tourism and oil industries and are at particular risk for hurricanes — opening the possibility of simultaneous state emergencies.
There also will be shortfalls in cities, counties, and towns — many of which haven’t yet debated or approved fiscal 2021 budgets because of bylaws that didn’t anticipate governance-via-Zoom.
Bankruptcies are a very real possibility.
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