Can lessons from the Great Recession help states avoid budget disasters?
As they face massive budget shortfalls due to the COVID-19 pandemic, states are looking for federal money to help stave off the kind of drastic cuts they enacted during the last economic downturn.
State budget officers and economists generally agree that cuts to state spending worsened the Great Recession in the years following 2008. Layoffs, hiring freezes and furloughs of state employees had ripple effects throughout the economy.
On Wednesday, the Legislative Fiscal Bureau in Wisconsin released a memo on the tax collection picture for April 2020, showing a “significant reduction in collections.” The collections were $870 million below collections in April of 2019. According to a memo from LFB Director Bob Lang, the decrease reflects two factors.
“First, the coronavirus pandemic has severely impacted the state’s economy and tax collections,” wrote Lang. “Second, the extension of income and franchise tax filing deadlines from April to July 15 in 2020 has affected collections.”
Read more: https://wisconsinexaminer.com/2020/05/08/can-lessons-from-the-great-recession-help-states-avoid-budget-disasters/
