Still No Full Recovery for State & Local Governments, nor Hours Worked

  • We are still seeing meaningful challenges for state and local government credit quality about eight months after the COVID-19 shutdowns began.

  • Moody’s Analytics revised their state budget shortfall down from $500 billion to a still hefty $450 billion (through FY22).

  • Moody’s Investor Service is projecting the annual change of state tax revenue to be 6.0% in fiscal year 2021. There is a wide range of results state-by-state, however.

  • The Center on Budget and Policy Priorities published state revenue forecasts that are declining across the board. Results in California (-21% [high-end]), Hawaii (-23%), and Massachusetts (-31% [high-end]) are among the worst.

  • Data from Homebase shows that hours worked by hourly workers have risen substantially since April, but the numbers have leveled off well below normal since June.

  • No federal relief is expected before the election, however there could be help for state/local governments and schools depending upon what happens on or just after Nov. 3.

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