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

Should California put wealth tax proposal to a vote?

California Assemblymember Rob Bonta (D) on the California gas car ban and a potential wealth tax.

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.

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.

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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.