Legislative fiscal leaders report challenges and financial impacts of COVID-19

July 10, 2020

The Council of State Governments surveyed legislative fiscal chairs in April 2020 on fiscal issues and other impacts on the states related to COVID-19. Here are the findings.


Main challenges to states


graphic text According to the survey, 91 percent of legislators listed revenue uncertainty as one of the main challenges facing their state.

88 percent of legislators surveyed listed the economic shutdown and the loss of commerce associated with COVID-19. Two-thirds listed high unemployment and underemployment, nearly half mentioned the strain on state unemployment insurance systems, and just over a third listed struggling small businesses.

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Other challenges reported by legislators include the impact on vulnerable populations (18 percent), the impacts on school closures (12 percent), the shortage of education funding (12 percent), revenue shortages for municipalities (9 percent), and mental health aspects of the crisis (9 percent).

Issues with the federal government


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One fifth of legislators surveyed noted that their states had had issues with the federal government, including delays in deposits of CARES Act funds, restrictions on the use of federal funds, and lack of coordination at the federal level that affected their states.

Fiscal solutions?


graphic textWhen asked about potential fiscal and economic solutions to the crisis, legislators mentioned that raising taxes was an option. Other suggestions included exploring alternative uses for federal CARES Act funding (18 percent), reforming state tax laws or pushing back tax deadlines (12 percent), drawing on state rainy-day funds (12 percent), and providing rent and mortgage relief (9 percent).

Flexibility in the use of federal funds


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The most frequently reported funding need for the states, for two-thirds of legislators surveyed, was for flexibility in the use of federal funds, including the ability to use CARES Act funds to replace lost revenue.

Specific funding needs


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Specific state funding needs reported by surveyed legislators include unemployment insurance (30 percent), funding for small business (30 percent), Medicare and/or Medicaid needs (27 percent), infrastructure funding (24 percent), SNAP funding (18 percent), and funds for local governments (12 percent).


Paycheck Protection Program


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Legislators reported that the Small Business Administration’s Paycheck Protection Program that was established in the CARES Act was very popular with their constituents, but the program quickly ran out of funds; 12 percent mentioned that the PPP needed to be renewed and replenished.

How can CSG best serve the states?

CSG will continue to serve our members.

  • Advocating for maximum flexibility in state usage of federal COVID funds, including removing the restrictive “COVID-related” language from the CARES Act (52 percent of legislators surveyed asked for this)
  • Providing guidance on using CARES Act funding creatively (36 percent asked for this)
  • Generally keeping leaders informed of happenings in other states and at the federal level

For the most up-to-date resources and analysis, visit the CSG COVID-19 website: web.csg.org/COVID19.

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