- Tax receipts ease as states post best credit quality in years
- Post-pandemic rebound, federal aid helped states’ finances
Record reserve funds built by US states in the past two years are likely to be needed as tax receipts slow, federal pandemic aid dwindles and the economy heads toward a recession.
California already is projecting a massive deficit for next year and Illinois posted a “stunning” $1.84 billion drop in April receipts from a year ago. The National Association of State Budget Officers says most states are planning for softer revenue growth or slight declines for fiscal 2023 and 2024, after double-digit percentage increases for two consecutive years.
Overall states’ tax revenue growth is poised to decrease to between 0% and 5% from as high as 20% in each of the last two years, Nicholas Samuels, a senior vice president for Moody’s Investors Service, said in an emailed statement Wednesday.
Bloomberg Politics
By Shruti Singh
May 4, 2023