States Brace For Painful Budget Cuts With Congress Deadlocked Over Coronavirus Aid

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Tom Wolf also wants the Legislature to legalize marijuana, with the tax revenue going toward grants for small businesses and criminal justice reforms.State tax revenue often lags economic trends because individuals’ income losses aren’t reflected on tax returns until months later. The resulting consumer spending led to a rebound in sales tax revenue in some states. Andrew Cuomo’s administration estimates the state will receive about $8 billion less in tax revenue than once expected this fiscal year. Michelle Lujan Grisham, a Democrat, is urging the Legislature to legalize and tax recreational marijuana as a way to shore up state revenue. Gavin Newsom signed in June includes $11.1 billion in automatic spending cuts and deferrals that will kick in Oct. 15, unless Congress sends the state $14 billion in additional aid.

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Spending cuts to schools, childhood vaccinations and job-training programs. New taxes on millionaires, cigarettes and legalized marijuana. Borrowing, drawing from rainy day funds and reducing government workers’ pay.

These are some actions states are considering to shore up their finances amid a sharp drop in tax revenue caused by the economic fallout from the COVID-19 pandemic.

With Congress deadlocked for months on a new coronavirus relief package, many states haven’t had the luxury of waiting to see whether more money is on the way. Some that have delayed budget decisions are growing frustrated by the uncertainty.

As the U.S. Senate...

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