Numerous states have seen their state revenue surge in 2021 fueled by a robust stock market, growing income, federal aid, and increased tax revenue, The Wall Street Journal reported.
States’ revenue soared 24% between April and November from 2020 to 2021, according to a survey conducted by the Urban Institute think tank, the WSJ reported. Thirty-two states said the revenue collected in the fiscal year ending in 2022 was ahead of expectations, according to data from the National Association of State Budget Officers obtained by the WSJ.
States are putting their revenue surplus toward one-time use rather than longer-term spending programs or tax cuts, the WSJ reported. Some states have turned to paying down debts, pension obligations and infrastructure programs.
State’s reserve funds surged to a record-setting level of almost $113 billion for the 2021 fiscal year, the budget officers’ association told the WSJ.
“Lawmakers, including Democrats and Republicans alike, are acknowledging that while the situation looks really good right now, these surpluses are likely temporary,” Josh Goodman, a researcher for the Pew Charitable Trusts, told the WSJ.
Democratic California Gov. Gavin Newsom introduced a $286.4 billion budget plan supported by roughly $45.7 billion in surplus from the current fiscal year, the WSJ reported. The increased tax revenue came from higher income tax for residents.
Newsom said he wants to put $9 billion of the surplus toward tax breaks for businesses impacted by the pandemic and direct the remainder to helping with homelessness, wildfires, climate change and COVID-19, according to the WSJ.
Republican Florida Gov. Ron DeSantis introduced a $100 billion budget in December 2021 that would see $1 billion go toward a gas-tax holiday and $238 million on one-time, $1,000 retention payments for teachers and principals, the WSJ reported.
Democratic New York Gov. Kathy Hochul introduced a $216.3 billion budget Tuesday, setting aside $2.2 billion for one-time property-tax relief payments and $1.2 billion for bonuses for health care workers for as much as $3,000, according to the WSJ.
“This is a once-in-a-generation opportunity to make thoughtful, purpose-driven investments in our people that will pay dividends for decades,” Hochul said, according to the WSJ.
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