News

State Budget Shortfalls Expected to Impact Public Works Spending

April 15, 2020

States and localities across the United States are facing an uncertain economic future as the coronavirus pandemic has ground economic activity to a halt across the country and cut off revenue streams that these governments rely on, such as sales and income taxes. Unanticipated state budget expenditures, like emergency funding packages, are also forcing states to reconsider how resources are allocated in their budgets.

According to the Center on Budget and Policy Priorities, states are estimating revenue shortfalls ranging from as low as 1% all the way up to 20% or higher. On the spending side, the National Conference of State Legislatures has produced a roundup detailing direct investment and other economic stimulus packages that states have passed in addition to the federal government’s action.

One of the areas that could be affected by anticipated budget cuts includes public work projects procured by state and local governments. Nonresidential public construction spending at the state and local level reached nearly $285 billion annually in 2018, according to the Census Bureau, a number that could be affected moving forward as states look for areas to implement short-term budget measures.

However, the exact impact of these measures and the responses that will be taken to address them could vary based on how much support state and local governments receive from the federal government. The CARES Act allocated $150 billion to help state and local governments respond to the coronavirus, and just this week the National Governors Association requested an additional $500 billion from the federal government in order to address anticipated budget shortfalls. Other advocacy groups, such as the National Association of Counties and the United States Conference of Mayors, have made similar pleas to Congress asking for financial support to address revenue shortfalls.

ABC will continue to monitor these developments and provide updates in Newsline for public works contractors as these situations unfold.

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