How States Can Forecast the Impact of COVID-19 on Their Budgets

As state policymakers confront the impact of COVID-19, they face unprecedented levels of uncertainty about the resources they have—and will need—to protect residents, maintain critical services, and limit the economic damage. At a recent webinar sponsored by The Pew Charitable Trusts, panelists discussed the critical roles of epidemiological modeling for the novel coronavirus as well as budget stress testing in helping states to forecast the effect of the pandemic on their budgets.

The panel taking part in the May 13 program consisted of Dylan George, vice president with In-Q-Tel and former senior policy adviser in the White House Office of Science and Technology Policy; Dan White, director of public sector research with Moody’s Analytics; and Don Boyd, co-director of the State and Local Government Finance Project at Rockefeller College at the State University of New York, Albany and principal of Boyd Research. The three discussed various scenarios for both the virus and the economy, the wide range of revenue outcomes linked to those scenarios, and the economic stresses that states may face.

George highlighted the key metrics—such as testing capacity, case counts, and hospital capacity—that can help decision-makers keep levels of illness beneath a crisis standard of care. At this point, considerable uncertainty remains about the path of the virus and the public health response.

Because of that uncertainty, White said, states need to model a range of scenarios and consider potential responses to each to ensure preparedness for any downturn. “States have never been in better shape to withstand a relatively normal recession. The only problem is that this is not a relatively normal recession,” White said.

The panelists fielded questions about federal aid, economic recovery, and the possible economic and health impacts of loosening restrictions on public activities and businesses.

A full recording of the webinar, including slides, is available. More information on Pew’s work on recessions and the impact of the coronavirus outbreak on state budgets can be found here.

Jeff Chapman is a director, Airlie Loiaconi is a senior associate, and Jen Janson is an associate with The Pew Charitable Trusts’ state fiscal health project.