The coronavirus-induced recession could erode more than $6.5 billion in state revenues next fiscal year — two-and-a-half times the gap administration officials predicted — if researchers from Arizona State and Old Dominion universities are correct. The researchers’ new nightmare scenario hinges on the relationship between unemployment and lost revenue. And economists broadly concede the current job market is facing unprecedented volatility, making any prediction equally uncertain. Connecticut is projected to face a 32.7% drop, 10th-worse of all states, with neighboring New York ranking first at 40%. A $2.7 billion gap is imposing enough, representing a gap of 13.5% in the General Fund. Administration officials say it would take the entire rainy day fund, plus about $500 million in spending cuts and revenue enhancements to close that gap.
Pandemic could erode one-third of all state revenues, new analysis finds