States Work to Finalize Fiscal 2021 Budgets (Updated July 1)

By Brian Sigritz posted 12 days ago

  

As of July 1, 41 states have enacted a full-year budget for fiscal 2021. States are currently contending with revenue losses and increased spending demands related to COVID-19 as they work to finalize or adjust their fiscal 2021 budgets. In addition, states continue to monitor developments at the federal level to see if additional federal aid will be provided, helping to lessen the need for more drastic cuts to essential services that would impact state residents and dampen the nation’s economic recovery. As noted in a recent NASBO blog post, states have begun taking initial steps to balance their budgets, including cutting spending, instituting hiring freezes, layoffs and furloughs, and using rainy day funds.

Generally, 46 states begin their fiscal years on July 1; however, for fiscal 2020 only, New Jersey extended its fiscal year so that fiscal 2021 will begin on October 1, 2020 and end on June 30, 2021. New York starts its fiscal year on April 1; Texas begins on September 1; and Alabama and Michigan start their fiscal years on October 1. Thirty-three states are enacting a new budget for fiscal 2021, while 17 states previously enacted budgets covering both fiscal 2020 and fiscal 2021; some of the 17 states that previously enacted a two-year budget approved a revised budget this year. In addition, of the 33 states approving a new budget, two states authorized a two-year budget covering both fiscal 2021 and fiscal 2022; Kentucky normally would have enacted a two-year budget this year, but opted to pass only one-year appropriations given the budget uncertainty regarding COVID-19 impacts.

Due to questions about the possibility of future federal aid, along with uncertainties regarding revenue outlooks, several states are planning on temporary budgets to begin fiscal 2021, while considering budgets for the remainder of fiscal 2021 in the coming months. Additionally, some states that enacted balanced budgets before the effects of COVID-19 expect to convene special sessions over the summer to adjust those spending plans in response to revenue declines.

Below is additional information on the states that have yet to enact a full-year budget for fiscal 2021:

  1. Louisiana – The House and Senate approved the budget on June 30 and the governor is currently reviewing the budget bill.
  2. Massachusetts – The governor signed a temporary budget for the month of July.
  3. Michigan – Fiscal year does not start until October 1. The governor and legislature continue to consider the fiscal 2021 budget.
  4. Mississippi – The legislature is working to finalize some portions of the fiscal 2021 budget.
  5. New Jersey – The governor signed a three-month budget. The state earlier shifted the start of fiscal 2021 to October 1.
  6. Pennsylvania – The governor signed a budget that funds most agencies through November; and funds schools through June 30, 2021.
  7. Rhode Island – The legislature is not expected to pass a fiscal 2021 budget until it has a clearer understanding regarding the possibility of federal fiscal aid. The state will enter fiscal 2021 authorized to spend 1/12 of fiscal 2020’s budget amount each month.
  8. South Carolina – The governor signed a continuing resolution to keep the state running until a fiscal 2021 budget is passed. The legislature is expected to return in September.
  9. Vermont – The governor signed a budget for the first quarter of fiscal 2021. The legislature is expected to return later in the summer to consider a full-year budget once the revenue situation and the outlook for federal aid is clearer.

Please click here for links to proposed and enacted budgets, as well as budget summaries.