After two years of record tax collections, budget writers in some states are starting to feel a revenue pinch created by a slumping stock market, banking and tech layoffs, slower consumer spending and lower energy prices.
Buoyed by higher revenues and federal aid during the pandemic, officials in many states had been promising to cut taxes and expand services next fiscal year. That could all come crashing down as high-flying revenue expectations collide with the new economic reality, which has shrunk some state projections for income and sales taxes.
“There has been a little bit of a need to rein in expectations,” said Brian Sigritz, director of state fiscal studies for the National Association of State Budget Officers. “There wouldn’t be enough money to go around for everyone’s priorities.”
