States, local governments face $225 billion budget shortfall: study

State and local governments face a $225 billion shortfall for the coming fiscal year, according to a study from the left-leaning Center for Budget and Policy priorities.

The study estimated that the governments’ revenues, which had in recent months come in higher than expected, were still 7.8 percent below pre-coronavirus estimates.

Once federal aid was taken into account, states, localities, tribal nations and territories were left about $300 billion short of revenues. States still have an estimated $75 billion in rainy day funds that could be used to plug some of those holes.

President Biden has requested $350 billion in state and local aid as part of his $1.9 trillion COVID-19 relief bill, a figure that is likely to be pared back in negotiations with Republicans.

Other relief efforts and proposals have sought to address some of the additional costs states face, such as education costs, funding related to the coronavirus and various public health measures.

The study noted that shortfalls among state and local governments had already contributed to 1.4 million jobs lost since the pandemic took hold, including 177,000 in the fourth quarter alone.

“Congress should act quickly to provide it or risk more public-sector layoffs and cuts in services for families and businesses as states balance their budgets,” the report said.