Illinois is facing a devastating fall in revenue from the virus’s impact on the economy. Minnesota, meanwhile, is adding relief for businesses, and a New York state senator has introduced a bill to give tax relief to frontline medical personnel. Here’s the latest on shifting state tax guidelines, deadlines, and policy to deal with the coronavirus pandemic. For Wednesday’s coverage click here. Here’s a state-by-state roadmap.
Illinois could be facing revenue losses of as much as $28.4 billion over three years as the health crisis plays out, according to a report released Thursday by the University of Illinois’ Institute of Government and Public Affairs.
The institute examined data reflecting state fiscal performance during the 2007-09 recession and presented several models for revenue losses in the context of the pandemic. In a moderate fiscal crisis the state would likely face a $17.6 billion revenue loss for calendar years 2020-23. That number rises to $28.4 billion in the severe fiscal crisis scenario. The report noted that the budget would be squeezed by increased spending to address the public health emergency even as revenue slumps from economic disruption.
“Illinois is not well-positioned to cope with these pressures,” said Robin Fretwell Wilson, the institute’s director.
Oklahoma Governor Partially Taps Rainy Day Fund
Oklahoma Gov. Kevin Stitt on Thursday signed two of three budget stabilization bills, tapping a fraction of the $503.9 million from available state reserves to plug an anticipated budget hole.
On the fourth day of a special legislative session, the Republican governor signed SB 1053, sending $201.6 million from the state’s rainy day fund to address a revenue shortfall wrought by economic slowdowns caused by Covid-19 and low oil prices. That move will keep the state government funded through April, according to a statement issued by the governor’s office.
Still unsigned is a separate measure, SB 199, that would use $302.3 million more from the state’s rainy day fund to address a revenue shortage estimated at $416 million. If left unaddressed, it could trigger cuts to the budgets of state agencies by more than 6% per month.
Accusing House leadership of “playing politics” by making last-minute changes, Stitt called upon lawmakers to return to the Capitol to restore funding cuts to the state’s digital transformation initiatives and preserve all funding for the remainder of the 2020 fiscal year, which ends June 30.
Lawmakers responded late Thursday, saying there was no need to return to the Capitol.
“The House and Senate remain united by our actions to swiftly stabilize the budget, and call on the governor to finish the job,” leadership for both chambers said in a joint release. “Further legislative action is not needed when a stabilized budget is already on the governor’s desk.”
Iowa Conditional Penalty Relief
The Iowa Department of Revenue issued an order Thursday permitting conditional penalty relief for taxpayers required to make estimated payments who are impacted by the crisis.
Director of Revenue Kraig Paulsen signed Order 2020-03, which grants relief to individual, corporate, or franchise taxpayers required to make estimated payments during 2020. The order is limited to taxes with an installment due date on or after April 30, 2020, and before July 31, 2020.
Minnesota Relief for Businesses
Minnesota will forgo penalties and interest on late sales and use tax payments under a new grace period established in response to the health crisis, the Department of Revenue announced Thursday.
Businesses with obligations due March 20 and April 20 will now have until May 20 to make their payments, though they should still file their returns by the due dates. The department said it continues to monitor the crisis and may provide additional guidance in the coming weeks.
“In addition to giving impacted taxpayers more time to pay their taxes, we want businesses to also consider the various state and federal disaster assistance programs that are now available,” Revenue Commissioner Cynthia Bauerly said in the statement.
New York Senator Proposes Tax Break for First Responders
The deputy minority leader of the New York State Senate on Thursday said that he was proposing a state income tax exemption for medical professionals and first responders involved in the effort against Covid-19.
Firefighters, emergency medical technicians, law enforcement personnel, doctors, nurses, and other emergency and health care workers would be eligible under the legislation, according to a news release from the office of Joseph Griffo (R).The tax exemption would be in place for four months, and the commissioner of New York’s Department of Taxation and Finance could extend it if necessary.
“Similar legislation was recently introduced in Congress that would provide for a federal income tax holiday for these individuals,” the news release said. Republicans currently have little influence in the state Legislature, so—short of an upswell of support from majority Democrats—prospects for Griffo’s bill are uncertain.
—With assistance from Paul Stinson in Austin.
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