May 13, 2021 - Economy

States' fiscal windfall during the coronavirus pandemic

Illustration of dollars in the shape of California and New York.

Illustration: Annelise Capossela/Axios

Remember the massive fiscal crisis that was about to befall the states, unable to print their way out of the recession? Well, it's over before it even really began.

Driving the news: California's catastrophic $54 billion anticipated budget deficit has become a $75 billion budget surplus over this fiscal year and next.

  • In New York, the 2021-22 budget is $212 billion. That's a massive 10% increase over the previous year.

The states have been helped by the aid earmarked for them in the most recent stimulus bill, as well as by an unanticipated spike in income tax revenues.

  • California, in particular, has seen incomes soar as tech companies go public and give their investors and employees one-off windfalls.
  • New York is being boosted by an increase in income taxes on the highest earners, with about 5,000 people earning more than $25 million now facing a state income tax of 10.9%.
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