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Data: Lucy Dadayan/The Urban Institute; Chart: Andrew Witherspoon/Axios

Early numbers show how significantly the coronavirus is devastating states' revenue streams — and could force choices between raising taxes or gutting services and laying off public employees.

Why it matters: Even as some states move toward reopening, the economic ramifications of having shut down will haunt them far into the future.

  • When states can reopen, and how quickly industries are able to bounce back, could either worsen or improve projections.

What to watch: Sens. Bob Menendez (D-N.J.) and Bill Cassidy (R-La.) plan to introduce bipartisan legislation as soon as next week that would create a $500 billion fund designed to help struggling state and municipality budgets in the wake of COVID-19.

  • "If there was another way to do this, I'd rather do it the other way," Cassidy tells Axios. "But what I don't want to happen is all this money spent for families and for employers to go to waste because cities cannot provide essential services."
  • Menendez tells Axios: "This is the time to step up to the plate."

By the numbers: The Urban Institute has been compiling lost revenue data as states make it publicly available. So far, there are figures for about one in four states that compare this April's state income and sales tax revenue collections against those from April 2019.

  • The data shows collections dropping between 20% and more than 50%, depending on the state, senior researcher Lucy Dadayan tells Axios — and those figures could get worse as new data comes in.
  • South Dakota is an outlier in the states the Urban Institute has tracked so far, in that revenues actually appear up for April. That may be largely because it is one of very few states that did not issue a stay at home order. But experts expect to see revenue declines next month.
  • Although it has not yet released April sales tax numbers to enable a year-over-year comparison, California's staggering tax revenue loss due to COVID-19 has led to an expected $54.3 billion budget shortfall through FY 2021 — including a $13.4 billion shortfall this fiscal year, the governor announced Thursday. That's with a $21 billion surplus last year.
  • New York also has yet to release April tax revenue data, but its latest budget projection has the state short as much as $13.3 billion in FY 2021, according to Dadayan's analysis of most recent state budget projections. Illinois is looking at a more than $4.6 billion shortfall for next fiscal year.
  • Arizona is projecting to be short more than half a billion dollars for this fiscal year.
  • The projected shortfalls for FY 2020, which ends at the end of June for most states, is arguably a bigger problem because there isn't much time left to make changes, per Axios' Dan Primack.

The big picture: Democratic-leaning cities have seen the highest case and death rates. But red and blue states alike are facing serious budget shortfalls.

  • That's why some Republican senators are getting behind efforts to provide federal dollars to help states balance budgets.
  • Even after accounting for state emergency savings accounts — which in many states were at an all-time high — 33 states will likely need to fill budget gaps of 5% or more, according to a recent analysis by Moody's Analytics.
  • 21 states would need to fill gaps of 10% or more.
  • "Anybody is going to be overwhelmed by this — even states who were well prepared," Dan White, director of government consulting and fiscal policy research at Moody's Analytics, tells Axios.

Between the lines: Much of the burden will likely be pushed on struggling local governments' plates, White said.

  • Cities have also lost smaller revenue sources such as hotel occupancy fees, inspection fees and construction fees.
  • Some could be forced to lay off public workers needed to combat the virus and keep the public safe — such as firefighters, paramedics, public hospital workers. The April jobs report, released this morning, showed around 800,000 local government jobs cuts already.
  • It's either that or raise taxes in the midst of high unemployment and financial insecurity. "That's the death spiral," said Menendez, who has been talking with mayors across his state.
  • New York City Mayor Bill de Blasio has already said he may have to start furloughing municipal employees if the city doesn’t receive federal funds to help fill budget gaps.

Some state and local governments will wait to make tough budget decisions in the hopes that they get needed funds from Congress, which is in heated negotiations around the fourth stimulus package.

Republican lawmakers have been hesitant to provide this much federal help to states, but they've been warming to the idea.

  • Menendez says he expects several Republican senators besides Cassidy to sign on to their proposal.

Go deeper:

Go deeper

Austin to cut $150 million from police budget

Photo: Sergio Flores/Getty Images

The Austin City Council unanimously moved to cut its police department budget by $150 million on Thursday, The Texas Tribune reports.

Why it matters: Austin is the first of Texas's four largest cities to slash its police funding, per the Tribune. The cut is also one of the biggest percentage decreases in the U.S. this year.

Ben Geman, author of Generate
4 hours ago - Energy & Environment

Key clean power provision likely won't survive in Dems' spending bill

A construction worker walks along a dirt road at the Avangrid Renewables La Joya wind farm in Encino, New Mexico, on Aug. 5, 2020. Photo: Cate Dingley/Bloomberg via Getty Images

A pillar of Democrats' plans to speed deployment of zero-carbon electricity is likely to be cut from major spending and tax legislation they are struggling to move on a party-line vote, per multiple reports and a Capitol Hill aide.

Driving the news: The New York Times, citing anonymous congressional aides and lobbyists, reports that West Virginia Sen. Joe Manchin (D) has told the White House he "strongly opposes" the Clean Electricity Performance Program.

Updated 7 hours ago - World

Fatal stabbing of British MP David Amess declared a terrorist incident

Police outside Belfairs Methodist Church in Leigh-on-Sea, England, on Oct. 15. Photo: John Keeble/Getty Images

Authorities have declared the death of David Amess a terrorist incident, hours after the Conservative Party lawmaker in the U.K. was fatally stabbed while meeting with local constituents in a church in eastern England on Friday.

The big picture: The Metropolitan Police has found "a potential motivation linked to Islamist extremism."