Over the past few weeks, OpenSky staff members have been analyzing the state and federal response to the COVID-19 pandemic as well as the potential fiscal and economic impact of the virus. Here we circle back to provide an update on some of the issues we have written about as part of this work.

Scope of economic fallout starting to materialize

States have continued to brace for decreased revenues and increased spending on public benefits whose utilization increases during tough times. Moody’s Analytics is expecting revenues to decline by a minimum of 10% for states and drop an average of 15% to 25%.[1] The precipitous drop expected in state revenues factors in legislation passed by the federal government, which provides $150 billion in aid to states and municipalities with more than 500,000 people, of which Nebraska is expected to receive $1.25 billion for COVID-19-related expenses.[2] (We will publish more information on this in subsequent policy briefs.) While Nebraska does not yet know the exact impact COVID-19 will have on the state budget, all indications are that it will be bad. (In a recent brief, we looked at how an economic downturn would look today were it similar in size and scope to the Great Recession.)

It has been a similar story with initial unemployment insurance claims, which surpassed 24,500 last week in Nebraska, the highest ever.[3] The United States also experienced 6.6 million unemployment insurance claims — also a record — due to the sudden and severe economic fallout from COVID-19.[4] We outlined the federal and state unemployment insurance response in a recent brief.

More coverage to come

OpenSky staff continue to monitor COVID-19-related developments at both the state and federal levels and will continue to publish analysis regarding the response to the pandemic, which is continuously evolving. In the meantime, we want to thank you for continued interest in OpenSky and these vital issues as we know that sound fiscal policy choices will play an essential role in helping our nation and state get through this unprecedented challenge.