States facing down budget deficits are likely to be tempted to employ tax hikes as a way to make the budget math work. But this siren song could threaten the recovery from the economic circumstances causing the budget issues in the first place.
It’s true that state revenues are down substantially due to the pandemic and its associated lockdowns. According to the National Association of State Budget Officials (NASBO), total state revenues are down byabout 3 percent year-over-year, with gaming and corporate income revenues taking the largest dips.
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