Regional Policy Leadership Series: DMV Fiscal Leaders
The COVID-19 pandemic and federal stimulus bills have created a highly unusual set of conditions for state and local budgets. In this webinar, fiscal leaders from the District, Maryland, and Virginia explained how they are navigating these challenges and opportunities.
Peter Franchot, Comptroller, Maryland
Aubrey Layne, Secretary of Finance, Virginia
Fitzroy Lee, Interim CFO, District of Columbia
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On managing the pandemic
- Dr. Fitzroy Lee described the challenges of forecasting tax revenue in the early days of the pandemic. They relied on robust data collection and tracking indicators like foot traffic and unemployment claims to set expectations.
- Dr. Lee also explained that the District’s reserves were in good shape following 2019, which was a great year for tax revenue, so they were able to balance their 2020 budget despite lower revenue.
- Secretary Aubrey Layne of Virginia said that they responded to the pandemic by curtailing discretionary spending, but they made no cuts to core government services. They began seeing big hits to tax revenue collection in May and June of 2020. Since then, they have seen a steady recovery.
- Secretary Layne said that tax revenue continued to recover because people were able to adapt to the new socially distanced context in certain industries, like government contracting. Other industries, like hospitality, did suffer, but the industries surrounding the federal government buoyed up the state budget.
On federal stimulus
- Secretary Layne described how the federal stimulus buoyed up the Virginia state budget, not just by providing $26 billion directly, but also through $50 billion given to Virginian citizens and companies.
- Maryland Comptroller Peter Franchot agreed that federal funding “absolutely saved the day.” He described it as a $60 billion “fire house” of cash.
- However, Comptroller Franchot reminded the audience that low wage earners who represent the bottom third of earners are still suffering and have no income, no reserves, and no cash.
- Regarding the stimulus, Dr. Lee explained they are trying to use the funding for one-time investments and for recovery, not for programs that need a long-term and sustainable source of funds and would lead to a fiscal cliff.
- On the American Jobs Plan and infrastructure spending, Secretary Layne says the challenge is in coordinating incoming federal money, which is also going to the state and local municipalities. Recipients also need to fight urge to get it all deployed as soon as it comes in, and said the money should be allocated to long-term, transformational programs.
On priorities moving forward
- Secretary Layne mentioned that some businesses are having a tough time finding labor. Comptroller Franchot said there is a disconnect between many unemployed people and available jobs. He says there needs to be apprenticeship programs and other paths to the middle class.
- Comptroller Franchot suggests that Hogan, Bowser, and Northam coordinate on broadband. He also says we need significant investments in cybersecurity in the infrastructure package and warned of startling amounts of fraud happening in government.