State budget balancing strategies: COVID-19 and the Great Recession

This research compares state budget balancing strategies taken during the COVID-19 pandemic and the Great Recession of 2007-2009. Distinguishing features of the two crises, as well as differences among the states, lead them to engage such strategies in similar and dissimilar ways. Federal aid during both fiscal disasters is also distinctive. During the Great Recession, federal stimulus funds to states supported budget balancing efforts. In contrast, until the COVID-19 relief bill of March 2021, federal assistance was primarily funneled directly to individuals and businesses and for pandemic-specific spending. This left states on their own to close budget gaps fueled by COVID-19.