COVID-19 and State Fiscal Implications

This article is provided as courtesy of Billy Millwee with Millwee & Associates Consulting. Billy served as the Texas Medicaid Director and Deputy Health and Human Services Executive Commissioner for a number of years, and he and his firm have been engaged in Medicaid consulting on a national level since 2012. Overview Across the nation, states are facing significant budget challenges due to the COVID-19 pandemic. As revenues decline, state expenditures are simultaneously increasing due to increasing demands on state services. In many cases, anticipated general fund revenues will be less than the costs to maintain state services. Despite these challenges, states must continue to balance their budgets.[1] There are three main budgetary impacts of COVID-19: Higher Direct Costs – States have already incurred and will continue to incur significant direct costs to respond to the COVID-19 pandemic. Key areas impacted include law enforcement, health systems, infrastructure, an