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Coronavirus Deals One-Two Financial Punch to State Budgets | New York News

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By GEOFF MULVIHILL, Associated Press

The coronavirus is pounding state governments with a financial one-two punch, costing them many millions to try to contain the disease just as businesses are shutting down and tax revenue is collapsing. The sharp drop in revenue could jeopardize some states’ ability to provide basic services.

States ranging from tiny Rhode Island to California, with the world’s fifth-largest economy, have warned that many programs are likely to face cuts or even elimination.

“I am gravely concerned about our ability to deliver basic services over the next six months to a year given the drop in revenues, and that’s why I am encouraging the Legislature to be extremely fiscally prudent,” Oregon Gov. Kate Brown, a Democrat, said about building the budget for the coming fiscal year.

Many states are blowing through the multi-billion dollar rainy day funds they built up after the end of the Great Recession. Without that cushion, government finance experts say, states would have been in much worse shape.

Virginia expects to take a hit of up to $2 billion. The result: Lawmakers may rescind the 2% annual raises just promised to teachers.

Christine Melendez, a high school Spanish teacher in Chesterfield County, said losing the raises would be a “slap in the face” to teachers who have endured years of stagnant pay. Like teachers across the country, they are improvising online lesson plans after schools were shuttered.

Melendez predicted there would be fierce pushback if teacher pay is not improved.

“We can only take so much,” she said.

States will get help from the $2.2 trillion stimulus working its way through Congress. State, local and Native American tribal governments are in line for $150 billion in direct aid to combat the virus, and could get more through other parts of the legislation.

How far that will go is unclear as the outbreak grows more severe and shutdown measures are all but certain to be extended.

New York Gov. Andrew Cuomo, a Democrat, ripped the GOP-led Senate’s version of the coronavirus package as “terrible” for New York and said, based on preliminary reports, that it would send the state some $4 billion in direct aid. A Tax Foundation estimate shows the state government in line for nearly twice that much.

New York, which has become the epicenter of the coronavirus fight in the U.S., could see revenue drop by $15 billion, or about 8%, in the coming fiscal year, budget officials said. Another $12 billion that was expected to arrive soon will be delayed for months because the state, like others, is extending the tax filing deadline from April to July.

“The response to this virus has probably already cost us $1 billion. It will probably cost several billion dollars when we’re done,” Cuomo said. “I’m telling you, these numbers don’t work.”

The gloomy financial outlook is a sudden and stark turnaround after years in which a strong economy sent streams of cash into state coffers. Governors and lawmakers across the country had plans for that money: teacher raises, pre-K expansions, Medicaid for immigrants who are in the country illegally.

Those wish lists are now looking more like pipe dreams.

California has a $20 billion reserve but also relies heavily on capital gains, which swell the budget when the stock market is soaring. Gov. Gavin Newsom this week warned agency heads that a drop in economic activity would put their ambitions for new or expanded programs on hold.

In Ohio, Gov. Mike DeWine announced freezes on state-government hiring and new contract services. He also told cabinet members to look for immediate budget cuts of up to 20%.

Only a month ago, Minnesota officials said the surplus for the fiscal year that goes through June would be $1.5 billion — $200 million more than previously expected. Now Gov. Tim Walz says most of the surplus would be set aside to deal with uncertainties brought by the virus.

New Jersey announced this week that it would keep $920 million it had planned to spend between now and June to ensure cash flow. That’s more than 2% of the state’s current spending plan, but officials are warning that the budget impact could be deeper than that.

In Tennessee, Gov. Bill Lee is now basing his budget plan for the fiscal year that starts July 1 on having an economy with no growth. Previously, he anticipated a growth rate of 3%.

Arkansas Gov. Asa Hutchinson said the outbreak is projected to cause a drop of $353 million in state revenue through June. That represents about 6% of the state’s general fund budget.

For most people, the new coronavirus causes mild or moderate symptoms, such as fever and cough that clear up in two to three weeks. For some, especially older adults and people with existing health problems, it can cause more severe illness, including pneumonia and death.

States that depend on tourism are vulnerable.

The Nevada Resort Association says taxes on tourism have paid for about 38% of the state’s general fund budget in recent years. The governor there has frozen state hiring and limited government purchases.

Rhode Island loses about $1 million in state revenue for each day its two casinos are closed. Gov. Gina Raimondo is warning that the virus’ widening economic fallout could lead to government layoffs in a state that already was facing a $200 million shortfall. Rhode Island lawmakers also approved borrowing up to $300 million to help the state cover its bills.

“Furloughs and layoffs are things you want to avoid at all costs,” Raimondo said. “They were considered in the last recession, but it all depends on how quick we get the economy back on track and how robust the federal government response is.”

Mulvihill reported from Cherry Hill, New Jersey. Associated Press writers Christina A. Cassidy in Atlanta; Andrew DeMillo in Little Rock, Arkansas; Melinda Deslatte in Baton Rouge, Louisiana; Gillian Flaccus in Portland, Oregon; Steve Karnowski in Minneapolis; Morgan Lee in Santa Fe, New Mexico; Philip Marcelo in Boston; Michelle Price in Las Vegas; Alan Suderman in Richmond, Virginia; Marina Villeneuve in Albany, New York; and Andrew Welsh Huggins in Columbus, Ohio, contributed to this report.

Follow Mulvihill at http://www.twitter.com/geoffmulvihill

Copyright 2020 The Associated Press. All rights reserved. This material may not be published, broadcast, rewritten or redistributed.



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Finance Minister Nirmala Sitharaman Reviews Progress Of COVID-19 Measures

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Nirmala Sitharaman Reviews Progress Of Atmanirbhar Bharat Initiatives

The government on Sunday released a progress report on the implementation of measures announced under its Atmanirbhar Bharat package after a review by Finance Minister Nirmala Sitharaman. In May, the government had announced fiscal and monetary support worth Rs 21 lakh crore to help the country battle the damage caused by the coronavirus pandemic. The finance and corporate ministries immediately started implementation of the announcements related to the economic package under the Atmanirbhar Bharat series of initiatives, an official release said.

Here are some of the key points on the progress reported so far: 

In a major relief to micro, small and medium enterprises, the Department of Expenditure has amended rules relating to global tenders, to ensure no global tender inquiry will be invited for tenders up to Rs 200 crore unless prior approval is obtained from Cabinet Secretariat. The government had earlier announced that global tenders will be disallowed in government procurement tenders up to Rs 200 crore.

In relief to contractors, various departments and ministries are implementing instructions to ensure central agencies like Railways, Road Transport and Highways and CPWD give an extension of up to six months for completion of contractual obligations.

The department issued a communication to all state governments for additional borrowing of 2 per cent (of projected gross state domestic product in 2020-21) subject to implementation of specific state-level reforms. The government had earlier announced its decision to increase borrowing limits of states from 3 per cent to 5 per cent for 2020-21 in view of the situation caused by the COVID-19 disease. The move will provide the states with extra resources worth Rs 4.28 lakh crore.

In a period of about one and half months, noticeable progress has been achieved in identifying units, sanctioning as well as disbursing of loans to MSMEs. The government had announced collateral-free automatic loans worth Rs 3 lakh crore for businesses and MSMEs.

Rs 45,000 crore Partial Credit Guarantee Scheme 2.0 for NBFCs

Banks have approved purchase of portfolio of Rs 14,000 crore and are currently in process of approval/negotiations for Rs 6,000 crore as on July 3.

Additional Emergency Working Capital Funding for farmers through NABARD

When kharif sowing is already on its full swing, Rs. 24,876.87 crore out of Rs. 30,000 crore has been disbursed as on July 6 out of this special facility.

Between April 8 and June 30, the Central Board of Direct taxes (CBDT) has issued refunds in more than 20.44 lakh cases amounting to more than Rs. 62,361 crore, and the remaining refunds are under process.

The Rs 30,000-crore Special Liquidity Scheme for non-banking financial companies, housing finance companies and microfinance institutions has been launched, following the Cabinet’s approval. The first application in this regard has received its approval and the remaining are also being considered, the government said.

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West Kelowna way behind in tax revenue collection – West Kelowna News

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City tax hole $11.5M

The COVID-19 pandemic has had a detrimental affect on businesses and residents across West Kelowna.

That is no more evident than the value of municipal taxes remitted by business and residential taxpayers by the July 2 deadline.

In a report for council, director of finance Warren Everton says in 2019, about 92 per cent of taxes were paid by the July deadline. Penalties would kick in if monies were not paid by then.

However, due to the pandemic, city council has eased off on penalties and taken other steps to ease the financial burden of taxpayers.

As a result of financial hardships endured, Everton says only 80 per cent of overall taxation has been paid to the municipality, leaving an $11.5 million shortfall.

Ten per cent penalties won’t kick in until Oct. 1.

Everton says there is presently a $9.36 million (81 per cent) shortfall in residential tax payments and $2.2 million (72 per cent) deficit in collection from business and other categories.

Despite the shortfall, Everton writes in his report the city remains on”solid financial ground” despite COVID-19.

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I won’t quit: Lebanese PM defiant as his critics blast financial chaos

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BEIRUT: Beleaguered Lebanese Prime Minister Hassan Diab on Saturday defied a barrage of criticism to declare that his government alone ruled Lebanon and it was determined to implement reforms to resolve the financial crisis.

Diab dismissed as “fake news” reports that he was on the verge of resignation, and said: “Lebanon will not be under anyone’s control as long as I am in power.”

The prime minister spoke after UN human rights chief Michelle Bachelet warned that Lebanon was enduring “the worst economic crisis in its history” and was “fast spiraling out of control.” 

She urged Diab’s government to initiate urgent reforms and respond to “the people’s essential needs, such as food, electricity, health, and education.”

Diab also faced harsh criticism from the American University of Beirut (AUB), where he was vice president and a professor before becoming prime minister.

BACKGROUND

UN human rights chief Michelle Bachelet urged the Lebanese government to initiate urgent reforms and respond to ‘the people’s essential needs, such as food, health and education.’

AUB president Fadlo Khuri said Diab’s government was the worst in Lebanon’s history in its understanding of higher education.

“I have not seen any shred of competence in this government since its formation six months ago,” said.

“The government owes the AUB $150 million in medical bills,” Khuri said, and he urged Diab to “at least discuss with us a payment timeline.”

Lebanon’s financial plight is illustrated by its currency, the lira, which has lost 80 percent of its value. 

The black market  dollar exchange rate on Saturday was 7,500, compared with the official rate of 1,507.

Bailout talks with the International Monetary Fund were suspended in a dispute over government debt, but Diab insisted on Saturday: “We have turned the page … and started discussing the basic reforms required and the program that the IMF and Lebanon will agree upon, which will restore confidence and open the door to many projects.”

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