State Governments at the Epicenter of COVID 19 Economic Recovery

After the usual political tussling, President Trump acknowledged much of the COVID 19 recovery will be driven by state governments who under the United States of America political system control many aspects of the nation’s public health laws.  There is no federal director of public health with the authority to open and close businesses. That authority rests with 50 state governors. President Trump outlined a process by which state governments can begin to put America back to work again as the majority of the states have created Work From Home orders taking nearly 1/3 of the U.S. economy off line and triggering what will hopefully be a temporary recession.  The federal government is playing a prime role in the recovery from COVID 19 and this as “piggy bank.” The $2.2 T federal stimulus package is massive and likely to increase. The $349 federal SBA funding that is a stop gap funding for companies impacted by COVID 19 has run out of funding. Deals with the Federal Reserve Bank with the airlines and others are progressing to spend down the $500 M in funding they have been allocated so far.  $150 M in loans can be provided by the Federal Reserve Bank for state governments and cities larger than 500,000 as outlined in the table below.  

States and cities are calling for additional funding to meet demands for service that will likely not be able to be paid for when steep sales and income tax revenue declines hit local and state governments in the coming months.  As an example, the state of Ohio saw an 8% decline in sales tax revenue and 5% decline in income tax revenues in March, 2020, and Governor Mike Dewine has called for department directors to plan for up to 20% budget cuts.  

State government leaders are working actively with the federal government and economic development leaders to support the survival and growth of local employers during COVID 19.  Below is a state by state list of business programs designed to assist companies impacted by COVID 19. First, 36 of the 50 states are offering some form of COVID 19 state government regulatory or funding support for a business recovery program beyond the federal government COVID 19 stimulus program.  States in the minority and offering little state-based support for COVID 19 impacted businesses include: Georgia, Hawaii, Idaho, Mississippi, Nevada, New Hampshire, New York, Oklahoma, Tennessee, Texas, Utah, Vermont, West Virginia and Wyoming. 15 states are offering some form of state government or private sector loan program for businesses impacted by COVID 19 with large programs in California and Ohio serving targeted companies. Two states are creatively using their Community Development Block grants for impacted businesses and communities, 13 states are offering some form of tax relief for businesses impacted by COVID 19 primarily in the form of delaying the filing of taxes and tax payments in line with the federal government’s tax filing delays and two states, Kansas and Delaware, created programs to specifically support the hospitality industry.  


Several cities have also enacted business related programs, and many of those are focused on preventing evictions as well as financing COVID impacted business.  With an SBA program that is oversubscribed by small to medium sized companies, support from state and local government for business recovery programs is critical for an economic rebound from COVID 19.

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