Grand Canyon Times

The only thing financial predictors can agree on right now is that it’s not good news for Arizona’s economy, facing a possible $1.1 billion budget deficit because of the COVID-19 pandemic.

All that remains is for the exact shortfall numbers to become known.

"Those virus forecasts are extremely speculative and changing weekly," Richard Stavneak, staff director of the Joint Legislative Budget Committee (JLBC), told the Eastern Arizona Courier. “That starts with projections of the effect on Arizona."

With an effective vaccine for the virus a year away lawmakers and financial analysts have expressed the hope that the new virus like regular flu is seasonal and will fade with the arrival of warmer summer weather. That likely won’t be the end of it they add.

"There is typically a second wave that comes (next winter)," Stavneak said.

The JLBC came out with new budget forecast estimations after a meeting held on April 9. The numbers predict that a plunge in state revenues from the pandemic plus higher costs to the state should leave Arizona with a $1.1 billion budget deficit by the end of the coming fiscal year.

That's out of a total $11.8 billion spending plan.

The problem however is worse than it appears on paper because of the drain the budget hit will have on state reserves.

“The new JLBC report says the $1.1 billion deficit comes even after the state uses close to $1 billion it was expected to have left over by the end of this budget year on June 30,” the Courier report noted.

The account said the only bright spot is that the state had socked away $973 million in a “rainy day fund” for just such emergencies. Budget staffers are additionally hoping for some funding help from the federal government.

Should events prove not the worst possible, the economy won’t bounce back immediately. Projections said despite the state’s rainy day fund or other emergency funds becoming available, another $1 billion shortfall for the 2021-2022 fiscal year will occur.

“That's because the number of people in the state's Medicaid program is still expected to be high,” the Courier report said. “But by that point, the extra dollars the federal government is providing to help will have disappeared.”

As of April 9, state health officials reported 89 deaths from COVID-19. Stavneak said the Institute for Health Metrics and Evaluation is predicting Arizona will end up with 775 deaths by the end of May.