COVID-19 Economic and Tax Revenue Impacts

The Weldon Cooper Center for Public Service today produced a paper on the impact of the COVID-19 pandemic on Virginia's economy.

Bill Shobe, director of the Center for Economic Policy Studies, said of the paper written by Terry Rephann, "Even as the economic consequences of the pandemic are just starting to unfold, it is important to use the limited information we have to make informed estimates of its likely effects. Some decisions about what actions to take must happen before we have complete information."

"Understanding the likely range of changes in income (GDP) and employment will help state and local government develop budget contingency plans that can reduce the overall costs of the economic emergency. We show that the loss in state tax revenues will likely be between $600 million and $1 billion in 2020 alone. Knowing this will help state agencies redirect their spending towards the most essential service," Shobe said.

Rephann added, "The report was created in response to state and local governments requests for more information about the potential state and local government economic and fiscal impacts of COVID9.  We had received several inquiries over the last two weeks and wanted to respond as best as we could to them within a relatively short time frame.
 

"Since we had a preexisting state economic model, we adapted it to run simulations based on several macroeconomic forecasts.  The methodology and scenarios will be revised and improved as we learn more," Rephann said.

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Terance J. Rephann