The smart move would be to cut nonessential spending. If receipts are down by, say, 30% then cut spending by 30%. But that doesn’t mean that all areas should get equal cuts.
Those “fact-finding” trips to Europe? Gone. The funding is cut 100%. That stupid LGBTQ outreach program? Gone. The funding is cut 100%.
Of course we know that won’t happen. Instead a few fire houses will be closed. And taxes will be raised.
I am sure that tax increases will happen.
If there are shortfalls of 30%, as in your example, I would expect that the powers that be will raise tax rates by 30%, to make up that shortfall.
I expect there will be packages of spending cuts and tax increases to make up the deficits projected. In most states, the tax revenue comes from state income taxes, sales tax, gas and diesel taxes, property taxes, car registration fees, and a broad amount of taxes on businesses. Expect increases in all categories of taxation. But the powers that be will do it so that there are not huge increases in any one type of tax. Then they will say that, for example, income taxes went up “only” 10%, or sales tax went up only “2 percentage points”, etc.
I am bracing for the shock waves in California, as California is projecting a $54 billion budget deficit. That’s serious money. A few billion here and a few billion there, and you are talking about real money. Not to be too flippant, but all of us are going to have increased taxes and fees to pay, everywhere in America.
I hope we can avoid a federal income tax increase. If Biden wins the election, a federal income tax increase is virtually certain to happen, on top of all the state and local tax increases we are facing.