For Governing Magazine, Alan Greenblatt writes that additional federal aid for state and local governments may not be forthcoming, as “President-elect Joe Biden most likely will be dealing with a Senate led by Republican Mitch McConnell.”

At a post-election news conference, McConnell said there was a need for further federal aid, but he specified supporting schools, hospitals and small businesses, not general governments. He called Friday’s jobs report, which showed unemployment dropping to 6.9 percent in October, a “stunning indication of a dramatic comeback of the economy,” suggesting that only limited, targeted stimulus was needed.

Indeed, in Washington, the September revenue forecast was much improved compared to the June forecast (and October collections increased over the September forecast). Similarly, the City of Seattle’s November general fund revenue forecast increased over the previous forecast by $36.0 million (3.0 percent) for FY 2020 and $32.6 million for FY 2021 (2.2 percent). (The new FY 2020 estimate is still below the level in Seattle’s adopted budget.)

Nationally, the Center on Budget and Policy Priorities (CBPP) notes,

Fortunately for states, revenues for fiscal year 2020 (which ended in June in most states) came in significantly better than they expected. Our analysis of Census data and state tax collections finds that revenues were about 2 percent below states’ pre-pandemic projections, which translates into total shortfalls of about $22 billion. That’s much lower than seemed likely earlier this year when unemployment rates were rising very rapidly and leading economic forecasters were projecting rates to hit Depression-era levels.

The CBPP argues that more federal aid is still needed. To be sure, the fact that revenues are looking better than expected earlier this year doesn’t mean that state and local governments are out of the woods yet. Still, if the positive trend continues, the need for more federal aid (or state tax increases or state spending cuts) may be less urgent.