LAST MAY California readied itself for budgetary disaster. State officials, forecasting dire impacts from the pandemic, projected that the state deficit would grow to $54bn over the coming fiscal year. That year has now come and gone, and California instead has a $15bn surplus, equivalent to about 7% of its budget for 2020. It is so flush with cash that its constitution obliges it to put some away for a rainy day. California is not alone in defying gloomy projections. In 22 American states, revenues in 2020 were higher than in 2019. Several now have budget surpluses. The governor of Idaho, which is celebrating a historic surplus, plans tax cuts. Utah will spend some of its windfall on transport infrastructure. Vermont intends to boost higher education and broadband internet. What has gone so right? Sound fiscal stewardship, federal aid, diversified economies and progressive tax systems have all played a part. But the recent downturn has also been a very unusual one.
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