Brazil’s 27 sitting governors, among them newcomers and second-termers, took office on January 1, 2019, to what they knew would be a challenging four-year stint in office. The country’s financial conditions had worsened, while spending on wages and pensions increasingly hobbled state finances from north to south. However, no one was prepared for just how tough 2020 has been. The Covid-19 pandemic hit state administrations in different forms, putting job security on the line for many governors. Tax revenues fell sharply. The state of São Paulo, Brazil’s wealthiest, reported a 10-percent drop in tax collection from its ICMS goods and services tax, the main source of revenue for states.
But the financial hit only tells a part of the story.