A fiscal review needs to be done urgently to find ways of raising more revenue to pay for public services, according to Guernsey's Policy and Resources Committee.
The work has been called 'absolutely essential' and will be done over the coming year.
The latest States budget estimates deficits of £59 million for this year, and another £23 million in 2021, caused by the coronavirus pandemic.
Tax take is down £30 million, with a shortfall of half as much again (£16m) predicted for next year.
A further 17 million has been budgeted for Covid support measures - including £5 million for a vaccine.
£82m is being taken from the Core Investment and General reserves to plug the shortfall.
But P&R Treasury lead Deputy Mark Helyar says this is not purely a Covid issue:
"This is an issue which is coming over the horizon at the Bailiwick anyway, it has merely been exacerbated by the financial effects of Covid and we must make sure that if action needs to be taken it can be taken quickly and effectively."
P&R says the Fiscal Review sought by the previous committee must be brought forward as soon as possible.
"What level of public services should be provided and how much tax are we prepared to tax from the economy and the community in order to provide these? Having spent a few weeks with my head metaphorically under the bonnet, I can say that our tax base has reached the limit of what it can achieve.
The government has committed to significant amounts of spending over the next 5-10 years and the £80 to £130 million estimate above current revenues cannot be met from the current tax base. So, we have a choice - we either cut our cloth and provide services at the level of revenue we have at the moment, or we consider other forms of taxation.
I'm not saying we are going to bring in additional taxes. What I am saying is that we cannot afford what we have been committed to spend."