The federal-state relationship is in the spotlight because of enormous fiscal challenges facing all levels of government. Tight budgets and a weak recovery in the wake of the Great Recession are leading to discussions about appropriate amounts of public spending and how costs should be allocated among local, state, and national government. Federal and state policy makers require solid data and analysis to engage in a meaningful debate and truly understand how their tax and spending policies affect other levels of government.
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States receive federal grants to help fund programs in areas ranging from education to transportation to health care. Federal grants accounted for an average of 30 percent of total state revenue in 2013, but states’ reliance on this revenue source varies widely. At nearly 43 percent, Mississippi had the largest share of revenue from federal grants, while North Dakota had the smallest at 19... Read More
Federal grants to states are about 30 percent higher overall, after adjusting for inflation, than they were in 2008, when the recession began. Federal stimulus aid to states resulted in a spike during and immediately after the recession. That aid was almost entirely phased out by 2013, but total grants to states remain above prerecession levels. Medicaid increases are the main drivers of this... Read More
After the Great Recession, the share of states’ revenue coming from federal grants hit a historic high of 35.5 percent in 2010. Increased federal dollars from economic stimulus funds and reduced state tax collections meant that federal dollars made up a bigger proportion of states’ revenue than at any time in at least 50 years. After tapering off slightly in 2011, the percentage of... Read More