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Fiscal Federalism Initiative




Why the Federal-State Relationship Matters

State and federal budgets and their economies are inseparably linked. Federal government grants make up an average of $1 out of every $3 in state revenues. Several of the largest state programs, such as Medicaid and education, are supported by these funds. Almost three-fourths of states tie their income tax calculations to the federal income tax. And many state economies are heavily reliant on federal activities within their borders. As a result, almost any federal policy change, from changing tax rules to military spending, will have an effect on the states

How We Conduct Our Work

  • Research. We conduct original, non-partisan research to examine the connections between federal and state governments, with a focus on budget, tax, and regulatory policies.
  • Convene. We bring together federal and state decision makers to promote consideration of the fiscal and economic health of states when federal policymakers propose and evaluate various tax and spending changes.
  • Inform. We give federal and state policymakers the data they need to enhance understanding of this multi-faceted relationship and make informed decisions in key policy areas where federal and state governments intersect.