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Project

State Fiscal Health

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State Fiscal Health
When states manage their finances effectively, they are more likely to have money to invest in priorities such as schools, health care, and infrastructure. When they don’t, they may be forced to cut spending and raise taxes to pay off long-standing expenses and provide basic services to citizens.

To help states manage uncertainty, adapt quickly when crises arise, and ensure that their budgets are balanced over the long term, The Pew Charitable Trusts provides data, analysis, and guidance to policymakers on a range of fiscal and economic issues. We also aid states as they design, evaluate, and improve business tax incentives and other economic development programs to ensure that these programs are cost-effective, helping businesses grow and workers thrive. Through research and advocacy, we help states identify potential policy approaches and make informed choices about what works best for their communities.

Our research—including 50-state assessments—examines key trends in state finances and evaluates states on their performance, underscoring effective approaches and creating an environment for potential reform. 

We collaborate with policy leaders in states in a variety of ways:

  • Research: We conduct comprehensive and policy-relevant research. Our findings give states evidence-based options to address their unique fiscal challenges.

  • Information sharing: We serve as a resource to policymakers making research-driven decisions to improve fiscal outcomes in their states. We lead webinars, events, and meetings, and provide communications assistance to encourage state, regional, and national conversations on budget policies and practices.

  • Technical assistance and policy advocacy: We provide strategic technical assistance to states seeking to improve their budget practices. Our capabilities encompass policy design, including state comparative analysis; drafting or advising on legislation; offering testimony; and supplying other assistance, as requested.

Through these strategies, our goal is to help policymakers manage economic and revenue volatility, enhance transparency, and improve their states’ fiscal health over the long term.

Article

Pandemic Aid Lifts Federal Share of State Budgets to New Highs

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Article

The share of states’ total revenue that comes from federal funds climbed to a record high nationally and in most states in fiscal year 2021, the first full budget year bolstered by temporary COVID-19 pandemic aid from the federal government.

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People walking
Article

Southern States Gain Residents the Fastest

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Population growth in southern states outpaced all other regions in the second full year of the COVID-19 pandemic. Florida was the fastest-growing state for the first time since the 1950s, expanding by 1.91% between July 2021 and July 2022. Western states also gained residents, but at a much slower pace. Strong population growth can lead to a rosier economic and fiscal landscape as a growing labor force stimulates new economic activity.

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Getty Images
Report

Tools for Sustainable State Budgeting

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Report

Responsible state fiscal policy requires more than just balancing the current year’s budget. It must also include ensuring that the budget is on a sustainable path. Otherwise, policymakers cannot have the lasting impact they hope for: They may act to improve state services or cut taxes only to have to scale those efforts back later. This risk is especially high in the aftermath of the COVID-19 pandemic. Record budget surpluses, driven largely by federal pandemic aid, empowered states to adopt historically large tax cuts and spending increases from 2021 to 2023, investments that many state leaders hope to build on in coming years.

Article

How Surpluses Can Help States Invest in Budget Stability

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As many states enter budget negotiations for next fiscal year with anticipated surpluses, policymakers must ask two critical questions: Is their state sufficiently prepared for unexpected events such as a recession or natural disaster? And, critically, is the current surplus temporary or structural?

Our Work

How states raise their tax dollars
How states raise their tax dollars
Data Visualization

How States Raise Their Tax Dollars, FY 2022

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Data Visualization

Taxes made up almost half of state government revenue in fiscal year 2022, with two-thirds of states’ total tax dollars coming from levies on personal income (38.2%) and general sales of goods and services (29.5%). Broad-based personal income taxes were the greatest source of tax dollars in 31 of the 41 states that impose them, with the highest share (62.3%) in Oregon and the lowest share (8.8%) in North Dakota.

Data Visualization

Where States Get Their Money, FY 2021

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Data Visualization

The portion of state government revenue coming from federal dollars remained inflated by billions in COVID-19 pandemic relief aid in fiscal year 2021. The share increased by less than a percentage point from fiscal year 2020 levels but still set a record at 36.7%.

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Data Visualization

Fiscal 50: State Trends and Analysis

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Data Visualization

Fiscal 50: State Trends and Analysis, an interactive resource from The Pew Charitable Trusts, allows you to sort and analyze data on key fiscal, economic, and demographic trends in the 50 states and understand their impact on states’ fiscal health.