Please note: This analysis, Federal Grants as Share of States Budgets Decline After Hitting Historic High, was updated on Sept. 21, 2015.
Following the Great Recession, the share of states’ revenue coming from federal grants hit a historic high in fiscal year 2010. Increased federal dollars from economic stimulus funds and reduced state tax collections meant that federal dollars made up a bigger portion of states’ revenue than at any time in at least 50 years. After tapering off slightly in 2011, the percentage of states’ revenue coming from the federal government fell steeply in 2012 to 31.6 percent—the result of both the continued recovery of other state revenue sources and the expiration of most stimulus funding.
Despite the recent drop, federal grants as a percentage of state revenue remain high by historical standards, providing nearly $1 out of every $3 in state revenue in 2012.