State Budgets

Federal Aid to the States 2008-2011

As the U.S. debt clock nears $16.5 trillion, shortfalls and deficits are the talk of the 2013 fiscal year. Not only does the deficit affect the federal government, but it affects state governments as well. It is well understood that the federal government must make spending cuts-these cuts will most likely drastically change the amount of federal dollars that are allocated to the states. Unfortunately for most states, dependence on federal funding has continually risen since 2008.

In 2011, forty-two states received more than 1/3 of their general funds from the federal government. Mississippi received nearly half (49.01%) of their general revenue from the federal government, the highest percentage in the nation. Louisiana received the second highest percentage, relying on the government for 46.52% of general revenue. Alaska, the state receiving the lowest percentage of funding from the federal government, still relies on federal funds for 24.01% of funding for state programs. Comparatively, in 2008, Mississippi received 46.76%, Louisiana received 46.22%, and Alaska received just 13.53%. See data below.

Despite heavy reliance on federal funding, and the increasing likelihood that the funding will disappear, most states seem unprepared for the possibility of drastic cuts. States should respond to the risk of a significant reduction in federal funds by setting aside funds and reviewing spending.

In Depth: State Budgets

Smart budgeting is vital to a state’s financial health. The ALEC State Budget Reform Toolkit offers more than 20 policy ideas for addressing today’s shortfalls in a forthright manner, without resorting to budget gimmicks or damaging tax increases. One way to stabilize budgets over time is to embrace…

+ State Budgets In Depth