Federal Grants as Share of States’ Budgets Near an All-Time High
Following the Great Recession of 2007-2009, the share of states’ revenue from federal grants hit a historic high in 2010 before tapering off slightly during the subsequent economic recovery. Increased federal dollars from economic stimulus funds and reduced state tax revenue meant that federal dollars made up a bigger portion of states’ revenue than at any time in at least 50 years. After peaking in fiscal 2010, the percentage of states’ revenue coming from the federal government fell slightly in 2011 (the latest year for which data are available) to 34.7 percent as state revenues began to recover.
Yet federal grants as a percentage of state revenues still remain high by historical standards. In 2011, federal grants still provided $1 out of every $3 in state revenues.