State Budgets

New Figures Reveal Amount of Federal Aid to States in 2012

Data released from the Census Bureau reveals that all 50 states rely on the federal government to support large percentages of the state’s general budget.

State Budget Solutions found that all state governments combined received 31.6 percent of their general revenue from the federal government in 2012.

For some states, that portion of aid makes up over 40 percent of its funding, including Mississippi, which posts the highest percentage of revenue funds coming from Washington, D.C. at 45.35 percent. At the other end of the spectrum is Alaska, which sees just 19.97 percent of its funds come from the federal government.

States count on the federal government’s cash to run many state programs, including joint programs with the feds, in addition to other grants.

For the first time, the Census Bureau provided data that split intergovernmental revenue into two separate categories of “from federal” and “from local.” This gives the most accurate data possible on this important state budget feature that legislatures have come to rely on as part of the regular budgetary process.

As the federal deficit tops $16.5 trillion, lawmakers in Washington are instituting financial cutbacks to discretionary programs, including funding that states heavily rely on to finance day-to-day expenses. Some states are taking steps to prepare for inevitable cuts. Financial Ready Utah offers ways states should respond to the risk of a significant reduction in federal funds so that states are prepared and not caught off guard when they take place, including:

  1. Study and assess the risk of a significant reduction in the receipt of federal funds by the state, including establishing a process for making a revenue estimate of the amount of federal funds that the state expects to receive in the near future.
  2. Discuss methods of preparing for, and responding to, a significant reduction in the receipt of federal funds by the state.
  3. Implement measures to respond to a significant reduction in the receipt of federal funds by the state of Utah, including a contingency plan and increasing the amount in the rainy day fund.

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