The share of states’ revenue coming from the federal government surged in the wake of the Great Recession. The 50-state share peaked at 35.4 percent in fiscal 2010, well above the prerecession 10-year average of 28.5 percent. The percentage is now dropping as federal stimulus funds decline and state tax revenue recovers.
After the Great Recession, increased federal stimulus money and reduced state tax revenue meant federal dollars made up a bigger portion of states’ revenue than at any time in at least 50 years….
The federal share of state revenue increased in every state between fiscal 2008 and fiscal 2010 but varied across the country:
– Mississippi had the largest proportion of revenue from federal dollars in fiscal 2011, at 48.8 percent, while Alaska had the smallest at 24 percent.
– Arizona saw the greatest increase in its share of revenue from federal dollars in fiscal 2011 compared with its 10-year prerecession average, from fiscal 1998 to fiscal 2007. Federal funds as a share of revenue jumped almost 13 percentage points, from 29.8 percent to 42.4 percent. The next-largest increases were in Louisiana, New Mexico, Michigan, and Florida.
– Federal funds in fiscal 2011 made up more than 40 percent of state revenue in nine states, 30 to 39.9 percent in 31 states, and 20 to 29.9 percent in 10 states. …