Report Finds State Reliance on Federal Money on the Rise

GLEN ALLEN, Va., March 26, 2014 /PRNewswire-USNewswire/ -- State Budget Solutions, a national organization dedicated to fiscal responsibility, released a new report highlighting increased reliance on federal funding by state governments.

According to the report, 41 states have increased general revenue dollars from the federal government. In total, states have received $5.27 trillion from the federal government since 2001. While this includes the "stimulus spike" from 2009-2011, the long-term trend of increased dependency on the federal government did not subside following the recession.

"In order to prepare for the next federal budget crisis, states need to identify all federal funds coming into their state and the cost of the strings attached to the funding," said Bob Williams, a former Washington state legislator and President of State Budget Solutions.

"As has been done in the state of Utah, state legislators in the other 49 states can and should take a risk assessment and develop a prioritized plan of action to act responsibly for their constituents," added Williams.

California accepted $639 billion, the most federal revenue over the period studied of 2001-2012. The state also had the highest total general revenue. In terms for percentage of general fund revenue, Mississippi was the only state to receive more than half of its revenue from the federal government. The state surpassed the 50% mark in 2007 and 2010.

"Growing reliance on federal funding in state budgets is a dangerous trend. It threatens the financial stability of all 50 states, as well as of the federal government. States must recognize that this funding arrangement also harms fiscal federalism. Federal funding usually comes with strings attached, and that means less chance for local control. When states do not stand firmly on their own financial footing, they will lose the ability to make the best, locally-based, independent decisions for their residents," added Williams.

About State Budget Solutions
State Budget Solution is non-partisan, positive, pro-reform, proactive and anchored in fundamental-systemic solutions.  The goal is to successfully engage political journalists/bloggers, state officials and opinion leaders in a new way of thinking about state government and budgets, fundamental reforms, transparency and accountability.  Sharing studies and articles, data sets, anecdotes, and compelling narrative about what is happening in state and local budgets, State Budget Solutions presents and disseminates information about every aspect of coming fiscal and economic disasters and, more importantly, highlights fundamental reforms to avoid them.

SOURCE State Budget Solutions