After years of declining tax revenues and federal stimulus payments, states find themselves relying more on the federal government for cash infusions than ever before. But thanks to the budget sequester, much of that money is about to vanish.
Federal grants accounted for more than one-third of state budget revenues in fiscal year 2011, according to data compiled by the Pew Charitable Trust’s Fiscal Federalism Initiative. That’s down slightly from the percentage of federal dollars that flowed into state coffers in fiscal year 2010, but it’s far above historical precedent.
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