"Although no two state budgets are alike, all 50 states have experienced fiscal stress in recent years, especially during FY2009 and FY2010. The national economic recession, which officially lasted from December 2007 to June 2009, led to lower levels of economic activity throughout the nation and reduced state tax revenues. […] This report examines the current status of state fiscal conditions and the role of federal assistance in state budgets. It begins with an overview of state budgeting procedures and then provides budgetary data comparing state fiscal conditions in FY2008 to FY2013. The data indicate that (1) recent improvements in the national economy have enabled many states to increase their general fund spending, but states still face several fiscal challenges in part due to relatively slow state revenue growth, the need to replenish reserves, and increased costs for health care and other social services; (2) states are more reliant on federal assistance today than in FY2008; and (3) state officials anticipate an increase in federal assistance for Medicaid over the next several years, but they are concerned that federal budget constraints could lead to declines in federal assistance in other program areas. This report concludes with an assessment of the consequences current levels of state fiscal stress may have for the 113th Congress."
CRS Report for Congress, R41773