USA Today reports today that aid from the federal government now tops revenues from state sales, property, and income taxes.  According to the Department of Commerce’s Bureau of Economic Analysis,  federal grants account for 15 percent of the states revenues, income taxes come in at -11 percent, property taxes contribute about 2 percent, and other taxes account for another 2 percent. 

As revenues from sales and property taxes have declined during this recession, federal aid from the Obama administration’s “stimulus” package as well as other federal aid coming in through the federal agencies is becoming more and more of a crutch.  

This should be driving a lot of questions among taxpayers about what this trend portends for the future of state budgets and taxpayers.  

The power of the federal government has been a growing trend over the last few years; we have seen increasing federalization of state law enforcement, for example, with the expansion of the COPS program and the JAG/Byrne grant programs. 

One comment from a state legislator captures much of the concern:

“This money isn’t manna from heaven. It comes with a price,” says Indiana state Sen. Jim Buck, a Republican.  He worries that the federal money will leave states under greater federal control and burden future generations with debt.

The recession has become the perfect excuse for some power-hungry politicians to expand the reach of the federal government and dictate terms.  And the growth in federal spending isn’t over yet….

Filed under: Bailouts, Budget, Deficit, In The News, State Issues, Stimulus, Taxes