States get roughly a third of their revenue from the federal government, funding that pays for health care, schools, roads, public safety, and other services.1 And since 2008, those grants have increased by 42 percent from $448 billion to $636 billion, adjusted for inflation, driven by rising Medicaid costs. Grants in other program areas have either experienced significantly smaller increases, or even decreases over that time.
Federal grants to states rose 42% from 2008 to 2019
Federal grants are 42 percent higher, overall, than they were when the Great Recession began in 2008. (See Figure 1.) Federal stimulus aid to states during and immediately after the recession resulted in a spike in grant spending, which increased by 55 percent in the first year after passage of the American Recovery and Reinvestment Act (ARRA) of 2009. By 2013, however, the temporary aid provided by ARRA had been nearly phased out, and grant dollars declined by about 30 percent from the 2009 peak. In 2014, federal grants to states began to rise again, and since 2017, they have hovered around 40 percent above 2008 levels.