Reduced State Aid

Cuts that states are making reduce aid and transfers to city governments.

  • This mix of state actions, taken by state leaders to balance state budgets, adds to the cyclical economic pressures and constraints that cities and other local governments are confronting.
  • During economic downturns, the decisions that state and local leaders make to balance budgets often exacerbate the effects of the downturn for other levels of government, for jobs and for the quality of life and well-being of individuals and communities.

City finance officers have encountered a variety of state actions since 2009, including cuts in general aid (50%), cuts in state-shared and/or state-collected revenues (49%), revocation or reduction of reimbursement programs or other transfers (32%), cuts in funding for services that cities and other local governments deliver on behalf of state governments (22%) and transfer of state program responsibility (17%). Amid the politics of state budget-balancing, sometimes state actions are also taken that reduce or limit local authority (13%).