Managing Fiscal Risks

A growing list of long-term budgetary challenges is making it increasingly difficult for states to plan for the future and address uncertain financial pressures.

The Pew Charitable Trusts helps state policymakers prepare for new and emerging risks to fiscal stability and manage uncertainty by strengthening budgeting practices across several areas, including:

  • Understanding and improving natural disaster budgeting practices.
  • Identifying and planning for other emerging risks such as significant demographic, technological, and economic shifts.
  • Improving state management of federal funds to account for uncertain and volatile funding.

Recent Work

Federal Share of State Budgets Remains High, But Uncertainties Lie Ahead

The share of states’ total revenue coming from federal funds stayed near record highs in fiscal year 2023, bolstered by ongoing pandemic aid, infrastructure funding, and a slowdown in state tax collections.

How States Can Build Disaster-Ready Budgets

Policymakers at every level of government are grappling with the rising costs of storms, floods, wildfires, and other natural disasters and how best to aid affected communities. As disasters have grown in frequency and severity, so too has the strain on public finances and the urgency to update budgeting practices, especially in the states, to help public officials plan for changing spending needs.

Pandemic Lessons Can Help States Manage Federal Funding

To help states address the economic and public health consequences of the COVID-19 pandemic, the federal government provided the largest influx of emergency relief funds in the nation’s history, a massive infusion of one-time dollars totaling more than $800 billion across six legislative packages.

Wildfires: Burning Through State Budgets

Wildfires in the United States have become more catastrophic and expensive in recent years, with the U.S. Department of the Interior and the U.S. Forest Service nearly doubling their combined spending on wildfire management in the last decade. Wildfire management consists of preparing for, fighting, recovering from, and reducing the risk of fires. To execute these activities, states, localities, the federal government, and Tribes, as well as nongovernment entities such as nonprofit organizations and private property owners, participate in a complex system of responsibilities and funding dictated by land ownership and an interconnected set of cooperative agreements.

Fiscal Balance
Federal Funding to State Governments, by Policy Area

Federal dollars are the second-largest source of funding for state governments, historically ranging from about a quarter to a third of total state revenue. In fiscal year 2024, Medicaid—which provides medical coverage for eligible children, adults, people with disabilities, and older Americans—accounted for 68.8% of total federal grants to states and was the largest source of federal funding in all but one state.

Media Contact

Catherine An

Senior Officer, Communications

202.552.2088