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.
The risks to government finances of acute shocks, such as economic downturns, public health emergencies, and natural hazards, are well-established, and policymakers have a range of tools at their disposal to safeguard their states against these temporary disruptions. By contrast, emerging trends—profound and lasting economic and social shifts that take shape gradually—can alter the foundations of state budgets in ways that are less fully understood and more difficult to prepare for.
Grants from the federal government represent a significant but often overlooked part of state budgets. In state fiscal year 2023, federal funds were the second-largest source of state revenue, after tax collections, accounting for 36% of the 50 states’ combined total revenue.
The United States’ population is aging rapidly. And as with other long-term shifts in social and economic conditions, the transition to an older population is already affecting state revenue and expenditures.1 Understanding and preparing for these ongoing changes will be critical to states’ future fiscal sustainability.
In summer 2025, the National Weather Service issued heat advisories for every region of the continental U.S.—and for the first time, Alaska—with high temperatures causing an array of disruptions to essential services, including transit delays and power outages, and straining physical and healthcare infrastructure. Based on current trends, experts predict that the number of extreme heat days could double or even triple over the coming decades.
This interactive visualization breaks down the distribution of federal grants to state governments by policy area. Although these grants are key to state budgeting, factors such as funding fluctuations, limitations on uses for federal resources, and complex grant application processes and reporting requirements can present challenges for state fiscal planning.
