State Governments Face Budget Uncertainties

By Toby Burke | June 18, 2025

State governments are required to maintain balanced budgets that ensure revenues equal expenditures. Any budgetary shortfall requires lawmakers to make calculated decisions to either reduce government services or generate additional revenue through tax and fee increases. There is growing uncertainty within the states of projected state revenues as President Donald Trump and Congress attempt to restructure federal support for state services and programs. The revenue concerns in the states are furthered by economic growth questions, inflation and the conclusion of the one-time pandemic relief funding from the federal government.

MultiState, a full-service state and local government relations company, issued a report by its Vice President and Counsel Bill Kramer, “State Budgets in the Shadow of Federal Uncertainty,” that indicates, on average, 34% of state spending revenue come from federal loans, grants and other expenditures.  Basically, one-third of state spending comes from the federal government. The expected reductions in federal support will inevitably result in a state budgetary shortfall that will have to be addressed. The levels of these reductions could be significant.