Federal aid No. 1 revenue source for states, a first

No stress test needed for the states. We already know: State revenues are completely stressed out.

In a historic first, Uncle Sam has supplanted sales, property and income taxes as the biggest source of revenue for state and local governments.

The shift shows how deeply the recession is cutting. Federal stimulus money aimed at reviving the economy and a sharp drop in tax collections have altered, at least temporarily, the traditional balance of how states, cities, counties and schools pay for their operations.

via Federal aid is top revenue for states – USATODAY.com.

States are suffering from sharp drops in taxes on everything from cars and construction supplies to property and income. The USA Today article says states don’t expect revenues to bounce back until 2012, just as federal aide is expected to lessen.

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