Stimulus cash lifts states, localities - Has offset big drop in tax collections

http://www.usatoday.com/printedition/news/20090803/1astimulus03_st.art.htm

By Dennis Cauchon
USA TODAY

A huge influx of federal stimulus money to state and local governments more than offset a sharp drop in tax collections, helping to put the brakes on the nation's economic decline, new government data show.

The stimulus funds helped reverse six months of spending declines, pushing state and local government expenditures up 4.8% in the second quarter, reports the Bureau of Economic Analysis.

"The money has caused a very sharp change in the path of the economy, which had been in steep decline," said Chad Stone, chief economist at the liberal Center on Budget and Policy Priorities in Washington, D.C.

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The flood of federal money lifted total revenues by 7.5%, overcoming an 8% drop in tax collections.

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