In fiscal year (FY) 2006, 47 states ranked in one of the two most desirable categories of the Continuum of State Fiscal Stress. By FY 2009, that number had slipped to six. Now, 19 states have reached these top ranks, providing evidence that states are continuing the long, slow climb out of a recession unlike any they had seen for many business cycles.
Potentially large reductions in federal aid loom on the horizon and will almost certainly slow down states’ recovery. But will they halt the recovery entirely, or even reverse it? That question remains.