State governments are becoming more financially conservative.

Numerous U.S. state governments are operating with reduced financial resources.

As the historic federal economic stimulus comes to an end, states are facing budget pressures. The federal government provided over $800 billion to help states manage the pandemic. In response, virtually every state made a tax cut and increased employee pay for public employees, according to Justin Theal, a senior officer at The Pew Charitable Trusts' Fiscal 50 project. However, this implies that fiscal flexibility is declining across the states.

The combination of federal support and a robust U.S. economy helped to improve state finances and conceal several persistent fiscal problems.

A study indicates that approximately 27 states are struggling to cover their current financial obligations, particularly in relation to underfunded pensions for retired public employees. The states with the highest levels of debt, according to Truth in Accounting, are Connecticut, New Jersey, Illinois, Massachusetts, and California.

According to Oliver Giesecke, a research fellow at Stanford University's Hoover Institution, approximately $70 of the $1,000 in federal aid allocated for pension contributions ended up being used.

State budgets are at risk due to emerging threats such as an aging population, deferred infrastructure maintenance, and more extreme weather.