State Spending and Employment Falls

While the Federal stimulus funds are trying to save and create jobs, they can't keep up with the decline in spending and public jobs. For example:

"The Great Recession of 2008 and 2009 decimated (Michigan)school revenues. State taxes, adjusted for tax restructuring, fell 8.6 percent from FY2008 to FY2009 compared to an income drop of 3.0 percent and inflation of -0.3 percent.
The Great Recession of 2008 decimated state tax revenues from all sources, causing actual year-overyear declines in FY2009 and FY2010." Source:Citizens Research Council.

The State of Michigan, to help solve its looming budget crisis, offered generous early retirement to its employees. 4,755 employees out of a total of 53,000 state employees took the early retirement. The problem will deepen next year if Congress fails to extend stimulus spending, which the Republican house has pledged to do.
Across the country, when many voters said the stimulus did no good, the problem was it never was of a size to offset the decline in state and local budgets and employment occasioned by declines in the state income tax and local property tax (related to the decline in real estate values).