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. Federal cash is now the No. 1 revenue source for state and local governments, surpassing sales and property taxes, the government data show. State and local governments are adding new workers and raising pay...The jump in government spending — federal, state and local — was the key reason that the nation's gross domestic product declined just 1% in the quarter, a sharp improvement from a 6.4% first-quarter drop. "The stimulus is working as intended," said Stone.