Pennsylvania public libraries began receiving increased allotments of state aid in 2000. In the first two years of enhancement aid, total state aid received by Pennsylvania libraries more than doubled. This reversed the trend of little growth in the years preceding 2000. The enhancement aid program also redesigned certain categories of state aid to increase incentives for local government support. Based on the principles from the economics of grants literature, an empirical model was employed to test the effect of state aid on library expenditures in Pennsylvania counties. Grant response was estimated by employing two separate equations in which library expenditures and state aid were simultaneously determined. It was found that expenditure response was significantly higher in the first two years of enhancement aid than it had been previously. Further, state aid stimulated increased local revenue financing in most years and in most counties. However, the degree of stimulation decreased in many counties during the enhancement period, thus providing them with tax relief.